Key Decisions

March 2014 – All Articles

(filed under: Key Decisions | March 17, 2014)

A Social Host Who Charged Admission Was Liable For Drunk Driving Accident

Ennabe v. Manosa
(Cal. Sup. Ct.), filed February 24, 2014, published February 24, 2014

KEY FACTS

Jessica Manosa hosted a party at a vacant rental property owned by her parents. The party was publicized to friends and non-friends by word-of-mouth, telephone, and text messaging. There was a $3 to $5 admission fee. Approximately 40 to 60 people attended. The majority of the people at the party were under age 21, and about one-third were unknown to Manosa. Alcoholic beverages were served and some attendees brought their own alcoholic beverages.

Twenty-year-old Thomas Garcia attended the party. He arrived at the party drunk and had additional drinks at the party. Because he was being disruptive, he was told to leave. In the process of leaving, Garcia hit Andrew Ennabe with his car. Ennabe died from his injuries.

Ennabe’s parents, on behalf of themselves and the estate of their son, filed a wrongful death action against Manosa. Manosa moved for summary judgment on the grounds that she was immune from liability under Civil Code section 1714. In opposition, the Ennabes argued that Manosa was not acting as a “social host” under Civil Code section 1714(c) because she charged a fee to unknown and uninvited guests. The trial court granted the motion and rendered a summary judgment in Manosa’s favor. The Court of Appeal affirmed. It held that a social host charging guests an admission or entrance fee of $3 to $5, to a party where alcoholic beverages are available, has not sold or caused to be sold an alcoholic beverage.

HOLDING & REASONING

The California Supreme Court reversed. It concluded that by charging an admission fee to some of the guests, Manosa was selling alcoholic beverages. Therefore, if Garcia had paid an admission fee, was obviously intoxicated, and had consumed alcohol provided by Manosa, Manosa was not immune from liability.

The Court rejected the argument that there was no “sale” of alcohol to Garcia because title to the alcohol never passed to him. It noted that, “when Garcia did pour himself a drink and begin to consume it, title to that drink clearly passed to him.” The fact that he did not take the drink immediately upon payment of the admission charge was irrelevant to whether there was a sale.

The Court rejected the argument that for there to be a sale, there had to be an intention of a commercial gain or profit. The Business and Professions Code referred to a “sale” not to “commercial sale” or “profit” or “gain.”

The Court found Manosa’s argument that classifying what she did as a sale could extend liability to hosts of potluck dinners where everyone brings a dish to the event and the host provides alcohol, unpersuasive. It noted: “In the usual social situation, the dessert or other gift brought by an invited guest and given to the host cannot fairly be characterized as a transaction in which consideration is given in exchange for alcoholic beverages provided by the host; the dessert or other offering is simply a commonplace gift consistent with ordinary etiquette.” And, it stated: “We need not sweep all informal potlucks into the jurisdiction of the Department of ABC’s licensure purview to conclude the instant situation, in which Manosa operated what was in essence a pop-up nightclub that required a cover charge for entry, falls within section 23025’s definition of a sale of alcohol.”

As to Manosa’s suggestion that imposing liability in a situation like hers would “wreak havoc” on the “social fabric of modern life,” the Court said: “The assertion is exaggerated. One does not normally charge guests an entrance fee to attend bar mitzvahs, weddings, or gallery openings, and the provision of alcoholic beverages to guests invited to such events typically is governed by social host immunity under Civil Code section 1714, subdivision (c).”

ANALYSIS

This decision creates potential liability where a party host charges an entrance fee and provides alcohol. Apparently, even where the fee is modest and only partly covers the cost of alcohol, liability is possible.

 

Attorney’s Fees Were Properly Awarded In Meritless FEHA Action

Robert v. Stanford University
(Cal. Ct. of App., 6th Dist.), filed February 25, 2014, published February 25, 2014

KEY FACTS

Francis Robert is an American Indian. He worked for Stanford University from 1997 to 2008. Stanford fired him in 2008 due to his alleged harassment of a female Stanford employee. He had been given several warnings before his termination, but he allegedly continued to harass her. His harassment led to a restraining order against him, which was upheld on appeal in 2009. Nonetheless, in 2010, Robert sued Stanford. His FEHA cause of action against Stanford alleged that his termination was based on his race.

During discovery, Robert never identified any evidence other than his own testimony that might support his FEHA cause of action. At trial, he testified that he believed that those responsible for investigating the harassment and terminating him had discriminated against him based on his “native ancestry.” He provided no other evidence in support of his discrimination claim.

Stanford moved for nonsuit on all causes of action. The trial court granted Stanford’s motion for nonsuit on the FEHA cause of action. It found that there was “some evidence” supporting Robert’s retaliation claim and his breach of contract/breach of the implied covenant claim and allowed them to go to the jury. The jury returned a defense verdict.

Stanford incurred over $235,000 in attorney’s fees defending against Robert’s action, and it filed a motion seeking to recover its attorney’s fees in the FEHA action. Robert opposed the motion on the ground that he was “destitute” and that his FEHA cause of action had not been frivolous, groundless, unreasonable, or vexatious.

The trial court awarded Stanford $100,000 after finding that Robert’s FEHA claim was “without merit and was frivolous and vexatious.”

HOLDING & REASONING

The Court of Appeal affirmed.

The court rejected Robert’s assertion that the trial court erred by failing to make written findings. It found that written findings were unnecessary so long as the trial court articulated the reason for its findings. The court then found that the trial court had considered Robert’s assertion that he was destitute and could not pay Stanford’s attorney’s fees. And, it found that the trial court had not abused its discretion in awarding those fees because Robert’s FEHA claim was still meritless, frivolous and vexatious.

ANALYSIS

It is a rare case that, even though meritless, frivolous and vexatious, it makes it to trial and it is even rarer when the employer wins hands down and recovers fees. While this case may have been a particularly weak case from the plaintiff’s standpoint, it shows that sometimes employers can emerge with a full victory.

 

Rental Property Owner Could Be Liable For A Drowning

Johnson v. Prasad
(Cal. Ct. of App., 3d Dist.), filed February 25, 2014, published February 25, 2014

KEY FACTS

Benorad and Brig Prasad bought a house with an in-ground backyard swimming pool in 2000. The pool was built in 1976 or 1977 and complied with state and local ordinances at that time. The Prasads did not alter the pool. Around the perimeter of the property was a six-foot wooden fence that prevented access to the backyard. The only direct access from the house to the pool was through the kitchen. That access was through a sliding glass door with a security gate over it. The security gate did not have a self-closing mechanism. Since 2009, Century 21 managed the house for the Prasads.

In June 2009, Tomica Johnson and her son, Brandon Johnson, rented the property.

On June 28, 2009, Michelle Volpi and her husband took their four-year-old grandson, Allen Soucy, to a get-together at the house. When they got there, Allen’s father, Andre Soucy, was already there, as were a number of other people, including children. They all went in the pool. Eventually, everyone got out.

Michelle Volpi went inside the house and did not close the security gate or the sliding glass door behind her because others were still coming in. Allen also went inside the house.

At some point, Michelle Volpi lost track of Allen. As it turns out, Allen had gone outside the house to the backyard. When he was discovered, he was at the bottom of the pool. Allen was kept alive on a ventilator for 19 days and then died.

Allen’s mother, Melina Johnson, filed a wrongful death lawsuit, alleging Michelle Volpi and Andre Soucy were negligent in supervising Allen. She alleged the Prasads were negligent in failing to properly fence the pool or otherwise protect a child from accidentally falling into the pool. And, she alleged Century 21 was negligent in “fail[ing] to ensure that the premises met safety code prior to renting the premises to the public.”

The Prasads and Century 21 moved for summary judgment. The trial court granted the summary judgment motion. Plaintiff timely appealed.

HOLDING & REASONING

The Court of Appeal affirmed as to Century 21, but reversed as to the Prasads.

As to the Prasads, the court framed the issue as to whether the homeowners owed 4 year-old Allen a duty of reasonable care to protect him from drowning in a swimming pool at a house they rented to tenants. To answer this, the court looked at a variety of factors. The court held that the Prasads did owe Allen a duty of care. The court then found that there were triable issues as to whether the Prasads breached that duty and, if so, whether that breach was a substantial factor in causing Allen’s death.

As to Century 21, the court explained that Johnson’s theory of liability in her complaint was that Century 21 was negligent in failing to ensure that the premises met safety codes prior to renting the premises to the public. However, she admitted that Century 21 was “exempt from compliance” because Health and Safety Code section 115922, which would have required a drowning prevention device such as a self-closing door or a fence around the pool, did not exist at the time the pool was built. Thus, there was no triable issue of fact with respect to Century 21’s liability.

ANALYSIS

One of the most interesting facets of the case is that the court was willing to let a jury decide whether a reasonably prudent homeowner was required to add precautions, beyond a fence around the yard, to protect against a child drowning. The court noted: “A jury could conclude a reasonably prudent homeowner should have taken further precautions because it was foreseeable that a child could still access the pool and could drown or be injured. Or it could decide the opposite.” This means the results could be very different in situations that are virtually identical, depending on the particular jury that decides the case.

 

A Staffing Company Is Not Liable For Conduct Of Its Employee

Montague v. AMN Healthcare, Inc.
(Cal. Ct. of App., 4th Dist.), filed February 21, 2014, published February 21, 2014

KEY FACTS

AMN Healthcare, Inc., dba Nursefinders is a staffing company that provides prescreened nurses and medical personnel to hospitals and other facilities. Nursefinders hired Theresa Drummond as a medical assistant. It later assigned Drummond to work at a Kaiser facility.

Sara Montague was also a medical assistant at Kaiser. At some point, Drummond and Montague had a disagreement at work regarding how rooms were to be stocked. This disagreement led Drummond to allegedly poison Montague.

Montague and her husband sued Nursefinders. Montague alleged causes of action for negligence, battery, negligence per se and intentional infliction of emotional distress under a theory of respondeat superior. She also alleged that Nursefinders negligently hired, retained, supervised and trained Drummond. Montague’s husband alleged a claim for loss of consortium.

Nursefinders moved for summary judgment. It argued that the causes of action based on respondeat superior liability failed because Drummond: (1) was a special Kaiser employee; or (2) acted outside the course and scope of her employment. It also asserted that no triable issues existed on Montague’s negligence claim and the lack of a viable cause of action precluded a derivative loss of consortium claim.

The trial court granted the motion.

HOLDING & REASONING

The Court of Appeal affirmed.

Although an employer is not liable for the torts of an employee that are outside of the course and scope of an employee’s employment, an employee’s willful, malicious, and even criminal torts may still fall within the scope of employment. However, “an employer is not strictly liable for all actions of its employees during working hours.” For there to be liability, there must be some “causal nexus to the employee’s work.”

The plaintiff has the burden of showing such a nexus. However, Montague failed to meet her burden. She presented no evidence regarding the scope of Drummond’s employment with either Nursefinders or Kaiser. Moreover, Montague presented no evidence that past work-related disputes with Drummond, other than Drummond’s personal animosity toward Montague, unrelated to Drummond’s employment with Kaiser, motivated her actions.

In addition, the court found that the public policy factors underlying the doctrine of respondeat superior did not support the imposition of vicarious liability to Nursefinders under the facts of the case.

The court rejected Montague’s claims that there was a triable issue as to whether Nursefinders failed to properly train Drummond on how to avoid workplace violence. The argument was that because Nursefinders trained Drummond on avoiding workplace violence and the incident occurred, this evidence supported an inference that Nursefinders must have breached its duty to train Drummond in avoiding workplace violence and this breach caused Montague’s injuries. The court rejected this as being speculative and not reasonably deducible.

ANALYSIS

The line between employee conduct that is (and is not) attributable to an employer for purposes of imposing liability is very blury and requires careful scrutiny of the particular facts.

 

Documents Sought In Discovery Were Relevant

Dodd v. Cruz
(Cal. Ct. of App., 2d Dist.), filed February 5, 2014, published February 5, 2014

KEY FACTS

Barry Dodd and Maria Cruz were involved in a motor vehicle accident. Dodd’s complaint alleged that Cruz’s negligent operation of a motor vehicle proximately caused Dodd to sustain personal injuries.

Dodd claimed he sustained a shoulder injury, specifically a torn rotator cuff. He received treatment for this injury from Kaiser Permanente. Later, a physician at Coast Surgery Center of South Bay performed a shoulder surgery on Dodd.

Before the surgery, Dodd did not know what Coast’s charges for the procedure would be. He did know, however, it would be on a “lien basis.” Dodd later learned Coast’s bill was between $40,000 and $50,000.

On the same day as Dodd’s surgery, Coast sold its account receivables and lien against Dodd to Medical Finance LLC (MedFi).

MedFi claims that it is in the business of purchasing account receivables from businesses, including health care providers, “at a discount.” According to MedFi, it expected to be paid by Dodd (and other patients) for 100 percent of the “book value” of the health care provider’s charges “regardless of what the court or jury decides is the reasonable costs” of Dodd’s medical care. However, there was no evidence Dodd agreed that the amount of MedFi’s lien would be the full amount of Coast’s charges.

MedFi’s President is Michael Waks, Dodd’s attorney. One of Coast’s limited partners, Roy Simon, M.D., is the brother of MedFi’s Vice President, William Simon.

Cruz contended that there was an arrangement among MedFi, Waks and Coast that was rife with the potential for collusion. MedFi and Dodd vigorously denied this allegation.

After litigation commenced, Cruz’s attorney served MedFi with a deposition subpoena for production of business records. MedFi filed a motion to quash as to certain records. The trial court granted the motion on the ground that the information sought by the subpoena was irrelevant. The court also sanctioned Cruz and her attorney for having necessitated the motion.

HOLDING & REASONING

The Court of Appeal reversed both the sanction award and the ruling on the motion to quash.

The court first examined its authority to review the ruling on the motion to quash. The court concluded that it did have authority. While a discovery order is ordinarily not separately appealable, a trial court’s decision on a discovery matter can be reviewed on appeal if it “necessarily affects” an appealable order. The sanction order was an appealable order and if the motion to quash should not have been granted, it was error to impose sanctions.

Having thus found it could review the order granting the motion to quash, the court turned to the merits. It found that the deal between Coast and MedFi was relevant as it was reasonably calculated to establish the reasonable value of the medical services Dodd received from Coast. Reasonable value was relevant because damages for past medical expenses are limited to the lesser of: (1) the amount paid or incurred for past medical expenses; and (2) the reasonable value of the services. (The amount a health care provider bills a plaintiff for its medical services is not relevant to the amount of the plaintiff’s economic damages for past medical services because a medical care provider’s billed price for particular services is not necessarily representative of either the cost of providing those services or their market value.)

The court noted that an expert Cruz retained might base his or her opinion about the reasonable value of Coast’s medical services, at least in part, on the amount Coast accepted from MedFi as full payment for its services. It also noted that Cruz is entitled to obtain documents relating to MedFi’s collection activity and policies and procedures, because they may support Cruz’s position that Dodd was not actually responsible for the full amount billed.

The court expressly declined to address the question of whether the documents might also show collusion.

Finally, the court rejected MedFi’s argument that the documents demanded contained “confidential and proprietary” information. It did so because MedFi did not make a legally cognizable, reasoned argument or cite any legal authority to support this objection in their joint brief.

ANALYSIS

Unusual fact situation results in a case that could serve as valuable authority in connection with litigants’ discovery activities when an opponent objects that something is “irrelevant.”

 

 

Other Cases Of Interest

A Medical Malpractice Action Was Not Untimely

Maher v. County of Alameda
(Cal. Ct. of App., 1st Dist.), filed February 18, 2014, published February 18, 2014

Brendan Maher was injured by a gunshot in Berkeley, California on May 24, 1996. He was transported by ambulance to the hospital where he underwent medical procedures related to his injuries. A biliary stent was placed in Maher’s body. Maher was unconscious or otherwise incapacitated secondary to his injuries when the stent was implanted.

Maher remained inpatient until July 10, 1996, when he was transported by ambulance to a rehabilitation facility. He remained there until August 8, 1996. Following his discharge from the rehabilitation facility, Maher received outpatient treatment until February 12, 1997.

On August 10, 2010, Maher went to the emergency room at Kaiser Hospital in Los Angeles, California because of abdominal pain and vomiting. Blood tests indicated his liver enzyme level was consistent with biliary obstruction and follow-up imaging revealed the biliary stent in his body.

In April 2011, Maher sued the health care providers who treated him in 1996 and 1997 for professional negligence in not timely removing the stent, or informing him of its placement and the fact it was designed to be temporary.

The defendants successfully demurred based on the expiration of the statute of limitations grounds

The Court of Appeal reversed. It found that Code of Civil Procedure section 340.5’s “foreign body” exception applied. Therefore, it found that Maher’s action was not time-barred.

 

Damages Were Not Foreseeable

Ash v. North American Title Company
(Cal. Ct. of App., 2d Dist.), filed February 18, 2014, published February 18, 2014

Richard Lerner, as trustee of a trust, contracted to sell trust property to David Ash, the trustee of another trust. The sale was part of a transaction authorized by federal law, the purpose of which was designed to defer the capital gains tax on Ash’s sale of another property. To facilitate the transaction, the proceeds of the sale of Ash’s other property had been deposited in a segregated account with a “qualified exchange intermediary.”

The sale was to close on a given Friday.

Lerner allegedly breached the real estate sales contract with Ash by delaying the close of the escrow so that it did not close on the agreed-upon Friday set forth in the contract.

On the Monday after the sale had been scheduled to close, the intermediary closed and then filed for bankruptcy. The bankruptcy court did not release Ash’s money until after it was too late to qualify for deferral of taxes.

Ash sued Lerner and the escrow company.

A jury found Lerner and the escrow company at fault for the escrow not closing on time – i.e., on Friday – and awarded Ash damages against Lerner for the delay, including the loss of the tax benefits. The jury also found the escrow company liable for breach of fiduciary duty and awarded Ash damages against it for losses resulting from the delay in the closing of escrow.

The Court of Appeal reversed in part. First, there was insufficient evidence that the contract damages assessed against Lerner, resulting from the intermediary’s bankruptcy and resulting loss of tax benefits, were foreseeable. Second, as to the escrow company, the trial court failed to instruct the jury on an intervening and superseding cause, to wit, the bankruptcy.

 

A Corporation Was Not Properly Served

Ramos v. Homeward Residential, Inc.
(Cal. Ct. of App., 4th Dist.), filed February 20, 2014, published February 20, 2014

Ariel Ramos sued Homeward Residential over the foreclosure of a deed of trust on Ramos’ home.

Ramos’ process server attempted to serve Homeward at an office in Irvine. The process server asked to speak to whomever was in charge of the office. A woman responded to his request and identified herself as being in charge of the office. The process server handed the woman the summons and complaint. She told the process server that she could not accept the documents.

Later, Ramos’ process server mailed a copy of the summons and complaint to Homeward at the Irvine address. However, the copy was not addressed to any officer or named individual but instead was simply sent to Homeward.

When Homeward did not file an appearance, he took its default.

The trial court granted Homeward’s motion to set aside the default based on its conclusion that Ramos had not properly served Homeward.

The Court of Appeal affirmed.

The Code of Civil Procedure provides a number of ways to serve process on a corporation doing business in California. The most common method is by service on the corporation’s designated agent for service of process pursuant to Code of Civil Procedure section 416.10(a).

Alternatively, under section 415.20, a corporation may be served by personally delivering a summons and complaint to those corporate officers, managers and employees identified in section 416.10(b), or by delivering them to someone in charge of the office of one of the individuals identified in section 416.10(b) and then mailing the individual a copy of the summons and complaint.

Ramos did not do so. Rather, the process server simply left a summons and complaint with someone who was in charge of a branch office of the defendant corporation and then mailed the corporation, rather than any individual officer or manager, a copy of the summons and complaint. Thus, Homeward had not been properly served.

 

A Fee Award Was Improper

Concepcion v. Amscan Holdings, Inc.
(Cal. Ct. of App., 2d Dist.), filed February 18, 2014, published February 18, 2014

The Pineda v. Williams-Sonoma Stores, Inc. decision was issued on February 10, 2011. It held that retailers could not ask customers who used credit cards for their purchases for identifying information, including their zip codes.

The next court day, Party City Corporation was sued in a putative class action for requiring customers to provide zip code information to complete credit card purchases. Two days later another similar case was filed against it. The following week, two more were filed. Several months later, another one was filed.

Party City demurred in several of the state court actions, seeking to abate the actions on the ground another, earlier filed action was pending and also sought to dismiss or stay the federal action. The district court ruled the federal case should proceed. The state court cases were coordinated in Los Angeles County Superior Court.

No formal discovery was conducted in the state actions prior to their settlement. However, Party City made available to class counsel the written discovery produced in the federal action pursuant to Federal Rule of Civil Procedure 26. No class certification motions were filed.

There was a one-day mediation. One mediation brief was submitted on behalf of all plaintiffs in the four coordinated state actions and the related federal case. With the assistance of the mediator, the parties reached a tentative class-wide settlement. Party City agreed to issue a total of $300,000 in certificates to the class members and to bear all costs of providing class notice, as well as all costs associated with the administration of the settlement agreement. The parties agreed the court could make an incentive award to each of the class representatives of $3,500. However, no agreement was reached as to the amount of attorney’s fees and costs to be recovered by class counsel. Fees were to be set by the court after a motion and opposition.

Class counsel filed a motion for attorney’s fees and costs, as well as incentive awards to the representative plaintiffs of $3,500. They sought fees under both the terms of the settlement agreement and the private attorney general doctrine. They requested an aggregate award of attorney’s fees and costs of $350,000. Their moving papers, including declarations from attorneys at each of the law firms representing plaintiffs in the five lawsuits that had been filed, reflected a total of 720 hours in prosecuting the action to date. The amount of the award was based on the lodestar method – the time spent multiplied by the reasonable hourly compensation for the attorneys involved – without an additional multiplier. The hourly rates claimed ranged from $700 per hour for one of the most experienced partners to $350 per hour for several associates.

Party City agreed class counsel was entitled to fair compensation but opposed the motion on the ground the fees and costs claimed were excessive, the time charges duplicative and the declarations inadequate and subject to proper evidentiary objections. Party City noted the amount sought in fees was more than the face value of the settlement itself. It suggested the award be no more than $137,062.80, the amount Party City’s counsel charged (and approximately 40 percent of the award to the settlement class).

The trial court had “issues” with the fee claim and requested detailed billing records be submitted to it for an in camera review. It then awarded all sums requested.

In the ensuing appeal, the Court of Appeal recited that a fee award must be grounded in the first instance on the number of hours reasonably worked multiplied by the reasonable hourly rate for each lawyer involved. This initial calculation requires the court to determine the reasonable, not actual, number of hours expended by counsel entitled to an award of fees. The attorneys are not automatically entitled to all hours they claim in their request for fees. They must prove the hours they sought were reasonable and necessary. The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended. The court even noted that a fee request “that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.”

After making the initial calculation, the court may augment or diminish that amount based on a number of factors specific to the case before it, including the novelty and difficulty of the case, the attorneys’ skill in presenting the issues, the amount involved and degree of success achieved, the extent to which the case precluded the attorneys from accepting other work and the contingent nature of the work.

The attorney fee award need not bear any specific relationship to the dollar amount of the recovery.

It is not necessary to provide detailed billing timesheets to support an award of attorney’s fees under the lodestar method. Declarations of counsel setting forth the reasonable hourly rate, the number of hours worked and the tasks performed are sufficient.

The initial declarations by the class attorneys were insufficient to prove the reasonable number of hours spent. Thus, it was within the trial court’s discretion to request further information. However, the court held: “What was not permissible, however, was for the court to invite an in camera review of time sheets and billing records not also made available to Party City and then to award fees without providing an opportunity for further argument based on the supplemental evidence presented.” And: “Under our adversarial system of justice, once class counsel presented evidence to support their fee request, Party City was entitled to see and respond to it and to present its own arguments as to why it failed to justify the fees requested.”

Because Party City was not provided with the same evidence as the trial court, the appellate court reversed and remanded for further consideration.

 

HMOs Cannot Delegate To Unstable IPAs

Centinela Freeman Emergency Medical Associates v. Health Net of California
(Cal. Ct. of App., 2d Dist.), filed February 19, 2014, published February 19, 2014

Health Net of California is a Health Maintenance Organization (HMO). It contracts with physicians such that the physicians provide medical services to Health Net members.

California law imposes a duty on emergency room physicians to treat patients regardless of their ability to pay. When those patients are enrollees in health care service plans provided by HMOs, the law imposes an obligation on the HMOs to reimburse the physicians for emergency treatment provided to the enrollees, even when the physicians were not under contract to the HMOs.

HMO’s sometimes delegate their health care obligations to independent practice associations (IPAs). HMOs are statutorily permitted to delegate to IPAs their obligation to reimburse emergency physicians.

A number of HMOs delegated their obligation to several related IPAs. At some point, the IPAs began experiencing financial problems and ultimately went out of business.

As the IPAs’ financial problems increased, they failed to reimburse physicians who had provided emergency services to their enrollees. The unpaid emergency physicians sought payment from the HMOs, which simply instructed the physicians to continue presenting their bills to the IPAs, even though it was clear that the IPAs would not be able to pay those bills. As they were required to do by law, the physicians continued to render emergency services to enrollees in the IPAs, and the IPAs continued to fail to reimburse them.

The physicians eventually sued the HMOs. They asserted causes of action for, among other things, negligent delegation. The HMOs successfully demurred to the complaint, and the physicians appealed.

The Court of Appeal held that where: (1) a physician is obligated by statute to provide emergency care to a patient who is enrolled in both an HMO and an IPA with whom the physician has no contractual relationship; (2) the physician provides emergency care to the patient; (3) the HMO, which has a statutory duty to reimburse the physician, chose to delegate that duty to an IPA it knew, or had reason to know, would be unable to fulfill the delegated obligation; and (4) the IPA fails to make the necessary reimbursement, the HMO should bear the resulting loss, not the physician.

In other words, the court held that the HMO has a non-delegable duty to reimburse emergency physicians.

 

There Should Have Been A Special Verdict

Vollaro v. Lispi
(Cal. Ct. of App., 2d Dist.), filed February 26, 2014, published February 26, 2014

Maureen Lispi rear-ended a car in which Ciara Vollaro was a passenger. Vollaro sued for personal injuries. Lispi asserted that the driver of the car in which Vollaro was a passenger had stopped suddenly and that as a result the driver of that car shared some of the fault for Vollaro’s non-economic injuries.

At trial, the court declined to use a special verdict form in which the jury was asked to decide if the other driver was negligent and, if so, to apportion fault.

The Court of Appeal held that this failure constituted prejudicial error. It affirmed in part, reversed in part, and gave specific instructions to the trial court.

When it renders a special verdict, the jury must make specific factual findings such that all that is then left for the court is to draw conclusions of law from them. The requirement that the jury must resolve every controverted issue is one of the recognized pitfalls of special verdicts. The problem is that the possibility of a defective or incomplete special verdict, or possibly no verdict at all, is much greater than with a general verdict.

Nonetheless, Lispi was entitled to a special verdict because the lack of one may have meant that she would have to pay for damages that were properly attributable to the driver of the car in which Vollaro was a passenger.

The court held that Lispi’s failure to file a cross-complaint against the other driver did not preclude her from seeking an apportionment of liability for non-economic damages.

The court also held that Lispi’s testimony that the other car stopped suddenly was sufficient to put the other driver’s potential liability in issue such that a jury could have found some portion of the fault fell on the other driver.

 

Surfing The Internet Is Permissible

People v. Spriggs
(Cal. Ct. of App., 5th Dist.), filed February 27, 2014, published February 27, 2014

While stopped in heavy traffic, Steven Spriggs pulled out his wireless telephone to check a map application for a way around the congestion. A California Highway Patrol officer spotted him holding his telephone, pulled him over, and issued him a traffic citation for violating Vehicle Code section 23123(a), which prohibits drivers from “using a wireless telephone unless that telephone is specifically designed and configured to allow hands-free listening and talking, and is used in that manner while driving.” Spriggs asserted that he did not violate the statute because he was not talking on the telephone.

The Court of Appeal agreed. It reviewed the Vehicle Code and its legislative history and concluded that only certain uses of wireless telephones were prohibited and that using an application or even surfing the internet was not within the prohibitions of the statute.

 

Freedom Of Speech Exists In Schools – To A Certain Extent

Dariano v. Morgan Hill Unified School District
(9th Cir. Ct. Apps.), filed February 27, 2014, published February 27, 2014

On May 5, 2010, several students at Live Oak High School, in the Morgan Hill Unified School District, wore shirts with pictures of the American Flag on them. This coincided with the Mexican holiday of Cinco De Mayo.

Because of threats of violence against these students by Mexican or Mexican-American students, school administrators asked the students to remove their shirts, wear them turned inside-out, or to go home.

The students brought a civil rights suit against the school district and two school officials, alleging violations of their federal and state constitutional rights to freedom of expression, equal protection, and due process.

The District Court granted a summary judgment in favor of the school district and school officials.

The Ninth Circuit Court of Appeal affirmed.

The United States Supreme Court has held that high school students had a First Amendment right to protest the war in Viet Nam by wearing black armbands in school.

Nonetheless, the Ninth Circuit held that school officials anticipated violence or substantial disruption of or material interference with school activities, and their response was tailored to the circumstances. As a consequence, the court concluded that school officials did not violate the students’ rights to freedom of expression, due process, or equal protection.