$17,000 restaurant dumpster ramp

editor@overlawyered.com (Walter Olson) — Thu, 22 Mar 2012 12:16:26 GMT

Because it’s important to keep future wheelchair-using employees in contention for the task of hauling the trash out back, and also because money spent on compliance doesn’t really count as money the way, say, an agency’s budget does. [Patterico] Tags: California, disabled rights Related posts Protest a group home, get investigated for housing bias (6) July 8 roundup (5) Disabled [...]

Tags: California, disabled rights

Security theater? Claims to offer protection are mere puffing

rit26@law.georgetown.edu (Rebecca Tushnet) — Tue, 20 Mar 2012 20:18:17 GMT

Jhaveri v. ADT Sec. Services, Inc., 2012 WL 843315 (C.D.Cal.)

The Jhaveris contracted with ADT for home security services. ADT promised to notify them of any alarm activation at their home, and if ADT could not reach them, ADT would immediately dispatch the police and ADT Security Services patrol. ADT received an alarm notification in December 2010, and dispatched a patrol officer to investigate. The patrol officer reported that there was no problem despite the presence of stacked furniture and broken windows, and only did a perimeter check even though the alarm was triggered inside the master bedroom closet. ADT didn’t contact the police and failed to notify the Jhaveris by cell phone of the alarm activation as protocol required. The Jhaveris alleged that, as the result of this deficient response, they suffered millions of dollars in damages.

The court dismissed a bunch of counts; I’ll only discuss the false advertising claims under state law. The allegations of false advertising were based on ads claiming that ADT is the “# 1 security company in America,” and would help Plaintiffs “protect [their] home and family, 24 hours a day, 7 days a week”; that ADT was “the electronic security industry's undisputed leader and standard bearer”; and that ADT's “well deserved reputation for excellence” was grounded upon its ability to provide “the very best in systems and services to all [their] valued customers.” These statements were all puffery: “generalized statements of superiority upon which no reasonable consumer would rely.” The 24-hour, 7-day claim was a non-actionable future promise. (This last can’t really be true: most ad claims are promises of future performance, and those that aren’t explicitly so are implicitly, since very few people want to buy a product that was good but is now bad.)

California Assembly Considers a Range of Food Legislation

Tue, 20 Mar 2012 12:43:34 GMT

The Sacramento Bee ran a front-page story today about proposed legislation that would alter how the state regulates food production and sale. Here's an excerpt from Torey Van Ort's story:

California is no stranger to major food policy measures, including a ban on foie gras that is set to go into effect later this year. But heightened interest in food issues, including the farm-to-table movement and demands for increased disclosure, are driving more proposed changes.
"I think in recent years, there's been an awareness that buying local is good for you and also good for the environment," said Assemblyman Mike Gatto, who is carrying a bail that would lift restrictions on selling homemade prepared foods. "I think that as families have realized that, certainly the Legislature has heard from constituents."

Van Ort goes on to describe Gatto's bill to permit the sale of so-called "cottage food products," including granola, baking mixes, baked goods, mixed nuts, preserves and roasted coffee made in individuals' homes. The law would give public health officials the authority to inspect home kitchens. Van Ort also provides a national perspective on the proposed law, noting that while California prides itself for being on the vanguard in food and ag matters, cottage food industry bills are all the rage in statehouses around the nation these days.

The story also details other food-related initiatives in California:

Senator Bill Emmerson, R-Hemet, has a resolution urging stricter federal standards in relation to the mislabeling of gluten-free foods.
Senator Ted Lieu, D-Torrance, is pursuing legislation aimed at ensuring that diners know the source of harvest for fish served in restaurants. He cites concerns about contamination and the lack of fishing regulations in some parts of the world.
"A coalition is seeking to qualify an initiative for the November ballot that would mandate labeling for genetically modified foods. Supporters have poured nearly $1.3 million into the effort, including $500,000 from a Chicago man who runs a natural health website."

California Assembly Considers a Range of Food Legislation

Tue, 20 Mar 2012 12:43:34 GMT

The Sacramento Bee ran a front-page story today about proposed legislation that would alter how the state regulates food production and sale. Here's an excerpt from Torey Van Ort's story:

California is no stranger to major food policy measures, including a ban on foie gras that is set to go into effect later this year. But heightened interest in food issues, including the farm-to-table movement and demands for increased disclosure, are driving more proposed changes.
"I think in recent years, there's been an awareness that buying local is good for you and also good for the environment," said Assemblyman Mike Gatto, who is carrying a bail that would lift restrictions on selling homemade prepared foods. "I think that as families have realized that, certainly the Legislature has heard from constituents."

The story also details other food-related initiatives in California:

Senator Bill Emmerson, R-Hemet, has a resolution urging stricter federal standards in relation to the mislabeling of gluten-free foods.
Senator Ted Lieu, D-Torrance, is pursuing legislation aimed at ensuring that diners know the source of harvest for fish served in restaurants. He cites concerns about contamination and the lack of fishing regulations in some parts of the world.
"A coalition is seeking to qualify an initiative for the November ballot that would mandate labeling for genetically modified foods. Supporters have poured nearly $1.3 million into the effort, including $500,000 from a Chicago man who runs a natural health website."

Class action against alcohol/caffeine blend not preempted

rit26@law.georgetown.edu (Rebecca Tushnet) — Tue, 20 Mar 2012 12:39:17 GMT

Cuevas v. United Brands Co., Inc., 2012 WL 760403 (S.D.Cal.)

Cuevas (there’s a spelling inconsistency in the opinion, but I’m going with the caption) brought a putative class action against United Brands for selling a flavored caffeinated alcoholic beverage, JOOSE, which had 9.9-12% alcohol by volume and about 125 mg of caffeine (lowish end of a cup of coffee, more than 3x than in a Coke). Joose went on the market in late 2007, and in November 2010, the FDA sent defendant a warning letter stating that “based on the publicly available literature, a number of qualified experts have concerns about the safety of caffeinated alcoholic beverages.” Studies indicated that caffeine reduces subjective perception of intoxication but didn’t improve diminished motor coordination or slower visual reaction times. The FDA concluded that, as used, caffeine was an unsafe food additive, rendering the product adulterated. United Brands discontinued shipping Joose.

Cuevas bought three cans of Joose in 2010, and alleged that she saw ads and looked at the labeling before she bought. She alleged that defendant failed to disclose the amount of caffeine in the product or the risks associated with caffeine added to an alcoholic beverage, and that these would have been material to her decision to buy.

The court rejected defendant’s motion to dismiss. First, federal alcohol labeling law didn’t preempt the claims. Federal law mandates the warning on alcoholic beverages, and bars other state requirements for any statement “relating to alcoholic beverages and health” on a container. Because ads and consumer protection are traditionally state regulatory areas, the court applied a presumption against preemption. The court read federal law as covering statements regarding health risks “associated with consuming or abusing alcohol.” However, there was no reason to think Congress intended to ban warnings “regarding other non-alcoholic ingredients in an alcoholic beverage that may have adverse health effects in and of themselves or when combined with alcohol.” Cuevas was arguing that United Brands should have warned about the interaction of caffeine and alcohol, not about alcohol per se. Thus, there was no preemption, either express or implied. (And to the extent her claims were based on ads other than packaging, they clearly weren’t preempted, since—unlike federal cigarette law—federal alcohol law doesn’t address warning statements in advertising or promotion.)

Cuevas also had standing under the UCL because she alleged sufficient economic injury in that she bought something she wouldn’t have bought if she’d known the truth. She properly alleged a violation of the CLRA from failure to disclose a material fact that was within defendant’s superior knowledge. (In a footnote, the court held that Rule 9(b) applied, and that plaintiff’s allegations regarding ads she saw lacked the requisite specificity, but she did specifically allege that she looked at the product containers before buying them and that there were no warnings; the complaint included pictures of the labels of those specific products.)

Finally, though she didn’t state a claim for breach of express warranty, she did state a claim for breach of the implied warranty of merchantability. California law bars a product liability action if a product is inherently unsafe and known to be so by the ordinary consumer, and the product is also a common consumer product intended for personal consumption, “such as sugar, castor oil, alcohol, and butter.” United Brands argued that this provision barred plaintiff’s claim, but the court disagreed, as it had with the preemption argument: “Plaintiff's claims are not based on the inherent dangers of alcohol but on the undisclosed effects of caffeine and alcohol combined.” Indeed, the Restatement (Second) of Torts, from which this provision is derived, specifies that adulterated products can be unreasonably dangerous: “Good whiskey is not unreasonably dangerous merely because it will make some people drunk, and is especially dangerous to alcoholics; but bad whiskey, containing a dangerous amount of fuel oil, is unreasonably dangerous.”

PG&E Announces Plans to Issue 2012 Solar PV RFO

whholmes@stoel.com (William H. Holmes) — Tue, 20 Mar 2012 00:11:49 GMT

Pacific Gas & Electric Company (PG&E) announced today that it expects to issue its 2012 Solar Photovoltaic PPA RFO (“PV PPA RFO”) in late March or April . PG&E's goal in this second round of the RFO is to procure 50 MW of new PV generation.

Two of the eligibility requirements of the PV PPA RFO are (1) that participants provide proof that an interconnection application has been filed, and (2) that participants must pursue Resource Adequacy for their projects. If you need to file an application, note that the current Cluster 5 window closes March 31, 2012. For program information, please visit PG&E’s 2012 PV PPA RFO website. Among other things, PG&E notes on the RFO website that it has developed an interactive, Google-based map of its service territory as a tool to help renewable energy developers identify potential project sites (although the map is not a guarantee that generators can interconnect at any particular time and place).

PG&E plans to conduct a Participants’ Webinar to discuss the 2012 PV PPA RFO shortly after its issuance. Registration for this event will be posted on the 2012 PV PPA RFO website at a later date.

Significant Insurance Bills Being Considered by California Legislature

Mon, 19 Mar 2012 21:33:01 GMT

California legislators will consider a variety of insurance-related issues before the 2012 legislative session ends on August 31, 2012.

Hundreds of bills were introduced prior to last month’s deadline for bill introduction. Many of the newly introduced bills would affect insurers doing business in California.

Most bills propose specific statutory changes. However, as is typical at this point in the legislative process, a number of bills merely contain general language. These so-called “spot bills” will be amended to include specific statutory changes later during the legislative session.

Here are seven newly introduced bills that merit insurers’ attention. These bills are not yet scheduled for hearings.

SB 1172 is a spot bill. It is expected that the bill will be amended to include provisions which would give the insurance commissioner the power to order an insurer or agent to pay restitution for Insurance Code violations and would grant the insurance commissioner authority to force the insurer or agent to pay the Department of Insurance’s attorney’s fees and costs related to the restitution order. These provisions were contained in SB 631, which failed to pass last year.

SB 1448 would make numerous changes to California’s insurance holding company statutes. Among other things, SB 1448 would require an insurer that is a member of a holding company to file with the insurance commissioner statements affirming the maintenance of corporate governance and internal control procedures. SB 1448 also would require an insurer’s ultimate controlling person to file an annual enterprise risk report that identifies material risks within the holding company that could pose risk for the insurer.

SB 1449 would enact the Interstate Insurance Product Regulation Compact. Enactment of the Compact would result in California’s membership in the commission that establishes uniform standards for the review and approval of products relating to life insurance, annuities, disability insurance and long-term care insurance.

SB 1460 would enact new statutes relating to the use of replacement crash parts that are not manufactured by the original equipment manufacturer (non-OEM crash parts). The bill would give statutory recognition to certified new non-OEM crash parts.

SB 1528 would allow a plaintiff in a liability lawsuit to recover the reasonable cost of the medical services provided to the plaintiff without regard to the amount that was actually paid for the services. The bill would nullify the California Supreme Court’s 2011 decision in Howell v. Hamilton Meats & Provisions, Inc., which held that a plaintiff’s recovery for medical damages is limited to the amount the medical care provider accepted for medical services. See this blog’s recent discussion of the Howell decision here.

AB 1687 would authorize the Workers’ Compensation Appeals Board to award attorney’s fees to a workers’ compensation applicant who is involved in a dispute over the appropriateness of medical treatment.

AB 2160 would require the insurance commissioner to treat a domestic insurer’s indirect investments in Iran as non-admitted assets on the financial statements the insurer files with the commissioner. See this blog's recent update here.

Many bills introduced last year are still pending before the Legislature. Two measures are especially noteworthy for insurers.

AB 52 would require health service plans and health insurers to obtain the insurance commissioner’s prior approval of rate changes. AB 52 was passed by the Assembly. The bill is now in the Senate Inactive File.

AB 53 would require each admitted insurer with premiums of $100,000,000 or more to file with the insurance commissioner a report on its minority, women and disabled veteran-owned business procurement efforts. AB 53 was passed by the Assembly. The bill is now pending before the Senate Rules Committee.

Who’s (potentially) defying whom?

rit26@law.georgetown.edu (Rebecca Tushnet) — Mon, 19 Mar 2012 15:55:09 GMT

Bruno v. Eckhart Corp., 2012 WL 752090 (C.D. Cal.)

Mazza fallout: The district court previously certified a nationwide class, and the defendants moved to decertify based on Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012). The court disagreed: Mazza was not a material change in the law. Mazza couldn’t and didn’t change state substantive law, or state law as interpreted by the 9^th Circuit, and to rule otherwise would contradict CAFA. Mazza was also distinguishable on its facts.

Bruno bought “a liquid product that claimed on its packaging to have six times better absorption and effectiveness than the equivalent active ingredient in competing brands” and later sued claiming that these statements were misrepresentations. The court certified a nationwide class for UCL, CLRA, and breach of express warranty claims, finding due process satisfied and thus that the burden shifted to the defendant to show that the laws of another state should apply. California choice of law rules require a court to determine whether the relevant law is the same or different across jurisdictions, and then analyze whether there’s a true conflict. The court held that defendants didn’t meet their burden on showing differences; they only cited another court’s conclusion that material conflicts between state consumer protection laws existed. That wasn’t enough to show a conflict “on the facts of this case.” Mazza, by contrast, featured a defendant that “exhaustively detailed the ways in which California law differs from the laws of the 43 other jurisdictions.” The plaintiffs didn’t contest those differences or their applicability.

Federal courts sitting in diversity must follow substantive state law as announced by the highest court of the state, which is the final authority; the federal court of appeals is not. Defendants interpreted Mazza to mean that, as a matter of law, they had no further burden in the choice of law analysis; that California consumer protection laws materially differ from other states’ in all cases; and that other states had a greater interest in the application of their law in all cases.

However, the California Supreme Court had expressly ruled on the two key ponts of state law: once due process is satisfied, the choice of law analysis places the burden on the defendant to show that another state's law, rather than California law, should apply to class claims. Moreover, California choice-of-law analysis must be conducted on a case-by-case basis because it requires analyzing various states' laws “under the circumstances of the particular case” and given “the particular [legal] issue in question.” Mazza couldn’t and didn’t change these rules. Indeed, Mazza quoted the relevant California Supreme Court case on the burden in determining choice of law, a matter of substantive state law. “[T]he language of Mazza does not show that the Ninth Circuit was tempting a United States Supreme Court reversal by ignoring or changing state law. Rather, Mazza acknowledged that California law requires the defendant to show that differences in state law are ‘material,’ that is, they ‘make a difference in this litigation.’” Defendants couldn’t “substitute Mazza’s holding in lieu of Defendants' own careful analysis of choice-of-law rules as applied to this particular case.” The court also noted that district courts have routinely applied California consumer protection laws to nationwide classes. “If Mazza was intending to abrogate these holdings, one would expect the Ninth Circuit to have distinguished—or at least mentioned—these cases, which contain excellent reasoning in their choice-of-law analysis and have been cited approvingly several times.”

Anyway, even assuming that Mazza could override California substantive law, a three-judge panel can’t overrule prior 9^th Circuit precedent, which also requires defendants to prove a material difference between California and other states’ laws on the facts of a case.

Defendants’ position would also conflict with CAFA, which has as a goal to “assure fair and prompt recoveries for class members with legitimate claims.” Eliminating a case-specific inquiry would “preclude the certification of nationwide classes in CAFA class actions based on the causes of action at issue in Mazza. The Court resists Defendants' urging to read CAFA's express purpose as merely an Orwellian pretense that offers consumers nothing but an empty promise.”

In the alternative, the court found Mazza distinguishable, even though it was brought under the same consumer protection laws. Defendants’ arguments and the facts were both different. Defendants failed to analyze California and other states’ laws as applied to this case, and thus didn’t meet their burden of showing material differences. Citing a case reaching the legal conclusion they wanted wasn’t sufficient. “Defendants cannot profitably rely on the work of a different party in a different case with different facts—or on the Ninth Circuit finding error in a district court rejecting an argument Defendants did not themselves present to this Court—to correct their failure…. Because Defendants provided no law from any jurisdiction, Plaintiff had nothing to contest. Thus, unlike in Mazza, Defendants here can not contend that Plaintiff conceded the material differences between California and other states' laws.”

In conclusion, the court commented: “Defendants seek to deprive consumers in several states who were exposed to misrepresentations of the most efficient vehicle for adjudication of their injury: a nationwide class action. Before this Court deals such a devastating blow to the consumer, the California Supreme Court requires that Defendants analyze various states' laws ‘under the circumstances of the particular case’ and given ‘the particular [legal] issue in question.’”

Glenn Neasham Case: From Successful Insurance Practice to Food Stamps

structures@aol.com (John D. Darer) — Fri, 16 Mar 2012 19:02:06 GMT

California's insurance department has revoked the insurance license of Glenn Neasham, who was convicted of felony grand theft of an elder for selling an Allianz Masterdex 10 indexed annuity to an...

This is a content summary only. Please click on the title for the full content, If you find yourself on FAEMM community, back out and type in www. structuredsettlements.typepad.com

San Diego Bay Cleanup Ordered After Over 20 Year Fight

Fri, 16 Mar 2012 15:43:49 GMT

Regional Water Quality Control Board Orders Cleanup of San Diego Bay When outsiders think of San Diego, I am certain that the first image that comes to mind is pristine beaches and summertime all year long. This image is not entirely misplaced. In fact, writing this post makes me long for the year long temperate [...]

Regional Water Quality Control Board Orders Cleanup of San Diego Bay

When outsiders think of San Diego, I am certain that the first image that comes to mind is pristine beaches and summertime all year long. This image is not entirely misplaced. In fact, writing this post makes me long for the year long temperate weather and vast array of outdoor parks, trails, and simply breathtaking beaches.

But conjuring up that image doesn’t accurately capture the whole picture. In fact, as a first year law student, I had the immense pleasure and amazing opportunity to intern for the San Diego Coastkeeper (SDCK), an environmental water quality non-profit. During the course of my semester long internship, I wrote various demand letters and memoranda about different issues that Coastkeeper had decided to pursue.

One of my assignments dealt with the precarious situation surrounding the San Diego Bay. While a study had been conducted, and by the time I interned it was well known that the Bay was contaminated with toxic pollutants, and even who the Potentially Responsible Parties (PRPs) were, no action had been taken by the Regional Water Quality Control Board, the state entity responsible for safeguarding the water supply.

While I can’t remember the particular circumstances surrounding my assignment, I know it dealt with the relevant state statutes and case law on the matter, and eventhough I knew relatively little about “the law” at the time, it seemed fairly clear that the odds were in our favor. Well, that was five years ago. And, comparatively speaking, my exposure to the issues was but a drop in the bucket when measured against the more than 20 year battle to clean up the Bay.

Thanks to facebook, this week I learned that the Water Board unanimously ordered a cleanup of 143,400 cubic yards of toxic sediments from the bottom of the San Diego Bay. As the SDCK’s blog states:

San Diego Bay is listed under the federal Clean Water Act for 20 separate pollutants including sediment toxicity, copper, mercury, PAHs, PCBs, zinc, chlordane and benthic community effects. Due to the fish contamination from the pollutants, the Port of San Diego posted all piers along San Diego Bay with fish consumption advisories. However, because residents still catch and eat fish from the bay, they continue to be exposed to serious human health risks. The bay also plays a major role in San Diego County’s tourism economy, which depends on clean and safe coastal waters to attract visitors.

Justice Perseveres

Aside from having actually volunteered for this organization on this matter, I thought that this story was particularly encouraging, because it shows how perseverance can eventually pay off. Eventhough someone might have known more than 2o years ago that the contamination in the Bay exceeded legal limits, who was to blame, and who could resolve the issue, it was not immediately resolved. Instead, it took many many years, and probably at least double the amount of staff, volunteers, lawyers, scientists, and other willing participants to never give up hope that their actions might eventually rectify the situation.

Of course, the irony of the recent release of The Lorax movie is also not lost on the situation, “Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.” Here’s to a cleaner Bay!

Click to learn more about Environmental Law.

Tasting Rooms Not Restaurants Says California Appeals Court

jwstorms@stoel.com (Jake W. Storms) — Thu, 15 Mar 2012 16:45:35 GMT

In a recent 3-0 decision, a California Appeals Court sided with Freemark Abbey Winery in its attempt to move its wine store and tasting room into a building in St. Helena which already contained a restaurant. The decision reversed the district courts granting of a preliminary injunction which would have stopped Freemark’s move entirely until a trial.

The building is owned by Freemark and the move was challenged by Silverado Brewing Co., the current operator of the existing restaurant. The challenge stems from Silverado’s lease, which gives it exclusive rights to run a restaurant in the building. Silverado claimed that moving Freemark’s tasting room into the same building would violate that exclusivity.

The court based its decision on the word “purvey” which, it stated, in this context simply meant selling. Any other reading, said the court, would lead to “absurd results.” The decision remanded the case back to district court with an order to vacate the broad preliminary injunction the district court had previously granted and an order to institute a new narrow injunction which would “prohibit[s] Freemark Abbey from selling food or beverages for consumption on the premises in any portion of the building” pending trial.

A copy of the court decision can be seen here.

March 15 roundup

editor@overlawyered.com (Walter Olson) — Thu, 15 Mar 2012 14:32:11 GMT

Part III of Radley Balko series on painkiller access [HuffPo] “Note: Add ‘Judge’s Nameplate’ to List of Things Not to Steal” [Lowering the Bar] California’s business-hostile climate: if the ADA mills don’t get you, other suits might [CACALA] Bottom story of the month: ABA president backs higher legal services budget [ABA Journal] [...]

Part III of Radley Balko series on painkiller access [HuffPo]
“Note: Add ‘Judge’s Nameplate’ to List of Things Not to Steal” [Lowering the Bar]
California’s business-hostile climate: if the ADA mills don’t get you, other suits might [CACALA]
Bottom story of the month: ABA president backs higher legal services budget [ABA Journal]
After string of courtroom defeats, Teva pays to settle Nevada propofol cases [Oliver, earlier]
Voting Rights Act has outstayed its constitutional welcome [Ilya Shapiro/Cato]
Huge bust of what NY authorities say was $279 million crash-fraud ring NY Post, NYLJ, Business Insider, Turkewitz (go after dishonest docs on both sides)]

Tags: ADA filing mills, bar associations, California, crash faking, insurance fraud, legal services programs, New York, pharmaceuticals, Voting Rights Act

Stoel Rives Holds California Wine Seminar

jwstorms@stoel.com (Jake W. Storms) — Mon, 12 Mar 2012 21:02:32 GMT

On March 8 and 9, Stoel Rives cosponsored, with Kennedy/Jenks Consultants, the 6th Annual Best Practices for Owning and Operating a Winery, held in Napa, CA. The well attended event covered such topics as valuation, water, energy, and branding. Stoel attorney’s Chris Hermann, John McKinsey, and Jake Storms were all panel speakers with John McKinsey acting as emcee for the second day of the conference.

Mattel Appeals $310 Million Award in Bratz Case, Argues Trade Secret Counterclaim Was Untimely

Mon, 12 Mar 2012 17:51:39 GMT

Mattel recently appealed a $310 million award for its alleged misappropriation of MGA’s trade secrets and MGA’s attorney’s fees and costs in defense of Mattel’s copyright claim. In its opening brief, Mattel requests the Ninth Circuit to vacate or reverse the award on grounds that MGA’s trade secret counterclaim was untimely and barred by the statute of limitations. Mattel also requests that the Court reverse or vacate the trade secret damages award on grounds of insufficient evidence, and reverse or vacate the attorneys’ fees and costs award on grounds that Mattel’s pursuit of its copyright claim was objectively reasonable.

Statute of Limitations

The statute of limitations for trade secret misappropriation under the California Uniform Trade Secret Act (Cal. Civ. Code § 3426.7) is three years after the plaintiff discovers, or should have discovered, the misappropriation.

MGA filed a trade secret counterclaim against Mattel in August 2010, on grounds that Mattel allegedly stole trade secret information about upcoming Bratz Doll lines during toy fairs. Mattel alleged that the statute of limitations accrued in 2004, when MGA had reason to suspect the alleged misappropriation after it hired two Mattel employees that were aware of Mattel’s alleged “toy fair conduct.” Thus, Mattel argues that more than three years had passed and MGA’s trade secret counterclaim was untimely and barred.

In addition, Mattel argues that the district court erred when it found that MGA’s trade secret counterclaim compulsory and related back to Mattel’s own trade secret claim in 2006, because the two sets of claims involved different trade secrets that were allegedly stolen at different places and times; by different actors; and through different means.

Insufficient Evidence for Judgment of Trade Secret Liability and Damages

Mattel also requests that the Ninth Circuit reverse or vacate the judgment of Mattel’s trade secret liability. Mattel writes in its brief that the “evidence was insufficient to support the jury’s verdict that each of the 26 products on which it found liability and damages was a trade secret.” Mattel acknowledges that MGA provided evidence that MGA generally made reasonable efforts to protect its trade secrets at toy fairs by protecting information from the press, locking products in separate rooms, and requesting visitors to sign Non-Disclosure Agreements. Mattel argued that the evidence, however, failed to demonstrate that MGA took these reasonable efforts of protection for each of the 26 products the jury found liability and damages.

In addition, Mattel argues that the evidence is insufficient to support the $85 million for trade secret damages because there is no evidence of identical uniform damages of $3.4 million for each of the 26 products. Mattel requests that the Court vacate or remand the trade secret damages award for a new trial limited to determining damages on these 26 trade secrets.

Attorneys' Fees and Costs

Finally, Mattel argues that the $137.2 million in attorneys’ fees and costs awarded to MGA under the Copyright Act for MGA’s defense against Mattel’s copyright claims should be reversed or vacated. Section 505 of the Copyright Act grants courts the discretion to award reasonable attorney’s fees and costs to a prevailing party. The 9th Circuit requires that courts shifting copyright fees and costs to consider the objective unreasonableness, frivolousness, motivation and need for deterrence. Mattel argues that its copyright litigation against MGA was objectively reasonable considering Mattel prevailed before the first, jury, obtained substantial relief, and had the Appellate Court remand the case for a new trial.

MGA has yet to file its response brief. This appeal merits attention and we will keep you updated.

California Federal Court Ships California Employee's Declaratory Relief Action Seeking To Invalidate His Non-Compete To Pennsylvania

Fri, 09 Mar 2012 00:50:13 GMT

On February 27, 2012, a California federal judge for the Northern District of California, decided the case of Hegwer v. American Hearing and Associates, finding that the alleged illegality of a non-compete clause in an employment agreement involving a California employee has no bearing on a legal forum selection clause. Accordingly, the Court transferred the employee's declaratory relief action to Pennsylvania federal court.

Plaintiff Jay Hegwer initially filed suit against his former employer, Defendant American Hearing and Associates alleging three state claims: declaratory relief, fraud, and unfair business practices.

According to the court's decision, Hegwer had been searching for a job in early 2010, and contacted a corporate recruiter, John Frank, who passed his resume to David Young, the regional manager for AHAA. Young contacted Hegwer to arrange an interview, and at the time, Hegwer advised him that he required a salary of $150,000. Young and Frank both informed Hegwer that the associate manager position they were considering him for paid a base salary of $100,000 per year, but that he could expect to earn $50,000 in commissions annually. Hegwer was hired as an associate manager, and signed an employment agreement containing a provision stating that all litigation arising out of or related to the agreement would take place in Chester County, Pennsylvania. The agreement also contained an arbitration clause, a non-solicitation/non-competition clause, and a choice of law clause specifying the agreement was governed by Pennsylvania law.

According to the decision, soon after he was hired, Hegwer went to Pennsylvania for a training session led by another employee, Deonda Weldon (“Weldon”). Weldon allegedly told Hegwer that only one company employee actually made any sort of commission, and that if he truly expected to make $50,000 in commissions, he should just “quit now.” In June, Hegwer was terminated for allegedly sexually harassing a fellow trainee, a claim he believes was fabricated by Weldon.

Hegwer filed suit in California state court, in Marin County. AHAA removed the case to federal court on the basis of diversity jurisdiction, and then moved to have the case dismissed for improper venue, or to be transferred to Pennsylvania.

Hegwer argued that the forum selection clause should not be enforced because the other provisions of the employment agreement, including the arbitration, non-compete and non-solicitation clauses, were unenforceable under California law. The court dismissed this argument, finding that whether other provisions of the agreement were unenforceable was irrelevant to the enforceability of the forum selection clause. Hegwer also argued that the enforcement of the forum selection clause would prevent him from having his day in court, since the case would be sent to arbitration. The court found this argument speculative and unpersuasive.

Finally, Hegwer argued that he would not be able to pursue the case if it took place in Pennsylvania, because of the extensive travel costs. The court found that given Hegwer currently resides in Wyoming, the cost would be similar to travel to either Pennsylvania or California, and as a result, Hegwer had failed to show that enforcement would deprive him of his day in court.

Ultimately, the court found the forum selection clause was enforceable, and venue was improper in California. The court relied on M/S Bremen v. Spata Off-Shore Co., where a forum selection clause is considered unreasonable, and thus, unenforceable if: the inclusion of the clause was a product of fraud, undue influence, or an imbalance of power, (2) the forum is so gravely difficult and inconvenient that the party challenging the clause will for all practical purposes be deprived of its day in court, or (3) the clause would contravene a strong public policy of the forum where the suit was brought. 407 U.S. 1, 15 (1972). Here, Hegwer failed to show the clause was gravely inconvenient, and therefore the case was transferred to the Eastern District of Pennsylvania.

The court’s ruling in Hegwer is in line with traditional rulings on the subject. The courts have routinely rejected notion that “expense or inconvenience of prosecuting an action in the designated forum" rises to the level of depriving one’s day in court. R.A. Argueta v. Banco Mexicano, 87 F. 3d 320 (9th Cir. 1996).

FSMA And Prop 65 At The GMA Conference

lnsmith@stoel.com (Lee Smith) — Thu, 08 Mar 2012 23:32:13 GMT

Attorneys Lee N. Smith and Melissa A. Jones participated in the GMA 2012 Food Claims and Litigation Conference in Dana Point. Mr. Smith (his real name) spoke on the effect of the New Food Safety Modernization Act and its potential impact on litigation, and Ms. Jones (her real name) and Mr. Smith also presented an overview of Proposition 65 and recent developments with particular regard to food products.

How FSMA May effect Litigation

It was our premise that FSMA will affect litigation in two main areas. One related to the threshold standards under the statute, which have yet to be defined in detail by law or regulation and two, related to the potential increase in government actions under those standards and the commensurate increase in related plaintiff litigation.

The areas under FSMA that have similar thresholds are those that trigger recalls (Sec. 206) , reporting to the food registry (Sec. 211), deregistration (Sec 102), additional record review (Sec.101) and finally those that may trigger administrative detentions (Sec. 207). The first four sections are triggered by the reasonable probability standard, which is usually taken to be mean more than 50% or more probable than not; which is a low standard to trigger recalls or reporting. The other standard for detention is “A reason to believe” food is “adulterated or misbranded.” for administrative detentions." We believe that these standards will trigger litigation similar to the Del Monte Fresh litigation where industry challenged the FDA's lack of evidence available to require a detention and recall.

With respect to Prop 65 we discussed the Prop 65 listing process, and recent case law California Chamber of Commerce v. Schwarzenegger et al., 196 Cal. App 4th, 233 (2011) that supports listing that comes directly from listing made under the labor code.

We identified a recent preemption case that found that the regulation of poultry did not in fact pre-empt prop 65 (see Physicians Comm. for Responsible Med. v. McDonald’s Corp., 187 Cal. App. 4th 554 (2010) (federal Poultry Products Inspection Act did not preempt Prop 65 warnings) and discussed the naturally occurring defense under Prop 65 which is difficult and can costly to prove.

We also noted a recent sixty day notice for MEI; which was just listed last year. The chemical 4-MEI is a fermentation byproduct in certain food products including caramel coloring, soy sauce, Worcestershire sauce, wine and ammoniated molasses, as well as ammoniated livestock feed. The chemical is used in the manufacture of pharmaceuticals, photographic chemicals, dyes and pigments, cleaning and agricultural chemicals, and rubber. First Sixty Notice to grocers in Feb. 2012 as to carbonate soft drinks with caramel coloring.

We mentioned the recent listing of Sulphur Dioxide and the current dispute over safe levels. SO₂ is a colorless, nonflammable gas with a pungent odor. As a component of ambient air pollution, SO₂is found in combination with sulfuric acid, sulfur trioxide, ozone, nitrogen dioxide, and particulates, and its presence in ambient air occurs primarily as a result of fossil fuel consumption at power generation and other industrial facilities

• Used in many food products as a preservative including on Cherries and Raisins.

• Should have been listed as an inhalant hazard only.

If you are interested in our slide pack you can find it here.

Sacramento’s Bad Humor Man

editor@overlawyered.com (Walter Olson) — Thu, 08 Mar 2012 14:46:41 GMT

Assemblyman William Monning (D-Carmel) wants to ban food trucks from parking anywhere near where schoolkids might be; under legislation he has proposed, they would need to keep even farther away from schools than medical marijuana dispensaries. Since schools dot the urban scene, a side effect would be to seriously curtail adult access to the trucks, [...]

Tags: California, obesity, schools

California Employment Background checks

Wed, 07 Mar 2012 16:50:23 GMT

As usual California tends to add protections for it’s residents on top of the national standard set by the federal Fair Credit Reporting Act (FCRA). However it’s important to note that the FCRA only applies when an employer has hired an outside agency to conduct the background check. FCRA requires the following:

1) Obtain your permission.
2) Give you notice on a separate document that a report may be required.
3) That you are given the opportunity to consent
4) That you are notified if information in the report is used to make an "adverse" decision about you
5) Get your specific permission if medical information is requested.
6) Give a specific notice if your neighbors, friends, or associates will be interviewed about your "character, general reputation, personal characteristics, or mode of living." This is called an "investigative consumer report" under the FCRA.

Keep in mind the information obtained in the background check usually can only go back 7 years. There are a few exceptions to this up to 10 years for issues such as bankruptcy or insurance policies over a certain dollar amount. Lastly the FCRA states that there is no limit to the number of years your criminal convictions can be reported.

If the employer has decide not to hire you or promote you based on the information obtained in the background check they must issue a "pre-adverse action notice" along with a copy of the background report before an adverse action is taken.

California law has stated that Starting Jan. 1, 1012 the employer provide the web address and telephone number of the third party that conducted the report. If the company does not have a website, you may request that a copy of the privacy policy be mailed to you. Also should you request a copy of the report the company must produce it within 3 days of your request. California law also requires that the report's cover page include:

• A notice in at least 12-point boldface type saying that the report does not guarantee the accuracy or truthfulness of the information, but only that the information was copied from public records.
• A warning that negative information could be the result of identity theft.
• Gives notice of your rights in English and Spanish.

Interestingly enough California has also decided that as of January 1, 1012 credit reports can only be obtained for people applying for specific job titles or functions. (CA Civil Code §1785 et seq.) Again, the employer must give notice that a credit check will be obtained, along with an explanation of why the check is allowed.

If the Employer chooses to conduct its own investigation and forgo a third party firm the FCRA and all of its provisions do not apply. However California law does impose a few regulations on the employer. (CA Civil Code §1785.53) For instance the employment application should contain a box to be checked indicating that the applicant wishes to receive a copy of all public records obtained during the internal investigation.

Labor law is complex and if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or information on our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

Personal Injury Against the Dodgers to Continue

Tue, 06 Mar 2012 19:26:39 GMT

You will be happy to know that a personal injury lawsuit filed against the Los Angeles Dodgers will be permitted to proceed even though the Dodgers are in bankruptcy. Plaintiff's lawyer had called the Dodgers efforts to dismiss the plaintiff's claims as despicable. Arguably, he is a little dramatic but there is no reason why such a claim should not be able to proceed, bankruptcy or no, because the Dodgers are still a real asset that can pay any injury claims.

The plaintiff's bigger hurdle is going to be the team's claim that they cannot demonstrate that security staffing caused his injuries and that the team had no knowledge of any inappropriate conduct by the assailants prior to attack.

Leaking Roofs are Springing Up Over Southern California

Tue, 06 Mar 2012 16:46:18 GMT

Recently, I have heard complaints regarding the aftermath of the unusually high winds Southern California experienced last year. After our extensive period of "hurricane force" winds, Southern Californians are now discovering that just because their roofs look alright, the wind didn’t cause substantial damage. Most people consider a roof damaged by wind only if a portion of the roof is blown off.

In fact, wind buffeting may not be visible to the average homeowner, but ensuing rains can show when wind has lifted portions of the roof or has caused enough damage to allow substantial leaking. Unfortunately, the leaks resulting from wind damage do not deteriorate slowly over time. With every rainfall, the damage becomes more evident as small leaks turn into large leaks and roof cave-ins become possible over a relatively short period of time.

The first claims I am hearing about are denials based on "wear and tear" exclusions for relatively new roofs. It’s been about three to four months since the strong winds began tearing through Southern California.

As subtle wind damage becomes evident and policyholders report wind damage claims to their insurers, it will be interesting to see what percentage of Southern Californians were impacted by the unusually strong winds and, of these structures impacted, how many of these wind claims will be recognized by insurers.

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