Category: Litigation Tips

In a landmark decision issued on April 24, 2025, the California Supreme Court ruled that contractual clauses limiting liability for intentional torts are unenforceable under California Civil Code § 1668.  The case, New England Country Foods, LLC v. VanLaw Food Products, Inc. (S282968), arose when NECF accused VanLaw of intentionally misappropriating its barbecue sauce recipe to sell directly to Trader Joe’s, violating their manufacturing agreement.  VanLaw sought to dismiss the claims based on a contract clause limiting damages, but the Court held that any provision attempting to limit liability for willful injury is invalid, regardless of the parties’ sophistication or the clause’s scope.

This decision clarifies that while limitations on liability for ordinary negligence may be enforceable under certain conditions, any attempt to contractually limit damages for intentional misconduct is categorically prohibited.

Read the full opinion here.

Most practitioners understand the game theory aspect of Section 998 offers.  But the rules have changed slightly.  In March, the California Supreme Court held that if a plaintiff rejects a 998 settlement offer, they can then be liable for costs and fees if they later settle before trial.  Importantly, this decision clarifies that Section 998 applies not just to trial outcomes but also to pre-trial settlements.

The ruling underscores that while parties can negotiate their own cost allocations in settlement agreements, Section 998’s default rules apply if such terms are not specified. This decision reinforces the statute’s purpose of encouraging reasonable pre-trial settlements by shifting costs to parties who reject favorable offers and later secure less favorable outcomes.  In other words, if a plaintiff rejects a 998 offer and then “fails to obtain a more favorable judgment or award,” Section 998 overrides the usual rule that a prevailing plaintiff can recover costs.  The case highlights the strategic importance of Section 998 offers in California litigation, serving as a powerful tool to leverage settlements and manage costs.

Several new laws and updates addressing key areas such as collaborative courts, artificial intelligence, access to justice, and juvenile protections are shaping the landscape of California’s judicial system.  These changes aim to enhance rehabilitation, ensure transparency, and expand access to fair proceedings while aligning with evolving societal and technological needs.  Below is a summary of the most notable updates, most of which took effect in January.

Artificial Intelligence

• CA Transparency Act (SB 942): AI businesses must identify AI-generated content starting January 1, 2026.

Collaborative Courts

• Drug Treatment Programs (AB 2106): Courts must order an available drug treatment or education program for defendants charged with drug offenses.
• Youth Court Referrals (SB 1005): Probation officers can refer cases to youth courts, with youth and family consent, instead of filing dependency or wardship petitions.
• Competency Determinations and Diversion (SB 1323, SB 1400):
• Courts can use written evaluations by licensed psychologists or psychiatrists for competency determinations.
• Felony defendants deemed incompetent may be referred to mental health diversion programs.
• For misdemeanor defendants, courts must consider diversion options or dismissal within specified timeframes.
• Treatment Court Guidelines (SB 910): Treatment courts must follow state and national guidelines, with updated drug court standards due by January 1, 2026.
• Veterans Court Diversion (SB 1025): Pretrial diversion programs in veterans’ courts now include felony offenses.

Juvenile Protections

• Restitution Fines for Minors (AB 1186): Minors cannot be charged restitution fines, and outstanding balances will become uncollectible after 10 years.

Starting December 1, a new system in the Central District of California will be implemented and U.S. magistrate judges will now be randomly assigned to supervise civil cases from start to finish, without requiring the district judge’s oversight. This change is intended to alleviate the heavy caseloads of district judges and expedite case processing. However, lawyers can opt out of magistrate judge assignments if they prefer an Article III district judge.

Only two other districts in the U.S.—the Eastern and Western Districts of Washington—have a similar system. The shift is expected to provide quicker access to justice and reduce costs by minimizing delays associated with the need for district judge supervision in civil cases. Attorneys and legal professionals see this modification as a step towards greater court efficiency, as it enables more frequent utilization of magistrate judges’ expertise and allows a more balanced workload.

The system modification received support from the Federal Bar Association, and its potential to streamline case assignments has been recognized as a significant improvement in handling civil cases in one of the nation’s busiest court districts.

The new year will bring significant changes to the timing requirements for filing and opposing motions for summary judgment (MSJs) in California.  Effective January 1, 2025, parties must follow the following updated deadlines:

• Notice of Motion and Supporting Papers: The notice of motion and all supporting documents must be filed 81 days before the hearing (plus time for service).  Previously, this deadline was set at 75 days.
• Opposition: Any opposition to the motion must now be filed 20 days before the hearing.  This is a substantial change from the prior deadline of 14 days.
• Reply: Replies must be served 11 days before the hearing—more than double the previous requirement of 5 days.
• Hearing Timeline: The motion must still be heard no later than 30 days before the trial date.  However, parties can agree to have the motion heard closer to the trial if both sides consent.

The updated California Code of Civil Procedure (CCP) Section 437c(b)(4) prohibits parties from introducing new evidence or material facts in their reply briefs.  While this rule aims to prevent the introduction of unexpected evidence on reply, it does leave room for interpretation.  There may still be some debate about whether parties can include rebuttals to the opposing party’s arguments, provided they do not introduce new arguments or evidence.

While these new timing requirements may seem like minor details, they can provide a trap for the unwary litigant, who can risk missing the deadline and thus waiving their right to move for summary judgment.

On March 14, 2024, the Northern District of California (NDCA) put into effect a pilot program that may allow corporate whistleblowers to avoid legal consequences.

The Whistleblower Pilot Program (WPP) offers non prosecution agreements (NPAs) to individuals whose information and voluntary cooperation can assist the government in identifying and prosecuting criminal conduct in various areas, including “intellectual property theft and related violations.”  Effective April 15, The U.S. Department of Justice announced a program that will extend NPAs to corporate executives as well.

The program was developed purposefully in the NDCA as Silicon Valley is home to technology companies and startups with an abundance of intellectual property.  It aims to address corporate misconduct by refraining from prosecuting individuals who voluntarily come forward to disclose criminal activity, even if they themselves are implicated.

July 1, 2024 will see the introduction of several new laws in California.  While most will go unnoticed by the vast majority of the public, here are just a handful of new laws which will likely have widespread impact.

Workplace Violence Prevention: Under SB 553, the majority of employers will be required to create and implement workplace violence prevention plans.  These plans must be documented, readily accessible, and include anti-retaliation measures.  Additionally, employers must maintain logs of workplace violence incidents and ensure that staff receive annual training covering the law and incident reporting procedures.

Ammo and Gun Tax: The Gun Violence Prevention and School Safety Act, AB 28, will put an 11% state tax on the sale of guns and ammunition within California.  The funds from the tax are designed to go to school safety and violence prevention programs within the state.

Date-Rape Drug Testing Kits to Become Available at Bars: AB 1013 mandates bars and nightclubs to offer drug testing kits for sale or for free to patrons.

Security Deposit Cap: Under AB12 it will become illegal for landlords to ask tenants for more than one month’s rent for security deposits.  However, landlords retain the right to charge tenants for repair costs exceeding the original security deposit if damages occur during the tenancy.

Menstrual Products Available in Schools: AB 230 will require public schools in California to provide free menstrual products in elementary schools.  The current law requires schools to stock menstrual products for grades 6-12, but under new law it will be required for grades 3-12.

California Corporations Code section 2203 outlines a critical provision concerning the legal capacity of foreign corporations operating within the state.  It provides that without satisfying the prerequisites laid out in Corporations Code section 2105, these entities cannot pursue claims in California courts.  Section 2105, mandates that all foreign corporations engaging in business activities within California must obtain a certificate of qualification from the California Secretary of State.

For practitioners representing defendants in California State Court facing claims from out-of-state or foreign corporations, it serves as a pivotal reminder.  It is important to ascertain whether the plaintiff corporation possesses a certificate of qualification to conduct business within the state, otherwise it may provide a defense to the claim.

On January 1, 2024, the California Legislature amended the California Business and Professions Code to solidify and reinforce the prohibition of noncompete agreements in employment contracts.

Effective February 14, 2024, Section 16600.1 mandates that employers notify all current and former California employees hired after January 1, 2022, with existing “noncompete agreements” or contracts containing a “noncompete clause” that these agreements are now considered void.  Additionally, Senate Bill 699 introduces Section 16600.5, declaring any contract void under Section 16600 as unenforceable, regardless of signing location or date.  Employers are restricted from enforcing such contracts, even if executed and maintained outside California.

On September 30, 2023, California Governor Gavin Newsom signed Senate Bill No. 235 (SB235) into law, which amends California Code of Civil Procedure section 2016.090.  It institutes a new procedure for initial disclosures of information and documents.  Beginning on January 1, 2024, parties will be required to make initial witness and document disclosures within 60 days of another party’s request.  Failure to comply or act in good faith with the new law will result in a court-imposed sanction of $1,000.

The initial disclosures shall include:

• “The names, addresses, telephone numbers, and email addresses of all persons likely to have discoverable information … that the disclosing party may use to support its claims or defenses, or that is relevant to the subject matter of the action or the order on any motion made in that action.”
• “A copy, or a description by category and location, of all documents” and
• Any insurance policies that may be used “to satisfy, in whole or in part, a judgment entered in the action or to indemnify or reimburse for payments made to satisfy the judgment.”

The new law also clarifies that “a party is not excused from its initial disclosures because it has not fully investigated the case, because it challenges the sufficiency of another party’s disclosures, or because another party has not made it’s disclosures.”  The rule will remain in effect until January 1, 2027.

These changes have the potential to streamline fact investigations and reduce the amount of written discovery exchanged between parties.  The new timeline will also require counsel to evaluate their position and case strategy much earlier to ensure all relevant information is captured in the initial disclosure.  Counsel would be well-advised to familiarize themselves with the new rule, which may catch opposing counsel off guard.