Category: Litigation Tips

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.

The march of Artificial Intelligence appears to be inevitable and speculation is rife as to whether AI language models like ChatGPT will replace lawyers.  While AI models have the potential to assist lawyers and enhance efficiency in legal research and fact discovery, it is unlikely that they will be able to replace lawyers entirely:

• Dispute resolution involves a high degree of interpersonal communication and negotiation, which requires emotional intelligence and social skills that AI models do not possess.  Lawyers must be able to communicate effectively with clients, judges, and opposing counsel, and to negotiate complex legal settlements that take into account the needs and interests of all parties involved.
• Dispute resolution requires more than an understanding of legal concepts and principles; the key skill is analysis and application of legal principles to specific cases and situations.  AI models can provide suggestions and recommendations based on patterns in data, but they do not have the ability to identify or understand legal nuances and subtleties, to make intuitive judgments, or to draw on their own experience and expertise to craft persuasive legal arguments.
• Caution is warranted even in the realm of legal research because, at least at this time, AI model’s responses are not always reliable.  According to OpenAI, ChatGPT “sometimes writes plausible-sounding but incorrect or nonsensical answers . . . because there’s currently no source of truth.”  Indeed, the quality of data on which AI models are trained is just as important as the quantity of data on which it is trained.  If the data is incomplete or biased in some way, ChatGPT may provide incomplete or biased results.

That said, the potential for AI to process vast amounts of data and generate intelligible insights promises to enhance the efficiency of human lawyers, allowing firms that adopt these innovations to deliver better, cost-effective outcomes to its clients.

Last month a divided Ninth Circuit panel ruled that California employers can require workers to sign an arbitration agreement as a condition of employment.  This is a reversal of the panel’s September 2021 ruling which allowed partial enforcement of A.B. 51, which California enacted to protect employees from “forced arbitration.”

The panel decided to revisit the case following the United States Supreme Court’s ruling in Viking River Cruises v. Morian, which the U.S. Chamber of Commerce and the California Chamber of Commerce argued invalidated the law.  In this ruling, the Supreme Court upheld that the Federal Arbitration Act preempts state laws, such as A.B. 51, that aim to limit arbitration agreements.  “Because the FAA’s purpose is to further Congress’s policy of encouraging arbitration, and A.B. 51 stands as an obstacle to that purpose, A.B. 51 is therefore preempted,” the majority Ninth Circuit panel stated in its opinion.

This win for California employers allows them to continue to mandate arbitration agreements with employees without the potential of civil or criminal liability.  However, this may not be the end of the story.  California employers would be well-advised to continue to track developments on this issue as the State of California evaluates its next steps and response to this ruling.

On January 5, 2023, the Federal Trade Commission (FTC) proposed a nationwide ban on non-compete clauses.  The proposed ban follows initial findings by the FTC that non-competes constitute an unfair method of competition, which violates Section 5 of the FTC Act.  This also follows through on President Biden’s 2021 Executive Order on Promoting Competition in the American Economy, which encourages the Commission to take action against the unfair use of non-compete clauses and other potentially restrictive covenants that may unfairly limit workers’ wages and mobility.

The proposed rule includes three main elements:

1. It categorizes all non-compete agreements to be unfair methods of competition and makes it illegal under Federal law to enter into or maintain non-competes with any workers, including employees, independent contractors, externs, interns and volunteers;
2. it requires employers to rescind existing non-competes; and
3. it requires employers to notify current and former employees of the rescission and provides a template for such notices.

The FTC has estimated that the new rule could increase wages by nearly $300 billion per year.  While still subject to a public comment period, finalization and judicial review, if implemented, the new rule would have a seismic impact on employment agreements nationwide.  Naturally, we will keep you informed of further developments.