Category: Litigation Tips

The New Year brings with it some important changes to the Code of Civil Procedure (“CCP”).  On January 1, 2021, California updated the CCP to incorporate two of the Covid-related Emergency Orders.  These changes are welcome updates for lawyers who have long relied on email service and remote depositions to increase case efficiency and reduce client costs.

For cases filed after January 1, 2019, CCP § 1010.6 now requires represented parties to accept eService and to eServe upon request.  Keep in mind that the serving party must confirm the email service address before completing service.

CCP § 1010.6 also clarifies that “electronic filing” is the act of transmission to the court as opposed to approval of the filing.  This clarifies that a party need not wait for a document to be accepted by the court before service is complete—a key distinction given that many clerks’ offices are currently working with skeleton crews.  Section 1010.6 also extends the statute of limitations for filing complaints and cross-complaints where the eFiling was rejected for failure to comply with the rules or pay the applicable fees.

CCP § 2025.310 codifies Emergency Rule 11, which allowed deponents to appear outside the presence of the deposition officer, thus facilitating remote depositions.

Finally, CCP § 599 automatically extends certain cut-off dates when trials are continued.  This includes the exchange of expert witness information, which previously needed to be specifically ordered by the Court if a trial was continued.

The practitioner would be well-advised to acquaint herself or himself with the new rules, which are likely to further streamline litigation by removing unnecessary red tape.

All civil claims are subject to a statute of limitations, meaning if they are not pursued within a certain time period a lawsuit cannot be brought.  The length of the statute depends on the specific claim, but most claims have a limitations period of between two and six years.

When the COVID-19 pandemic hit, followed by significant court closures, the California Judicial Council responded with Emergency Rule 9.  The rule “tolled” (or “paused”) the statutes of limitation for civil actions from March 6, 2020 until 90 days after Governor Newsom lifted the state of emergency.  “Tolling” stops or suspends the running of statutes of limitations; when the tolling period ends, the clock starts again.

The Judicial Council has now amended Rule 9 to provide an end date for the tolling period.  Specifically, Amended Emergency Rule 9 creates two tolling periods depending on the length of the pertinent statute of limitation.  Under Rule 9(a), statutes of limitations that exceed 180 days are tolled from April 6, 2020 until October 1, 2020.  Under Rule 9(b), statutes of limitations of up to 180 days are tolled from April 6, 2020, until August 3, 2020.

Because most statutes of limitation are over 180 days, the practical effect of the Amended Rule appears to be that most civil statutes of limitation have been extended by 178 days, i.e. the period between April 6, 2020 and October 1, 2020.  The new rule may therefore revive claims that were otherwise time barred, or provide litigants with more time to file their claims.

That said, the Judicial Council provided no guidance or illustration on the application of the amended rule, and some commentators have noted that its effect is not altogether clear, particularly as it relates to claims with a shorter limitations period.

Since statutes of limitation are critical in litigation, the practitioner would be well-advised to acquaint himself or herself with the new rule and its effect.

Earlier this year, the California legislature adopted multiple changes to the Code of Civil Procedure.  Given COVID-related Court shutdowns and delays, many of these new rules may have gone overlooked.

Here is a refresher on the most impactful changes:

• CCP section 2031.280(a):  Now requires that “[a]ny documents or category of documents produced in response to a demand for inspection, copying, testing, or sampling shall be identified with the specific request number to which the documents respond.”  The rule used to require that “[a]ny documents produced in response to a demand for inspection, copying, testing, or sampling shall either be produced as they are kept in the usual course of business, or be organized and labeled to correspond with the categories in the demand.”  Counsel receiving a voluminous document production now has firm footing to request that opposing counsel clearly identify what documents correspond to each request for production.
• CCP section 2030.210(d) and (e): Now requires counsel to provide electronic versions of interrogatories and requests for admission to the opposing party upon request.  The responding party also must provide the responses in electronic format upon request.  Note that this can save both parties significant time in preparing discovery “shells” and separate statements, especially for lengthy discovery requests.
• CCP section 2023.050: Sanctions are required if a party, person, or attorney produces the requested documents within 7 days of a scheduled hearing on a motion to compel.  The sanctions also apply to nonparty discovery.
• CCP section 2016.090: Authorizes the court, upon stipulation of all parties, to order the exchange of initial disclosures prior to serving written discovery.  The initial disclosure requirements are similar to those in Federal Rule of Civil Procedure 26.

Counsel would be well-advised to conduct a comprehensive review of these new rules to ensure compliance. The new rules may also provide an effective sword when dealing with opposing counsel.

As most business leaders know, the most stringent privacy law in the United States—the California Consumer Privacy Act (“CCPA”)—went into effect this year and applies to all companies that do business in the Golden State.  The CCPA’s private right of action gives California residents the right to sue companies when their personal information is subject to unauthorized access, theft, or disclosure stemming from a company’s failure “to implement and maintain reasonable security procedures and practices.”  Because the CCPA creates a right to statutory damages (ranging from $100 to $750 per violation) without the need to prove actual harm, companies should prepare for a deluge of CCPA class actions. 

One critical aspect of such preparation should be to implement a security breach response plan that will promptly and effectively respond to individual consumer notices following an alleged security breach.  Under the “notice and cure” provision of the CCPA, a private plaintiff must provide a company with 30 days’ written notice prior to filing a lawsuit.  “In the event a cure is possible,” a company can avoid “individual statutory damages of class-wide statutory damages” if it “actually cures” the violation within 30 days and provides the consumer with a written statement to that effect.  The notice and cure provision thus provides a promising avenue for companies seeking to sidestep CCPA class actions.  That said, this section is sure to be one of the most hotly contested parts of the CCPA because the term “cure” is undefined by the statute. 

The attorneys at Lewis & Llewellyn are fully prepared to defend our clients’ interests in single plaintiff and putative class actions based on alleged CCPA violations.  Contact us to learn more about the CCPA or our deep experience addressing privacy issues in litigation. 

Many employers insist that their employees sign mandatory arbitration agreements as a condition of employment.  However, on October 10, 2019, California Governor Gavin Newsom signed a bill into law that will prohibit employers from requiring mandatory arbitration agreements for nearly all types of employment claims.  The bill adds a new Section 432.6 to the California Labor Code prohibiting any person (including employers) from requiring an applicant or employee (as a condition of employment, continued employment, or the receipt of any employment-related benefit) to “waive any right, forum, or procedure” for alleged violations of the Fair Employment and Housing Act (FEHA) and the California Labor Code.  

In light of the sweeping reach of the new law, many anticipate a successful legal challenge on the ground that it is preempted by the Federal Arbitration Act.  This could lead to years of litigation, and ultimately, the issue may need to be resolved by the U.S. Supreme Court.  Given the current uncertainty, employers would be well-advised to consult with experienced employment counsel when considering whether to continue to use mandatory arbitration agreements or whether existing agreements need to be modified.

Lewis & Llewellyn partner Nick Saenz is a regular contributor to Tech Crunch, one of the web’s leading publications focused on the technology industry.  In a recent article, Nick cautioned readers on how to avoid accusations of trade secrets theft, when either leaving for a competitor or onboarding new employees.  You can read the article, which includes Nick’s sage advice, below or on TechCrunch’s website.

In the previous litigation tip we discussed several recent cases that concluded employee non-solicitation provisions in employment agreements are per se invalid under California law.  It is axiomatic that parties in litigation generally pay their own attorneys’ fees.  Section 1021.5 of the California Code of Civil Procedure is an exception to this rule.  It allows a court to award attorneys’ fees to a litigant if (1) he or she is a “successful party,” (2) the action has resulted in the enforcement of an important right affecting the public interest, (3) the action has conferred a significant benefit on the public or a large class of persons, and (4) an attorney fees award is appropriate in light of the necessity and financial burden of private enforcement.  In AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., 28 Cal. App. 5th 923 (2018), the Court of Appeal affirmed the award of attorneys’ fees to the prevailing defendant who had successfully argued that an employee non-solicit provision contained in a contract was invalid.  The practitioner would be well-advised to keep this in mind when defending against claims involving employee non-solicit provisions.  The threat of attorneys’ fees could prove to be a powerful weapon in the litigator’s armory and could lead to a quick resolution of the dispute, or at least increase the stakes for the plaintiff.

At Lewis & Llewellyn we routinely advise and represent clients regarding all facets of employee mobility.  California businesses commonly include employee non-solicitation provisions in their employment agreements.  But several recent cases have concluded these provisions are per se invalid under California law, resulting in significant potential consequences for companies statewide.  It is well-established that California law favors employment mobility and does not recognize non-compete agreements restraining employees from leaving one job to work for a competitor.  This policy is codified in Business & Professions Code section 16600.  Unlike non-competes, however, courts have long held that employee non-solicit provisions barring individuals or companies from poaching company talent do not violate section 16600 because the restraint on employee mobility is minimal.  Until now:  in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., 28 Cal. App. 5th 923 (2018), the Court of Appeal cast significant doubt on the enforceability of employee non-solicits.  This analysis soon gained traction—federal courts in Barker v. Insight Glob., LLC, No. 16-CV-07186-BLF, 2019 WL 176260, at *3 (N.D. Cal. Jan. 11, 2019) and Weride Corp. v. Kun Huang, No. 5:18-CV-07233-EJD, 2019 WL 1439394, at *10 (N.D. Cal. Apr. 1, 2019), relied upon AMN Healthcare to conclude employee non-solicits were unenforceable under section 16600.  While it is too early to say whether these rulings will become the majority view, companies now face significant risk that former employees can legally raid the company’s talent pool.  Moreover, as with non-competes, companies can face liability for wrongful termination for firing an employee who refuses to agree to an employee non-solicit provision.  Accordingly, both company and outside counsel should closely monitor these developments to determine whether these cases are the new norm or a string of outliers.

As every litigator knows, most California settlement agreements include a waiver of Civil Code section 1542.  Because, in a settlement agreement, the parties typically agree to abandon, or give up, rights or claims that otherwise could be pursued or enforced, a section 1542 waiver is needed if the settling parties wish to include both known and unknown claims in a general release.  Effective January 1, 2019, the language of section 1542 has been amended as follows:

A general release does not extend to claims which that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, which and that if known by him or her, must would have materially affected his or her settlement with the debtor or released party.

While these amendments may seem picayune, the practitioner would be well advised to be sure the new language is included in future settlement agreements, otherwise he or she risks the section 1542 waiver being ineffective.

The New Year also saw a change in the rules governing mediations.  Effective January 1, 2019, all parties to California based mediations will be required to sign a written disclosure form confirming that the client understands and agrees to mediation confidentiality.  The new rule, which is embodied in California Evidence Code section 1129, requires the attorney to obtain a printed acknowledgment, signed by that client, stating that he or she has read and understands the confidentiality restrictions governing mediation.  There are many samples of such forms, such as the one found here.  While some have criticized the new rule as fixing a non-existent problem, practitioners should ensure compliance as a matter of routine practice to avoid any issues on the day of the mediation.

When a case settles, most settlement agreements include a confidentiality provision for key terms.  Attorneys often believe they are bound by such terms either when they approve the settlement as to form or even when the agreement has broad language regarding its application to the client’s attorneys.

However, a recent ruling by the California Court of Appeal threw that assumption into doubt.  In Monster Energy Company v. Schechter, the parents of a 14-year old girl sued Monster Energy after she consumed two Monster brand energy drinks, went into cardiac arrest and died.  Thereafter, the parents’ attorney negotiated a settlement agreement which included a confidentiality provision purporting to bind him and his firm.  The attorney subsequently gave an interview in which he said the case had settled for “substantial dollars for the family.”  Monster Energy then sued the attorney and his firm alleging that they had breached the settlement agreement’s confidentiality provision.

The attorney and his firm then filed a special motion to strike under section 425.16 of the California Code of Civil Procedure (an anti-SLAPP motion) arguing that Monster Energy could not show a probability of prevailing on its breach of contract claim because the attorney and his firm were not parties to the settlement agreement.  The trial court denied the motion and an appeal followed.

The Court of Appeal held that “when a settlement agreement provides that the ‘[p]laintiffs and their counsel agree’ to keep the terms of the agreement confidential, and when the plaintiffs’ counsel signs the agreement under the words, ‘Approved as to form and content,” the plaintiffs’ counsel could not be liable to the defendant for breach of the confidentiality provision.  The Court noted: “The only reasonable construction of this wording is that they were signing solely in the capacity of attorneys who had reviewed the settlement agreement and had given their clients their professional approval to sign it.  In our experience, this is the wording that the legal community customarily uses for this purpose.”

Because confidentiality is often a key term of a settlement agreement, attorneys would be well-advised to keep this recent opinion in mind when drafting settlement agreements.  As the Court noted, one way to avoid this issue, and bind attorneys to a confidentiality provision, is “to draft a settlement agreement that explicitly makes the attorneys parties to the agreement (even if only to the confidentiality provision) and explicitly requires them to sign as such.”