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Guide to Trial Support Services
2011 Guide to Trial Support Services February 2011 /$4 Part 1 of 2 EARN MCLE CREDIT Economic Loss Doctrine page 25 Attorney’s Fees in Probate Matters page 12 PLUS Kids’ Court page 44 Disparate Treatment Discrimination Suits page 32 Class Distinctions Los Angeles lawyers Julian W. Poon (right) and Blaine H. Evanson examine recent circuit court decisions on class certifications page 18 Relationships are built on many things... Like making you feel valued as a client. Crowe Horwath LLP takes pride in the relationships we have with our clients. In a recent client survey, our clients said we do a better job than our competitors of making them feel valued as a client. To learn more about our commitment to building lasting relationships, visit crowehorwath.com/clients, or contact Sydney Garmong at [email protected]. Sydney Garmong, Partner Audit | Tax | Advisory | Risk | Performance The Unique Alternative to the Big Four ® Crowe Horwath LLP is an independent member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath International is a separate and independent legal entity. Crowe Horwath LLP and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath International or any other member of Crowe Horwath International and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath International or any other Crowe Horwath International member. Accountancy services in Kansas and North Carolina are rendered by Crowe Chizek LLP, which is not a member of Crowe Horwath International. © 2011 Crowe Horwath LLP FW11067D6F E X C L U S I V E LY FA M I L Y L AW Walzer & Melcher LLP is known for its expertise in handling complex divorce cases and premarital agreements. The firm is committed to resolving contested cases by settlement. Where that cannot be achieved, the firm provides strong and effective representation in litigation. Peter M. Walzer Christopher C. Melcher Leena S. Hingnikar Woodland Hills, California (818) 591-3700 www.walzermelcher.com www.drprenup.com Jennifer L. Musika 0/&'*3. ."/:40-65*0/4 Foepstfe!Qspufdujpo -"8'*3.$-*&/54 Q "$$&445007&3130'&44*0/"- -*"#*-*5:1307*%&34 Q 0/-*/&"11-*$"5*0/4'03 &"4:$0.1-&5*0/ Q &/%034&%130'&44*0/"--*"#*-*5:*/463"/$,&3 Call 1-800-282-9786 today to speak to a specialist. 4"/%*&(003"/(&$06/5:-04"/(&-&44"/'3"/$*4$0 2 Los Angeles Lawyer February 2011 5 ' -*$&/4&$ 888")&3/*/463"/$&$0. F E AT U R E S 18 Class Distinctions BY JULIAN W. POON AND BLAINE H. EVANSON The most fundamental question in certifying class actions is what level of proof is required of plaintiffs 25 Loss Horizon BY CLAY WILKINSON AND ERIC BROWN Intentionality and foreseeability can affect the seemingly clear application of the economic loss doctrine Plus: Earn MCLE credit. MCLE Test No. 200 appears on page 27. 32 Test Results BY JOHN B. LOUGH JR. With its decision in Lewis v. Chicago, the Supreme Court has expanded the statute of limitations for disparate treatment employment discrimination lawsuits 37 Special Section 2011 Guide to Trial Support Services Los Angeles Lawyer D E PA RT M E N T S the magazine of the Los Angeles County Bar Association February 2011 Volume 33, No 11 COVER PHOTO: TOM KELLER 10 Barristers Tips Develop a mentor relationship to enhance your lawyering abilities 42 Classifieds 42 Index to Advertisers BY DAREN M. SCHLECTER 43 CLE Preview 12 Practice Tips Recovering attorney’s fees in probate actions BY RICHARD G. REINIS 44 Closing Argument Kids’ court BY LAUREN WOLKE LOS ANGELES LAWYER (ISSN 0162-2900) is published monthly, except for a combined issue in July/August, by the Los Angeles County Bar Association, 1055 West 7th Street, Suite 2700, Los Angeles, CA 90017 (213) 896-6503. Periodicals postage paid at Los Angeles, CA and additional mailing offices. Annual subscription price of $14 included in the Association membership dues. Nonmember subscriptions: $28 annually; single copy price: $4 plus handling. Address changes must be submitted six weeks in advance of next issue date. POSTMASTER: Address Service Requested. Send address changes to Los Angeles Lawyer, P. O. Box 55020, Los Angeles CA 90055. Los Angeles Lawyer February 2011 3 LEGISLATIVE INTENT–STATUTORY CONSTRUCTION Plain Meaning Rule | Latin & English Maxims | Legislative History Help with Argument and Points and Authorities Opinion Declarations and Expert Witness Testimony VISIT US ON THE INTERNET AT www.lacba.org/lalawyer E-MAIL CAN BE SENT TO [email protected] EDITORIAL BOARD Chair MICHAEL A. GEIBELSON Articles Coordinator Founder and Former Director, Legislative Intent Service Opinion Testimony Given in over 45 State, Federal and Administrative Actions William H. Keller 310.343.9893 • www.Calcodes.com [email protected] EXPERT WITNESS — Claims Consultant EXPERIENCE q q INTEGRITY HONESTY OVER 45 YEARS EXPERIENCE as a claims adjuster, licensed in three states and qualified in state and federal courts. Expert in good faith/bad faith, standards and practices and standard in the industry. Specialties in property/casualty construction defect, fire/water, uninsured/underinsured motorist, warehouse and cargo claims. Failure to defend and/or indemnify. Litigation support, case review and evaluation claim consultation, coverage review and valuations. Appraisal, Arbitration and Claims Rep. at MSC & MMC. Contact Gene Evans at E. L. Evans Associates Phone (310) 559-4005 / Fax (310) 559-4236 / E-mail [email protected] 3 3 1 0 A I R P O R T AVENUE, S U I T E 7 , S A N T A M O N I C A , C A L I F O R N I A 9 0 4 0 5 KENNETH W. SWENSON JERROLD ABELES (PAST CHAIR) ETHEL W. BENNETT ERIC BROWN CAROLINE BUSSIN PATRICIA H. COMBS CHAD C. COOMBS (PAST CHAIR) ELIZABETH L. CROOKE BEN M. DAVIDSON ANGELA J. DAVIS (PAST CHAIR) PANKIT J. DOSHI GORDON ENG DONNA FORD STUART R. FRAENKEL GABRIEL G. GREEN TED HANDEL JEFFREY A. HARTWICK STEVEN HECHT (PAST CHAIR) LAURENCE L. HUMMER AMY K. JENSEN GREGORY JONES MARY E. KELLY JOHN P. LECRONE KENNETH K. LEE JONATHAN D. LIBBY PAUL MARKS AMY MESSIGIAN MICHELLE MICHAELS COMM. ELIZABETH MUNISOGLU RICHARD H. NAKAMURA JR. (PAST CHAIR) CARMELA PAGAY DENNIS PEREZ ADAM J. POST GARY RASKIN (PAST CHAIR) JACQUELINE M. REAL-SALAS (PAST CHAIR) DAVID A. SCHNIDER (PAST CHAIR) STEVEN SCHWARTZ MAYA SHULMAN THOMAS J. SPEISS III ALYSON SPRAFKIN HEATHER STERN THOMAS H. VIDAL JEFFREY D. WOLF KOREN WONG-ERVIN STAFF Publisher and Editor SAMUEL LIPSMAN Senior Editor LAUREN MILICOV Senior Editor ERIC HOWARD Art Director LES SECHLER Director of Design and Production PATRICE HUGHES Advertising Director LINDA LONERO BEKAS Account Executive MERYL WEITZ Sales and Marketing Coordinator AARON J. ESTRADA Advertising Coordinator WILMA TRACY NADEAU Administrative Coordinator MATTY JALLOW BABY Copyright © 2011 by the Los Angeles County Bar Association. All rights reserved. Reproduction in whole or in part without permission is prohibited. Printed by R. R. Donnelley, Liberty, MO. Member Business Publications Audit of Circulation (BPA). The opinions and positions stated in signed material are those of the authors and not by the fact of publication necessarily those of the Association or its members. All manuscripts are carefully considered by the Editorial Board. Letters to the editor are subject to editing. 4 Los Angeles Lawyer February 2011 Keeping the jury engaged is a full time job. TRIAL CONSULTING | DATABASE PREPARATION | TRIAL PRESENTATION | LITIGATION SUPPORT Trial consulting, graphics, litigation support and video services at any stage in a dispute: SETTLEMENT CONFERENCES • MEDIATION • ARBITRATION • TRIAL Video Editing & Syncing • Court Graphics & Consulting • Presentations We have the experience to handle anything from small matters to your most complex litigation needs. I have personally worked on hundreds of cases, including the L.A. Dodgers divorce trial, People v. Robert Blake, Class Actions, Insurance, Criminal, Personal Injury, Products Liability, and Intellectual Property, for Plaintiff and Defense, and for firms of all sizes. Ted Brooks, President [email protected] Trial Technology and Court Presentation are not just a small part of our business–they ARE our business www.LitigationTech.com 213.798.6608 los angeles 415.291.9900 san francisco There is no substitute for experience. ■ ■ ■ ■ Daily Journal Top Neutral 2008 & 2009 Over 1,400 successful mediations 16 years as a full-time mediator Director, Pepperdine’s “Mediating the Litigated Case” program 2002-2009 LEE JAY BERMAN, Mediator 213.383.0438 www.LeeJayBerman.com RECEIVERSHIP SPECIALISTS Court Appointed Receivers and Referees 19 Years of Serving the Insolvency Community “Committed to improving the value of your client’s assets, at the lowest cost, while disputes are resolved.” KEVIN SINGER JOHN RACHLIN Real Estate & Business Expert Attorney At Law s Receivership, Referee & Partition Assignments Real Estate Management & Sales Business Management & Sales Family Estate Management & Sales Real Estate & Business Evaluations s SOUTHERN CALIFORNIA OFFICE NORTHERN CALIFORNIA OFFICE 11400 W. Olympic Blvd. Suite 200 Los Angeles, CA 90064 795 Folsom Street 1st Floor San Francisco, CA 94107 Tel 310.552.9064 Tel 415.848.2984 NEVADA OFFICE ARIZONA OFFICE 7251 W. Lake Mead Blvd. Suite 300 Las Vegas, NV 89128 40 N. Central Avenue Suite 1400 Phoenix, AZ 85004 Tel 702.562.4230 Tel 602.343.1889 www.ReceivershipSpecialists.com 6 Los Angeles Lawyer February 2011 LOS ANGELES LAWYER IS THE OFFICIAL PUBLICATION OF THE LOS ANGELES COUNTY BAR ASSOCIATION 1055 West 7th Street, Suite 2700, Los Angeles CA 90017-2548 Telephone 213.627.2727 / www.lacba.org ASSOCIATION OFFICERS President ALAN K. STEINBRECHER President-Elect ERIC A. WEBBER Senior Vice President RICHARD J. BURDGE JR. Vice President PATRICIA EGAN DAEHNKE Treasurer MARGARET P. STEVENS Assistant Vice President PAUL R. KIESEL Assistant Vice President HELEN B. KIM Assistant Vice President ELLEN A. PANSKY Immediate Past President DON MIKE ANTHONY Executive Director SALLY SUCHIL Associate Executive Director/Chief Financial Officer BRUCE BERRA Associate Executive Director/General Counsel W. CLARK BROWN BOARD OF TRUSTEES CHRISTOPHER C. CHANEY MARRIAN S. CHANG BRIAN S. CURREY LINDA L. CURTIS JEFFERY J. DAAR ANTHONY PAUL DIAZ LOUIS R. DIENES BEATRIZ D. DIERINGER DANA M. DOUGLAS MIGUEL T. ESPINOZA TANYA L. FORSHEIT JOSHUA G. HAMILTON JACQUELINE J. HARDING ANGELA S. HASKINS BRIAN D. HUBEN TAMILA C. JENSEN DIANE L. KARPMAN SAJAN KASHYAP MICHAEL K. LINDSEY SARAH E. LUPPEN HON. RICHARD C. NEAL (RET.) ANNALUISA PADILLA ANN I. PARK THOM H. PETERS DAVID K. REINERT JAMES R. ROBIE DEBORAH C. SAXE BRUCE IRA SULTAN JULIE K. XANDERS AFFILIATED BAR ASSOCIATIONS BEVERLY HILLS BAR ASSOCIATION BLACK WOMEN LAWYERS ASSOCIATION OF LOS ANGELES, INC. CENTURY CITY BAR ASSOCIATION CULVER-MARINA BAR ASSOCIATION EASTERN BAR ASSOCIATION OF LOS ANGELES COUNTY GLENDALE BAR ASSOCIATION IRANIAN AMERICAN LAWYERS ASSOCIATION ITALIAN AMERICAN LAWYERS ASSOCIATION JAPANESE AMERICAN BAR ASSOCIATION OF GREATER LOS ANGELES JOHN M. LANGSTON BAR ASSOCIATION KOREAN AMERICAN BAR ASSOCIATION OF SOUTHERN CALIFORNIA LESBIAN AND GAY LAWYERS ASSOCIATION OF LOS ANGELES MEXICAN AMERICAN BAR ASSOCIATION PASADENA BAR ASSOCIATION SAN FERNANDO VALLEY BAR ASSOCIATION SAN GABRIEL VALLEY BAR ASSOCIATION SANTA CLARITA BAR ASSOCIATION SANTA MONICA BAR ASSOCIATION SOUTH ASIAN BAR ASSOCIATION OF SOUTHERN CALIFORNIA SOUTH BAY BAR ASSOCIATION OF LOS ANGELES COUNTY, INC. SOUTHEAST DISTRICT BAR ASSOCIATION SOUTHERN CALIFORNIA CHINESE LAWYERS ASSOCIATION WHITTIER BAR ASSOCIATION WOMEN LAWYERS ASSOCIATION OF LOS ANGELES JUDGE LAWRENCE W. CRISPO (RETIRED) I receive innumerable e-mails each day offering pharmaceuticals to enhance my life. Ironically, many appear to be coming from my own e-mail address. And with increasing frequency, I have received e-mails written in Russian. Fortunately, many of these e-mails get filtered by my Mediator Arbitrator Referee 213.926.6665 www.judgecrispo.com ERISA LAWYERS LONG TERM DISABILITY, LONG TERM CARE, HEALTH, EATING DISORDER, AND LIFE INSURANCE CLAIMS ERISA & BAD FAITH MATTERS ✔ California state and federal courts ✔ More than 20 years experience ✔ Settlements, trials and appeals Referral fees as allowed by State Bar of California Kantor & Kantor LLP 818.886.2525 TOLL FREE 877.783.8686 firm’s e-mail quarantine system. Before e-mail spam became a late night talk show staple, there was snail mail. The ridicule of snail mail arguably reached its pinnacle in the late 1980s and early 1990s. See http://en.wikipedia.org/wiki/Cliff_Clavin. That ridicule turned to empathy for the Postal Service’s potential demise. Compare http://www.time.com/time/magazine /article/0,9171,913226,00.html (July 7, 1975) and http://www.washingtonpost.com /wp-dyn/content/article/2010/09/29/AR2010092906645.html (September 29, 2010). The flood of useless e-mail perhaps explains why its treatment in the Code of Civil Procedure and state and federal court rules is schizophrenic. With the availability of electronic filing, federal judges have become intolerant of counsel unwilling to use e-mail addresses. State courts, however, are saddled with an electronic filing system that is only available in some parts of some counties. Thus state courts are mostly relegated to the agreement of the parties to accept service by e-mail. Rule 2.251 of the California Rules of Court provides procedures for electronic service. Among them is Rule 2.251(f)(2), which states, “If a document is served electronically, any period of notice, or any right or duty to act or respond within a specified period or on a date certain after service of the document, is extended by two court days.” Accord, Los Angeles Superior Court Local Rule 18.0(g). Electronic service that creates a Thursday, Friday, or Saturday response deadline effectively extends the response period by four calendar days—or three calendar days if the response deadline is on a Sunday. Thus, more than half the time, service by e-mail in state court proceedings extends the period for notice or response by at least as long as the extension for service by snail mail in federal courts. See Rule 6(d) of the Federal Rules of Civil Procedure (referring to Rule 5(b)(2)(C)). The state courts’ extension by two court days is the same that applies to Express Mail, any other overnight delivery, and facsimile transmission under Code of Civil Procedure Section 1013(c) and (e). The savings of one or two days over snail mail leaves little strategic incentive to agree to electronic service in state court proceedings. As one practitioner said, “I didn’t go to law school to become my opponent’s printing company.” Under current law, electronic filing and service in state courts also provides little or no advantage on the day of filing or service. Unlike federal courts, which acknowledge that a day ends at midnight, Code of Civil Procedure Section 1010.6(a)(3) requires a document to be electronically filed by 5 P.M. “or the time at which the court would not accept filing at the court’s filing counter, whichever is earlier.” Otherwise the document is deemed to be filed the following court day. Unlike service by mail, which only requires deposit in the mail on a particular date, electronic service must also be completed by the “close of business” or it “is deemed to have occurred on the next court day.” Rule 2.251(f)(4) of the California Rules of Court. This provides no advantage to practitioners who prefer a final edit to a satisfying dinner. Perhaps as budgets ease, technology improves, and electronic filing and service become the norm, the Code of Civil Procedure and California Rules of Court can be modernized to reflect the immediacy of electronic communication. ■ www.kantorlaw.net Michael A. Geibelson is a business trial lawyer with Robins, Kaplan, Miller & Ciresi L.L.P., where he handles unfair competition, trade secret, and class actions. He is the 2010-11 chair of the Los Angeles Lawyer Editorial Board. 8 Los Angeles Lawyer February 2011 JACK TRIMARCO & ASSOCIATES www.jacktrimarco.com A proud member of the Los Angeles County Bar Association barristers tips BY DAREN M. SCHLECTER Develop a Mentor Relationship to Enhance Your Lawyering Abilities A WISE PERSON ONCE SAID that a mentor is someone whose hindsight can become your foresight. In the practice of law, a young attorney can and should develop a relationship with a more senior attorney, usually in the same area of law, to learn skills often not taught in law school, including how to deal with difficult people and situations, communicate effectively, and solve problems. Those who have made their way through law school and into the perils of practice know that having another lawyer to bounce ideas off of can be invaluable to becoming a more skilled practitioner. Often, mentors are direct supervisors or more skilled attorneys to whom newer attorneys turn for advice. Developing relationships with other attorneys of varying backgrounds, experience, and expertise can be beneficial to mentees and mentors. Veteran attorneys can also benefit from the role of mentor by being re-energized from the passion and perspective of younger attorneys. Arguably, having many different mentors with various legal backgrounds can mean the difference between being a mediocre attorney and an excellent one. Mentors offer invaluable insight into how to be competent, zealous, and ethical. A junior attorney can be overwhelmed with the daily tasks that litigators face: the hurdles of litigation; analysis of the strengths and weaknesses of a client’s case; avoidance of conflicts of interest; and interaction with opposing counsel, court staff, judge, and client. For newer litigators compelled to go solo, mentors can assist with such pivotal tasks as how to open and properly maintain a client trust account, obtain malpractice insurance, master the tips and tricks of business development, and delegate tasks. The same is true of new transactional attorneys, who must also decide whom they represent, make pivotal decisions about how to avoid conflicts of interest, and adequately protect a client’s goals and interests in a written document. Then too, mentors can be attorney friends with similar experience but who are not directly or emotionally tied to a case or situation. For example, keeping in touch with those in one’s graduating class can be an invaluable resource. Other attorneys may have mentors. These attorneys may have insight, training, or other advice that can help the newer practitioner with deciding whether to take a case, handling an ethical situation, or dealing with the innumerable hurdles that practitioners deal with on a daily basis. Thus, having the benefit of a network of attorneys of similar experience can make the practice of law more fulfilling. Discussing how-to issues with a mentor can help a mentee with what would otherwise take years of hard-learned lessons to achieve. Mentors can also often serve to give their less experienced comrades the bigger picture of a case that newer attorneys fail to grasp, teaching a newer attorney how to be sympathetic to a needy client without getting too emotionally involved. Finally, experienced mentors can remind a newer attorney how to keep the client’s goals and interests inviolate. Regularly, mentors advise that being an ethical attorney involves not just rote memorization of the professional standards and canons of ethics as taught in law school but keeping one’s perspec10 Los Angeles Lawyer February 2011 tive clear from the influence of third parties and one’s emotional entanglement to a minimum. Many attorneys have lauded the importance of mentorship to fulfillment in the profession. Nicole Livolsi acknowledges that she had to seek a mentor upon joining a large firm. As the partners assigned to mentor her were not a good fit, she sought others, and in time, she discovered mentors with whom the relationship was mutually beneficial. Not surprisingly, she says that having a quality mentor was the tipping point in her decision to continue the practice of law. Invariably for her, mentorship kept her passionate about the practice of law. Mentorship can be especially fulfilling for more veteran attorneys who have benefited from both sides of the mentoring equation. Suzanne Henry credits the mentoring relationships she developed with more senior attorneys she liked and trusted as having a huge impact on her development as a litigator. As she has progressed through her legal career, she found mentorship on litigation was becoming less important and business development more so. Now in her 11th year of practice, Henry gives back to other attorneys on the litigation front while continuing to benefit from business development mentoring. She says that attorneys have to stay relevant and that in order to develop a solid bond with a mentor, it is necessary to give and not simply take. Like many, Henry knows that having succeeded in law school and passing the bar is simply not enough to guarantee success and fulfillment in the practice of law. To her, “The closest thing to an apprenticeship in the United States legal system is developing a relationship with a trusted, knowledgeable, and likeable mentor.” While some attorneys have stressed that they cannot get proper mentorship at a large firm, others believe that they have benefited from a special team within a big firm that focuses on a particular practice area. For example, Ryan Van Steenis of the Huron law group, now in his third year of practicing law, says that he benefited from a special team at a large law firm. Van Steenis would rather take a less valuable job with a good mentor than work at a better paying job at which mentorship is not stressed. Van Steenis has had two mentors with two different styles who helped him with the critical issues of how to be a great attorney and how to develop business. As a result, he has a well-rounded approach to the practice of law. He says having a law degree is no substitute for having the practical experience and knowledge from those who have gone before. In the end, mentors are the building blocks of creating competent, fulfilled, and motivated attorneys. There is no better gift than to receive what a true mentor can give. Those who have benefited from years of mentorship should help ensure that mentorship remains a pillar of the profession. Undoubtedly, mentorship provides a great service to ensure the quality of the profession as a whole and is a rewarding and gratifying experience for all involved. ■ Daren M. Schlecter is the founder of the Law Office of Daren M. Schlecter, whose practice focuses on all aspects of bankruptcy. Expert witnesses and litigation consultants for complex litigation involving analyses of lost profits, lost earnings and lost value of business, forensic accounting and fraud investigation Other areas include marital dissolution, accounting and tax Excellent communicators with extensive testimony experience Offices in Los Angeles and Orange County Call us today. With our litigation consulting, extensive experience and expert testimony, you can focus your efforts where they are needed most. 818-981-4226 or 949-219-9816 www.wzwlw.com [email protected] practice tips BY RICHARD G. REINIS RICHARD EWING Recovering Attorney’s Fees in Probate Actions TWO CALIFORNIA COURT OF APPEAL OPINIONS from 2010 leave any lawyer attempting to recover attorney’s fees in a probate matter with greater uncertainty than ever before. At the same time, practitioners studying the decisions will be empowered by rules of interpretation that have the potential to stand any statute—not just those in the Probate Code—on its head. Together the two opinions issued by separate divisions of the Fourth District—along with a probate case decided by the Fifth District in 2009—provide ample support for litigators arguing in any situation for a broad interpretation of statutory language. In one of the cases, Leader v. Cords,1 the court provided salient rules for victorious practitioners seeking attorney’s fees. They should rely on the principle that a statute is ambiguous if susceptible to two differing, reasonable interpretations. In accord with that principle, they should invite their opponents to state their arguments and then respond with a reasonable position. In this way the targeted goal of statutory ambiguity will be reached. After that, all practitioners need to do for an award of attorney’s fees is demonstrate that the statute in question is remedial and wide enough in scope to cover the misconduct of their opponents. While these rules seem to clear a smooth path for successful probate litigants seeking attorney’s fees, the court in Soria v. Soria2 had other ideas. Still, Soria supports a broad reach for the statute authorizing fees. Ultimately, Leader and Soria obscure the application of Probate Code Section 17211 and the meaning of similar Probate Code Sections 2622.5 and 11003—the former dealing with conservatorships and guardianships and the latter with estate administration. These three cover the ambit of probate disputes and attempt to remove incentives for litigation filed without reasonable cause and in bad faith. That is the key part of the code sections, and Leader is right on that point. Soria, by contrast, seems to have gone off the rails to reach the correct result. Leader3 arose in the context of Probate Code Section 17211, which authorizes a probate court to issue an award of attorney’s fees if a party to a contest of a trustee’s account has acted without reasonable cause and in bad faith. Division One of the Fourth District of the California Court of Appeal interpreted the statute broadly in a manner not supported by published precedent. Three months later, Division Three of the Fourth District decided in Soria4 that the liberal interpretation of Section 17211 had gone far enough. Section 17211 is virtually identical to Probate Code Sections 2622.5 and 11003, so Leader and Soria not only apply to a trustee’s account contest but also to bad faith litigation over conservatorships, guardianships, and estate administration. In Leader, the trustee had refused to make a distribution to beneficiaries. Instead, he used his trustee’s powers to leverage a benefit for himself. While obligated to regularly render accounts to the beneficiaries, the trustee had failed to do so, and the beneficiaries demanded an accounting. Ultimately, the beneficiaries filed a petition seeking a finding that the trustee had committed breaches of trust by 12 Los Angeles Lawyer February 2011 failing to file regular accountings. The beneficiaries also sought attorney’s fees under Section 17211. The trial court found that the trustee had violated the Probate Code but nevertheless denied the beneficiaries’ request for attorney’s fees. According to the trial court, the action against the trustee for failure to file an account did not amount to a “contest of the trustee’s account,” stating that Section 17211 was unambiguous on this point. The appellate court disagreed. Citing Mayo v. DMV, the court of appeal declared that a statute is ambiguous if it is “‘reasonably susceptible of two disputed meanings.’”5 The beneficiaries argued that a petition based on a theory of breach of trust for failure to file an accounting amounted to a contest of the trustee’s account. The trustee and the trial court took the opposite view. The petition filed by the beneficiaries did not contest an account but instead sought only a determination that the trustee’s conRichard G. Reinis is a senior partner at Steptoe & Johnson LLP, where he is a member of the Business Solutions and Litigation Departments. Reinis represented the trustee of the Rudnick Estates Trust at trial and on appeal in Rudnick v. Rudnick and secured a denial of a petition of review before the California Supreme Court. duct constituted a breach of trust. In resolving this dispute, the appellate court stated, “Thus, if we accept [the trustee’s] interpretation of the phrase as reasonable, the phrase [‘contests the trustee’s account’] is reasonably susceptible to more than one meaning.”6 In Leader, the beneficiaries sought to have the statute interpreted broadly in order to collect attorney’s fees. They easily surmounted the hurdle of “without reasonable cause and in bad faith,” but the unfortunate phrase “contests the trustee’s account” stood in the way. Nevertheless, the court relied on another handy rule of interpretation. Referring to the statute as remedial, the court declared that the statute’s language was entitled to broader interpretation and determined that the phrase “contests the trustee’s account” should include contests “related to an account.” Thus, a statute that provides a means for the enforcement of a right or the redress of a wrong is a remedial statute.7 Litigators may wonder how many statutes do not fall into this category. Moreover, according to the Leader court, a remedial statute “must be liberally construed ‘to effectuate its object and purpose, and to suppress the mischief at which it is directed.’”8 The opinion concludes: We do not envision that the Legislature intended to leave beneficiaries in [the petitioners/beneficiaries’] position without potential recourse under section 17211, subdivision (b), for the unreasonable and bad faith opposition to [their] petition for distribution, merely because they do not challenge the accuracy of the account’s enumerated receipts and distributions, or assets and liabilities. Such a narrow reading of 17211, subdivision (b) would defeat its remedial purpose.9 Soria versus Leader After Leader, one might have predicted that the odds of securing an award of attorney’s fees in probate litigation related to a trustee’s account (or an objection to an account of a conservator or guardian filed under Section 2622.5, or an account filed in connection with estate administration under Section 11003) had gone up considerably, provided one party could prove the other’s unreasonableness and bad faith. Not so. Three months after the publication of Leader, the Soria court issued its opinion dealing with the exact same statute. The Soria plaintiffs were the grandchildren of the defendants. In a written agreement, the grandparents had accepted title to the plaintiffs’ family home with the understanding that the house would be reconveyed to the grandchildren. When that did not happen, the plaintiffs filed a complaint containing multiple causes of action, including a request for similar relief to that secured by the Leader beneficiaries—a determination of a breach of trust by the trustees and an injunction compelling the grandparents/trustees to account. The action was not brought under the Probate Code. A jury rendered a verdict for the grandchildren/beneficiaries who subsequently, and successfully, moved against the grandparents for attorney’s fees under Section 17211(b). The Soria court reversed on several grounds. First, the grandchildren/beneficiaries did not contest a trustee’s account: Instead, [the plaintiffs] pursued a civil action against [the defendants], alleging they breached their duties as trustees, and sought an injunction to compel [the defendants] to produce an account. The very existence of a trust was in dispute. At trial, there was no contest of a trustee’s account within the meaning of section 17211(b).10 This is an odd statement, since the grandparents called an accountant as a witness, and he presented an accounting at trial. Next, the Soria court argued that Leader was distinguishable because Soria was a civil action, and the fees were sought as a personal judgment against the trustees, not surcharged against future compensation from or an interest in the trust. The court stated, “Section 17211(b) does not permit attorney fees to be awarded in such a manner.”11 Neither of these grounds can withstand reasonable scrutiny. The grandchildren’s challenge in Soria was certainly related to a trustee’s account, just like the Leader beneficiaries’ petition for a determination of a breach of trust for failure to account. That the grandchildren did not file a petition under Section 17200, as had the beneficiaries in Leader, differentiates the two cases, but in form only, not at all in substance. The plaintiffs and the defendants in Soria, in effect, acquiesced to the jurisdiction of the court at law, not equity, and a jury trial followed. Indeed, one can question whether this was the parties’ prime motivation in choosing to forego a probate proceeding. But did that forum selection deprive the parties of the special rules of a court in equity and the application of the Probate Code to the proceedings? The Soria court noted12: [The probate court] had exclusive jurisdiction over Grandchildren’s claims.… By hearing a matter within the probate court’s exclusive jurisdiction, a trial court acts merely in excess of jurisdiction, not without jurisdiction.…In this case, no party has objected to the trial court’s exercise of jurisdiction over a matter exclusively within the probate court’s jurisdiction, and therefore the trial court merely acted in excess of jurisdiction….As a result, the judgment is not void.…13 Thus, the Probate Code applied, and the trial court was acting within its power when it applied Section 17211(b). That left the question of whether Section 17211(b) was properly applied, but the Soria court’s attempt to distinguish Leader by noting the issue of forum selection appears to lack substance. The Soria court determined that Section 17211(b) does not apply on the ground that the remedy available under the Probate Code is a surcharge against the trustee’s compensation or other interest of the trustee in the trust. The opinion states that this type of remedy cannot be accomplished in a civil action that results in a money judgment against the trustee. However, Section 17211(b) states that the trustee shall be personally liable for any amount that remains unsatisfied from the trustee’s compensation or interest in the trust. The line drawn by the Soria court is a distinction without a meaningful difference. Leader posed a truly substantive problem that required disposition. The beneficiaries in Leader did not contest the trustee’s account but brought an action alleging a breach of fiduciary duty for failure to account. The Soria beneficiaries similarly brought an action to compel an accounting, so Leader and Soria both invoke an account. Therefore, following the logic of Leader, the court of appeal in Soria should have upheld the trial court. The Soria court did not dodge this reasoning and agreed that Section 17211(b) is remedial and must be liberally construed. Nevertheless, the court applied a “prevailing party” standard. The trustees’ trial presentation of an account had served as the basis for the ultimate award, which required both parties to make certain payments: “Thus, if Grandchildren did anything at trial that could be construed as a contest to the account, the contest was unsuccessful.”14 In other words, the action may have been related to or a contest of an account, but the plaintiffs were not the prevailing party—a factor implicit in a statute that conditions relief on a finding that an action was without reasonable cause and in bad faith. Had the Soria court concluded its opinion on this point, the two cases might have been reconciled. Simply put, in Soria the grandparents/trustees acted with reasonable cause and not in bad faith. That constitutes a true point of distinction. Unfortunately, the Soria court went further. Its opinion attempts to distinguish Leader with an analysis of the statutory scheme in Part 5 of the Probate Code, Judicial Proceedings Concerning Trusts, including Sections 17000 to 17450 and, in particular, Section 17211. The court’s efforts in this regard are unconvincing. The court draws a distinction between a contest to an existing Los Angeles Lawyer February 2011 13 account and a proceeding to compel the trustee to account, thus veering away from liberally construing Section 17211(b) to include anything “relating to an account.” Concluding that an action to compel an accounting would not be covered by Section 17211(b), the Soria court delivered a coup de grace to liberal construction: “If the Legislature intended to include within section 17211 a proceeding to compel the trustee to account, it would have expressly done so.”15 The opinion proceeds to drive the point home: “Section 17211 is a remedial statute, but liberal construction can only go so far.”16 To apply Section 17211(b) in this case “would in effect turn section 17211(b) into a statutory basis for recovery of attorney fees in virtually any case in which the existence of a trust is in dispute or any action of a trustee is challenged. We do not discern any intent by the Legislature to reach that result by enacting section 17211(b).” 17 The court directly addressed the Leader ruling: Our conclusion is not inconsistent with Leader because it differs from this case [in that]…the beneficiaries in Leader pursued a petition in the probate court [and]…[h]ere, in contrast, Grandchildren did not follow the Probate Code procedures for proceedings concerning the internal affairs of a trust but pursued a civil action….In Leader, the petition to compel the trustee to make a final distribution arose from and was directly related to the trustee’s accounting. Here, Grandchildren’s lawsuit did not arise out of an accounting. Grandchildren and Grandparents disputed whether a trust even existed.18 The rule of law is not advanced by this part of the opinion. Once the court had made its determination of the section’s inapplicability, it ruled out other sources of potential recovery of attorney’s fees for the grandchildren/beneficiaries. Starting its analysis with a description of the American Rule—each party to a dispute is responsible for its own attorney’s fees unless otherwise specified by agreement or statute— as codified in Code of Civil Procedure Section 1021, the Soria court simply states, “There are a few exceptions to this rule, but none is applicable here.”19 From the Soria court’s view that the grandchildren’s choice of forum rendered the dispute at issue a “civil proceeding,” not a “probate proceeding,” the only means of recovery of attorney’s fees for the victorious party was by statute or contract, neither of which existed to support an award of attorney’s fees. Broad Equitable Powers However, the Soria court’s dismissal of exceptions to the American Rule was a major over14 Los Angeles Lawyer February 2011 sight. One very significant exception to the American Rule is available in courts of equity, including probate courts—and probate courts maintain broad equitable powers over trusts within their jurisdiction. Once the jury rendered its verdict that the agreement was a trust, the trial court in Soria became, in effect, a probate court. Indeed, according to Rudnick v. Rudnick—a decision issued by the Fifth District of the court of appeal in 2009— those broad equitable powers include the power to award attorney’s fees, especially when the court has determined that the proceeding is unfounded and was brought in bad faith.20 At trial in Rudnick, three (of more than 10) beneficiaries (“objectors”) challenged a trustee’s petition under Section 17200 regarding instructions to consummate a sale of a large tract of land near Tehachapi. A majority of the beneficiaries had voted favorably, and the trustee sought approval from the probate court. The trustee called the trust accountant to the stand, who presented an accounting and the proposed distribution of sale proceeds. The trial court ruled in favor of the trustee, finding the objectors’ testimony lacked credibility. Moreover, in response to a subsequent motion by the trustee for attorney’s fees and costs, the court ruled that the objectors had acted in bad faith by challenging the petition pretextually, with the real intent to delay and derail the sale approved by the majority. In granting the motion, the trial court assessed the fees against future distributions to the objectors. The trustee had advanced two arguments: The • probate court has the general equitable authority to make an award of attorney’s fees to apportion the costs of a trial among those whose bad faith conduct was responsible for those costs. • Under Section 17211(a), the mirror image of subsection (b), the trial court may make an award of attorney’s fees against beneficiaries who contest the trustee’s account without reasonable cause and in bad faith. The objectors’ argument was identical to those made by the trustee in Leader and the Soria court: The objectors’ contest was to the sale (or distribution), not to an account rendered by the trustee. However, the trial court in Rudnick never reached the trustee’s second argument. Its decision was predicated on the general exception to the American Rule for probate courts under Estate of Ivey,21 cited as the case law upon which the passage of Section 17211 was based. This seminal case stands for the proposition that “a probate court, pursuant to its equitable powers and authority over administration of a testamentary trust, may provide that reasonable and necessary legal fees incurred by other beneficiaries in oppos- ing a first beneficiary’s frivolous bad faith attacks on the trustee’s account had to be paid out of the first beneficiary’s share of the trust.”22 Section 17211 and Ivey are founded on the notion that it is unfair for nonlitigant beneficiaries of a trust to bear the costs of defending against bad faith litigation instigated by other beneficiaries. The trial court in Rudnick never ruled on the statutory argument but ordered that attorney’s fees be charged to the future distributions of the objectors, because it was unfair for the nonlitigants to have to pay the costs of defending against the bad faith actions of the objectors. The Fifth District Court of Appeal agreed that this was an equitable apportionment of costs incurred by the trustee. The Rudnick court relied on Conley v. Waite 23 : “[W]hen an unfounded suit is brought against [the trustee] by the cestui que trust, attorney’s fees may be allowed him in defending the action and may be made a charge against the interest in the estate of the party causing the litigation.”24 The Ivey court also relied on Conley, among others: Courts having jurisdiction over trust administration have the power to allocate the burden of certain trust expenses to the income or principal account and not infrequently do so in connection with accountings or suits relating to the administration of the trust. Sometimes this authority is stated in statutory form, but it exists as part of the inherent jurisdiction of equity to enforce trusts, secure impartial treatment among the beneficiaries, and to carry out the express or implied intent of the settlor.…Where the expense of litigation is caused by the unsuccessful attempt of one of the beneficiaries to obtain a greater share of the trust property, the expense may properly be chargeable to that beneficiary’s share.…25 In Leader, the beneficiaries paid their own attorney’s fees and one-half of the trustee’s attorney’s fees to defend their own action. This was inequitable because the trustee’s opposition to the beneficiaries’ contest was in bad faith. Thus, the beneficiaries were awarded their attorney’s fees against the trustee’s interest in the trust or in compensation from the trust. If there had been a finding that the action was not a contest of a trustee’s account, the Leader court, relying on Ivey and Rudnick,26 might still have made its attorney’s fees award to equitably apportion legal fees incurred by the bad faith conduct of the trustee in trying to use his power to distribute as leverage to secure a benefit from the beneficiaries to which he was not entitled under the trust. PRIVATE CLUB 545 SOUTH FIGUEROA STREET, LOS ANGELES, CA USC GOULD SCHOOL OF LAW 2011 REAL ESTATE LAW AND BUSINESS FORUM REAL ESTATE11 Look to the Future at the Most Highly Attended Real Estate Law and Business Conference in Southern California AGENDA MORNING Commercial Real Estate Markets in the U.S.: Forecasting Trends and Pricing Risks • Real Estate Financing Sources in the Post-Crash Market • Development Reform In Troubled Times • The Expanding Role of Preferred Equity in Rescuing Commercial Properties • $1.3 Trillion in Failed CMBS: The Coming Tsunami • Changing Face of Retail • Breakfast Session: Building a Practice Inside a Firm AFTERNOON Luncheon Keynote by USC Athletic Director Pat Haden • Calculation Issues on Joint Ventures and Preferred Equity • Office and Commercial Leasing and Bankruptcy • Strategies for Transit-Oriented Developments and Sustainable Communities • Securitized and Structured Financing Going Forward • The Failing Real Estate Project • Financing Strategies for Renewable Energy Projects • Quick Hits on Hot Topics CLOSING “Meet the Speakers and Network” Annual Wine and Cheese Reception NATIONALLY KNOWN SPEAKERS INCLUDE: • Tom Adams • Ashwin Adarkar • Hunt Barnett • Austin Beutner • Andrew Berman • Gregg Bloomberg • Ted Brandt • Michael Carp • Sam Chandan • Victor Coleman • John Eber • Chip Fedalen • Jonathan Firestone • Jeff Friedman • Jeff Giller • Sally Gordon • Larry Green • Justin Guichard • Eric Hafter • Melinda Hall-Wood • Hasan Ikhrata • Eric Isken • Larry Kosmont • Joan Kramer • Mark Landau • Art Leahy • George Lefcoe • Bill Lindsay • Michael LoGrande • Richard Lyon • Michael May • John Menne • Glenn Mueller • Dick Rai • Patrick Randolph • Andrew Ratner • Andrew Redinger • Jonathan Roth • Randall Rothschild • Marshal Salant • Bleecker Seaman • Renata Simril • Arturo Sneider • Glenn Sonnenberg • William Tayler • and dozens of other real estate stars Earn CLE/CPE/DRE credits! Special discount for co-sponsors and local bar association members. Visit our website: http://law.usc.edu/cle/realestate WEDNESDAY MARCH 2, 2011 There was no finding of bad faith in Soria and no clear winner, although the grandparents were ordered to reconvey the home. The trustee apparently mounted a legitimate contest that required a jury to characterize a layman’s document as a trust and then interpret the trust. Equitable apportionment arguably was not warranted, so the alternative to applying Section 17211(b) was still not available. However, the reliance in Soria on the American Rule is misplaced. Probate courts, sitting in equity, have the power to protect innocent beneficiaries and a trust corpus from the costs of defending against bad faith litigation.27 This general rule is modified by Section 17211 to be applicable when the conduct relates to or contests a trustee’s account.28 The standard under that statute requires a finding that the conduct is without reasonable cause and in bad faith. Need for Legislative Action Beneficiaries in both Leader and Soria initiated actions to accomplish something more fundamental than contesting an account, and any focus on the word “contesting” may run counter to the statutory purpose. Both sought a distribution of trust assets from reluctant trustees. In Leader, the alleged failure to account supports the court’s finding that the action was related to an account. In Soria, the plaintiffs sought an injunction to compel the reconveyance of the residence, the trust corpus, and the rendering of an account. Notwithstanding the Soria court’s characterization that what was presented did not constitute an account under the Probate Code, the defendants did indeed present one at trial. These cases are not distinguishable on the ground set forth by Soria that the plaintiff grandchildren’s action was not related to or a contest of a trustee’s account. The distinction, if there is one, is that the trustee in Leader acted without reasonable cause and in bad faith—a characterization that the court did not make regarding the trustee’s actions in Soria. A finding of a breach of the trust agreement is not ipso facto acting without reasonable cause and in bad faith. The Soria court simply might have determined that Section 17211(b) was inapplicable because the failure to account by the grandparents/trustees was not without cause and in bad faith. The appellate court did not go that far but rather looked for another reason to determine the section inapplicable. By repeatedly referring to the plaintiffs’ failure to follow procedures under the Probate Code, the Soria court seems to be hedging its bet—rendering Section 17211(b) inapplicable by choice of forum, if not by statutory interpretation. Focusing on the trustee’s conduct in the two cases may lead to a more harmonized con16 Los Angeles Lawyer February 2011 clusion. In Leader, the trustee refused to make a distribution unless the beneficiary agreed to something unrelated to the trust. In Soria, the trustees refused to convey (distribute) the house, claiming there was no trust and that the preconditions to reconveyance had not been satisfied. The former was not a justification for the trustee’s contest of the beneficiaries’ action. The latter was. This analysis is not evident in the most recent decision. The Soria court’s conclusion that the action was not a contest of a trustee’s account is contrary to the Leader holding and can only lead to confusion. Section 17211 has now been interpreted in such a manner as to raise issues that are truly incidental to its statutory intent, such as the meaning of “contests a trustee’s account,” “account,” and now “related to a trustee’s account.” The statute should apply to actions taken by either a trustee (as in Leader) or beneficiaries (as in Rudnick) when such actions are without reasonable cause and in bad faith and impose unreasonable costs on other beneficiaries or the trust estate. The application of this remedial statute ought to be available to litigants regarding any matter raised under Section 17200. This raises the question of whether Section 17211 is a sanction or a means by which costs may be fairly allocated, or both. A starting point is a review of Section 17211(a), which allows a trustee to charge his or her attorney’s fees against the trust interests when objecting beneficiaries challenge the trustee’s account in bad faith. Why should this power be limited to an “account” as narrowly defined in certain sections of the Probate Code? If the trustee reports on internal matters of the trust, such as the approval of an asset sale by the majority beneficiaries, as in Rudnick, and seeks instructions from the court to consummate the transaction, why should the costs of a bad faith attack on that petition be borne by the other beneficiaries who, arguably, are protected against something less momentous—a bad faith attack on a list of assets and liabilities? Is it probable that the legislature, in enacting Section 17211(b), intended for beneficiaries to be entitled to an award of attorney’s fees incurred in connection with a trustee’s bad faith opposition to a contest of their account but would not be entitled to attorney’s fees if they brought an action to compel a distribution or an accounting by a trustee, who then files an opposition without reasonable cause and in bad faith? The Leader court does a decent statutory analysis and comes to the right conclusion that Section 17211(b) should be available in actions related to a trustee’s account. It reached this result under circumstances in which the trustee used his position of power to establish a negotiating advantage unrelated to the trust corpus. The court was not required to go further and rule that the statute must be applied whenever a trustee or beneficiary contests a matter brought under Section 17200 without reasonable cause and in bad faith, but that result would have been much easier to understand than a rule that applies the statute when the contest is “related” to an account. Soria, in which the trustee denied even the existence of a trust and proved that money was to be paid by others, declines to follow that path because there was no bright line of bad faith. A court can only apply a remedial statute when it clearly perceives misconduct. In Olmstead v. Arthur J. Gallagher & Company, the California Supreme Court states: “[T]he language of a specific Section must be construed in the context of the larger statutory scheme of which it is a part.”29 A court must interpret code sections “to ascertain the intent of the lawmakers so as to effectuate the purpose of the law.…But it is settled principle of statutory interpretation that language of a statute should not be given a literal meaning if doing so would result in absurd consequences which the Legislature did not intend….”30 Both the Leader and Soria courts agree that Section 17211 is remedial but disagree as to which wrongs are to be remedied. The legislature needs to amend Probate Code Section 17211 as well as Sections 2622.5 and 11003 to clarify that if a litigant in a probate matter is pursuing a claim without reasonable cause and in bad faith, the litigant must pay all costs and fees incurred. Whether the litigation involves a report, an account, an accounting, a distribution, an expense reimbursement, a failure to perform under the code, or any other legitimate function of conservators, guardians, estate administrators, or trustees, any party found to have acted without reasonable cause and in bad faith ought to pay. Litigation depletes assets— not only those of directly affected parties but also innocent third parties, including taxpayers. ■ 1 Leader v. Cords, 182 Cal. App. 4th 1588 (2010), rev. denied, No. S182335 (June 9, 2010). 2 Soria v. Soria, 185 Cal. App. 4th 780, 783 (2010), rev. denied, No. S184803 (Sept. 1, 2010). 3 Leader, 182 Cal. App. 4th 1588. 4 Soria, 185 Cal. App. 4th 780. 5 Leader, 182 Cal. App. 4th at 1596 (citing Mayo v. DMV, 193 Cal. App. 3d 406, 408 (1987)). 6 Id. 7 Rich v. Maples, 33 Cal. 102, 106 (1867); Miller v. Hart, 11 Cal. 2d 739, 741 (1938). 8 Leader, 182 Cal. App. 4th at 1598 (citing Tintocalis v. Tintocalis, 20 Cal. App. 4th 1590, 1592 (1993) (citing Ford Dealers Ass’n v. DMV, 32 Cal. 3d 347, 356 (1982))). 9 Id. at 1599. 10 Soria v. Soria, 185 Cal. App. 4th 780, 783 (2010), rev. denied, No. S184803 (Sept. 1, 2010). 11 Id. at 784. 12 Id. at 787 n.3. 13 Id. (citations omitted). 14 Id. at 787. The statute does not employ the term “success” or “prevailing party” or otherwise require a certain outcome, although the likelihood of a court making the requisite finding but ruling against the petitioner seems slim. The Senate Committee report on SB 392 on January 16, 1996, described the new statute as “authoriz[ing] a court to award [attorney’s] fees to a prevailing party where there is a bad faith challenge or defense to a [trustee’s] account.” CAL. SENATE JUDICIARY COMM. PROBATE LAW OMNIBUS BILL, 1995-96 Reg. Sess., at 6 (1996). 15 Soria, 185 Cal. App. 4th at 788. 16 Id. at 789. 17 Id. 18 Id. 19 Id. at 785 (citing Gray v. Don Miller & Assocs., Inc., 35 Cal. 3d 498, 504 (1984)). 20 Rudnick v. Rudnick, 179 Cal. App. 4th 1328 (2009) (citing Hollaway v. Edwards, 68 Cal. App. 4th 94, 99 (1998)). 21 Estate of Ivey, 22 Cal. App. 4th 873 (1994). 22 ARNOLD H. GOLD, MONICA DELL’OSSO & MARY F. GILLICK, CALIFORNIA CIVIL PRACTICE PROBATE AND TRUST PROCEEDINGS §§10:51, 24:118 (2005 & Supp. 2009). Judge Arnold Gold (ret.) filed an amicus curiae letter on February 10, 2010, with the California Supreme Court in support of a petition for review of Rudnick. In this letter, Judge Gold stated that the ruling in Rudnick was “quite dangerous—it opens the door to a flood of requests for attorneys fees awards in trust litigation based solely on the argument that such an award would be ‘equitable’ under the circumstances—excessively encouraging litigation and discouraging settlements.” Amicus Curiae Letter from Hon. Arnold H. Gold to California Supreme Court, at 1 (Feb. 10, 2010) (“Judge Gold Amicus Curiae Letter”), in Rudnick, No. S179383. However, Rudnick specifies that an equitable apportionment is not an abuse of discretion when a beneficiary’s contest is unfounded. Rudnick, 179 Cal. App. 4th at 1334 (citation omitted). 23 Conley v. Waite, 134 Cal. App. 505, 506 (1933). 24 Rudnick, 179 Cal. App. 4th at 1334. 25 Ivey, 22 Cal. App. 4th at 883 (citations and quotations omitted). 26 See also Vokal v. Davison, 121 Cal. App. 2d 252, 260-61 (1953); Estate of Reade, 31 Cal. 2d 669, 67172 (1948), cited in Rudnick, 179 Cal. App. 4th at 1336 n.2; Estate of Kann, 253 Cal. App. 2d 212, 223 (1967); Serrano v. Priest, 20 Cal. 3d 25, 35 (1977) (citing Quinn v. State of Cal., 15 Cal. 3d 162, 167 (1975)). 27 See Rudnick, 179 Cal. App. 4th 1328. 28 Judge Gold takes credit for authoring Section 17211 and “shepherd[ing] it through the legislative process.” Judge Gold Amicus Curiae Letter, supra note 22, at 2. He describes this statute as granting probate courts the power to order the losing party in a contest over an accounting to pay attorney’s fees and other expenses of the contest if the contest or defense thereof was without reasonable cause and in bad faith and notes it was modeled after Ivey. Id. His letter concludes, “Why did I bother? According to the Rudnick opinion, the probate court already had that power as part of its equitable powers (and especially when bad faith has been shown)! I suspect that a review of the legislative history of Probate Code Section 17211 would reflect that the Legislature didn’t think it was engaging in an idle act when it adopted that statute.” Id. 29 Olmstead v. Arthur J. Gallagher & Co., 32 Cal. App. 4th 804, 811, 11 Cal. Rptr. 3d 298, 303 (2004). 30 Id. (citations omitted). Judge Michael D. Marcus (Ret.) Mediator • Arbitrator • Discovery Referee EXPERIENCED • PERSUASIVE • EFFECTIVE Daily Journal Top Neutral 2007, 2009 & 2010 Super Lawyer, Dispute Resolution 2008-2010 • Employment • Business/Commercial • Personal Injury Century City Downtown Los Angeles Orange County tel: 310.201.0010 www.marcusmediation.com email: [email protected] • Legal Malpractice • Real Property • Intellectual Property Available exclusively at Los Angeles Lawyer February 2011 17 by Julian W. Poon and Blaine H. Evanson CLASS DISTINCTIONS The circuits have invoked a variety of different standards in certifying classes for litigation 18 Los Angeles Lawyer February 2011 in class action filings has caused a corresponding rise in the number of federal appellate court decisions on issues relating to class certification. Particularly since 1998, when Rule 23 of the Federal Rules of Civil Procedure was amended to allow for discretionary interlocutory review of class-certification decisions,3 federal appellate courts have been thrust into a developing and complex area of the law. The U.S. Supreme Court has, however, remained largely silent. The most recent Supreme Court decision to address class certification in any significant detail was Ortiz v. Fibreboard Corporation, over 10 years ago.4 Lower federal courts have thus been left to wrestle with the complex issues related to class certification, and clear splits among these courts have developed. The lack of Supreme Court guidance has led to divergent approaches by the lower courts in many key areas, including 1) the standards governing the extent to which claims for monetary relief may be pursued in Rule 23(b)(2) “mandatory” class actions for injunctive and declaratory relief, 2) the use of so-called hybrid class actions, 3) the standing requirements for absent class members, 4) the burden of proof on plaintiffs at the classIn Gibson, Dunn & Crutcher LLP’s Los Angeles office, Julian W. Poon is an appellate, class actions, and general commercial litigation partner, and Blaine H. Evanson is an associate with the Appellate and Constitutional Law and Class Actions practice groups. The authors or their firm represented the defendants in Dukes, Gianzero, Bateman, Bates, and Klay. KEN CORRAL T he number of class actions in California and the country is rising at a dramatic pace. According to a report in the Los Angeles Daily Journal, 30 percent of U.S. companies and 39 percent of California companies had a class action filed against them in 2009.1 Between late 2001 and early 2007, consumer class actions rose 156 percent and accounted for more than 20 percent of all class action filings in the latter period. Labor class actions increased 228 percent, constituting 46.9 percent of class action filings in late 2007. The Ninth Circuit, in particular, has experienced a surge in class actions. There was a 560 percent increase in filings between July-December 2001 and January-June 2007.2 It should not be surprising that the increase certification stage, and 5) the certification of punitive damages and statutory penalties, and the aggregation problem to which they give rise. Practitioners should pay careful attention to developments and divergences in these areas. Monetary Relief in 23(b)(2) Classes As most practitioners are aware, there are three types of class actions under Rule 23 of the Federal Rules of Civil Procedure. In the past decade, plaintiffs have increasingly resorted to Rule 23(b)(2) class actions in seeking injunctive relief and monetary damages.5 They have done so in part because Rule 23(b)(2) avoids the expensive notice and opt-out requirements of (b)(3) certification.6 Defendants have also sought (b)(2) certification in certain circumstances in order to avoid the added inefficiency and cost of dealing with individual plaintiffs who exercise their right under Rule 23(b)(3) to opt out.7 Rule 23(b)(2) only authorizes the certification of a class if “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” The Supreme Court in Ticor Title Insurance Company v. Brown suggested that monetary relief may not be sought in (b)(2) classes, because “class members may have a constitutional due process right to opt-out of any class action which asserts monetary claims on their behalf,” and (b)(2) does not require notice or provide for opt-out rights.8 But Ticor did not resolve this issue, and lower courts have adopted different standards on how district courts are to analyze whether a putative class seeks relief that is predominantly injunctive and/or declaratory, as Rule 23(b)(2) requires. The Fifth Circuit was the first to address the issue, holding in Allison v. Citgo Petroleum Corporation that claims for monetary relief impermissibly predominate in putative (b)(2) class actions unless they are “incidental” to plaintiffs’ requests for declaratory and injunctive relief.9 Monetary relief is “incidental” when the damages “flow directly to the class as a whole,” and the court can calculate damages without the need for individualized determinations.10 The Allison test is the most stringent of the three major standards to have been adopted by different circuits so far. Although it is not completely in keeping with the Supreme Court’s concern in Ticor, the Allison test is less likely to raise due process concerns for defendants than the competing standards. The Third, Sixth, Seventh, and Eleventh Circuits all generally follow the Fifth Circuit’s rule.11 The Second Circuit, in contrast, adopted 20 Los Angeles Lawyer February 2011 a more malleable, pro-plaintiff interpretation of when claims for monetary relief impermissibly predominate. In Robinson v. MetroNorth Commuter Railroad Company, the Second Circuit rejected the Allison rule and applied an “ad-hoc balancing” test instead.12 Robinson holds that the court must assess “whether (b)(2) certification is appropriate in light of ‘the relative importance of the remedies sought, given all of the facts and circumstances.’”13 This flexible approach focuses on whether the plaintiffs’ request for injunctive relief is just a sham.14 The Ninth Circuit fashioned a new, third approach earlier this year in Dukes v. WalMart Stores, Inc.15 The court held that a (b)(2) class may seek only monetary damages that are “not superior in strength, influence, or authority to injunctive and declaratory relief.”16 The Ninth Circuit formulated this new standard based on a collegiate dictionary definition of “predominate” as “superior in strength, influence, or authority”—as well as other not-yet-enumerated factors.17 However, the main thrust of its test remains functional: [W]hether the monetary relief sought determines the key procedures that will be used, whether it introduces new and significant legal and factual issues, whether it requires individualized hearings, and whether its size and nature—as measured by recovery per class member—raise particular due process and manageability concerns.18 The Supreme Court has granted certiorari to review the Ninth Circuit's decision. There are at least two significant concerns that will likely influence any resolution of this issue by the Supreme Court. First, certification of a (b)(2) class seeking monetary relief runs counter to the Supreme Court’s reasoning in Ortiz v. Fibreboard Corporation, which rejected an expansive application of Rule 23(b)(1) because the case went beyond (b)(1)’s historical roots.19 Allowing significant claims for monetary relief in a (b)(2) class similarly extends (b)(2) beyond its historical roots. Second, a (b)(2) class seeking monetary relief may raise due process and fairness concerns because it may give rise to intra-class conflict. Some members may have large monetary claims and others small claims.20 These conflicts of interest undermine the fairness of binding divergent class members to the same outcome in the settlement or other resolution. Hybrid Class Actions Some courts and commentators have suggested that any concerns regarding monetary relief claims in putative (b)(2) class actions could be resolved through hybrid class actions, to the extent the concerns can be resolved at all.21 Unfortunately, the term “hybrid” has sometimes been used imprecisely to describe a number of distinct hybrids. The different hybrids include 1) the quasi hybrid of providing notice and possibly optout rights in a (b)(2) class, and 2) the (b)(2)/(b)(3) hybrid. These hybrids suffer from significant flaws that militate against their use. For example, in an attempt to alleviate due process concerns, some courts and litigants have provided notice and opt-out rights in a (b)(2) class action. Some courts have permitted individual plaintiffs with conflicting interests to opt out of the class on the basis that because courts may have more discretion to deviate from the (b)(3) requirement of “best notice practicable,”22 the cost of notice may be lower than in a comparable (b)(3) class.23 But this resulting quasi hybrid (b)(2) class action raises the same concern that has split the circuits over how to determine when claims for monetary relief in putative (b)(2) classes impermissibly “predominate” over claims for injunctive and declaratory relief. The quasi hybrid also runs counter to Ortiz, given that it arguably departs too much from the historical antecedents and models for (b)(2) classes. For example, a federal court in California certified a putative gender-discrimination class action under (b)(2) that sought compensatory and punitive damages.24 In doing so, the court noted that the monetary damages could require 19 individualized determinations.25 Such a case could be seen as standing in stark contrast to the examples that the Advisory Committee on the Federal Rules of Civil Procedure has provided. The committee’s (b)(2) examples all requested classwide injunctive (or declaratory) relief to the exclusion of individualized claims for money damages.26 A (b)(2)/(b)(3) hybrid may ameliorate some of the problems affecting (b)(3) hybrids and quasi hybrids, but the concerns remain. In a (b)(2)/(b)(3) hybrid, the court certifies an injunctive class under (b)(2) and separately certifies a damages class under (b)(3), effectively treating two different (but related) cases as one.27 This process may at least address some due process concerns, because individual plaintiffs would receive notice and the opportunity to opt out.28 The (b)(2)/(b)(3) hybrid raises problems of its own, however. Courts may be tempted to cut the analysis short as to whether each of the respective requirements of Rules 23(b)(2) and (b)(3) have been satisfied. But essential to the validity of this hybrid is that the district court performs a full (b)(2) analysis (i.e., the defendant must have “acted or refused to act on grounds that apply generally to the class,” and injunctive relief must be “appro- priate respecting the class as a whole”) for the injunctive class, and a full (b)(3) analysis for the monetary relief class (i.e., predominance of common questions, manageability, and superiority of a class action). Too often courts fail to ensure that each class component satisfies these requirements.29 There are also Seventh Amendment concerns with the (b)(2)/(b)(3) hybrid.30 By seeking to recover claims for monetary damages, the (b)(3) portion of a (b)(2)/(b)(3) hybrid could implicate the jury-right clause. action and likely redressable. 36 Although there is broad agreement among courts (including the Ninth Circuit)37 and commentators that at least one named plaintiff must have standing, there is currently a circuit split on whether every class member must have standing. In Denney v. Deutsche Bank AG, the Second Circuit held that every class member must have standing, reasoning that standing is a threshold, constitutional requirement that may not be relaxed or modified through at class certification is the burden of proof on plaintiffs, as movants, to establish each of the Rule 23 factors. Rule 23 does not specify the amount of proof required, and the Supreme Court has not yet addressed the issue. The trend among the circuits is to require plaintiffs to prove the Rule 23 factors by a preponderance of the evidence. The Third Circuit, in In re Hydrogen Peroxide Antitrust Litigation, held that “to certify a class the district court must find that the evidence more likely than not establishes each Monetary damages are traditionally recoverable in common-law courts (rather than courts of equity).31 Although the (b)(2) portion of this hybrid typically would not trigger a jury-trial right (because it seeks only an injunction or declaration), the Seventh Amendment requires a jury to decide all disputed facts affecting the right to recover on the (b)(3) money damages claim, including those facts that overlap with the (b)(2) injunctive relief claim.32 The right to a jury also implicates the Seventh Amendment’s reexamination clause. Due to the complexity of a typical (b)(2)/(b)(3) hybrid, a single jury may not always be able to hear and decide all of the pertinent issues triable to a jury. The reexamination clause prohibits a second jury from reexamining the factual findings of the first jury. 33 Therefore, the court must ensure, through, for example, careful instructions or innovative procedures, that successive juries do not come to different factual conclusions.34 However, this approach could render the (b)(2)/(b)(3) hybrid unmanageable and inefficient, and an unmanageable and inefficient class action defeats the purpose of a (b)(3) class action and should not be certified.35 the procedural device of Rule 23 or any other Federal Rule of Civil Procedure.38 In contrast, the Seventh Circuit, in Kohen v. Pacific Investment Management Company, held that only one named plaintiff must have standing.39 Writing for a unanimous panel, Judge Richard A. Posner reasoned that proving a class member was not injured leads to a dismissal on the merits, not a dismissal for lack of jurisdiction.40 Arguably, Denney more faithfully applies Article III’s requirements to the class-action context. Kohen, in contrast, could be read as conflating an Article III injury-in-fact with an injury sufficient to win the lawsuit on the merits. As the Denney court explained, “[A]n injury-in-fact need not be capable of sustaining a valid cause of action under applicable tort law.”41 The proper rule is likely that all class members must have suffered some injury, “[b]ut this requisite of an injury is not applied too restrictively.”42 fact necessary to meet the requirements of Rule 23,”43 and other courts, including the Second and Fifth Circuits, have held the same.44 Commentators have lauded this trend because plaintiffs, as movants, bear the burden of establishing that class adjudication is appropriate. In addition, because class actions are the “exception to the usual rule,”45 the “preponderance of the evidence standard makes the most sense.”46 Still, there remains much confusion among other courts, which have not specified what standard of proof applies.47 The standard district courts use therefore tends to vary, on an “ad hoc, case-by-case basis.”48 And the guidance from some appellate courts has been somewhat confusing. For example, in the Tenth Circuit plaintiffs must meet a “strict burden of proof” at class certification.49 At the same time, the Tenth Circuit has held that allegations in the complaint should be accepted as true at that stage of the proceeding.50 Another question that has been largely resolved is the district court’s burden at class certification, separate and apart from the burden on the plaintiffs. The previous confusion dates back to the Supreme Court’s decision in Eisen v. Carlisle & Jacquelin, in which it stated that “nothing in either the language or history of Rule 23…gives a court any authority to conduct a preliminary inquiry into the merits of a suit to determine whether it may be maintained as a class action.”51 Some courts had read this statement as pro- Standing Requirements Another constitutional issue dividing the courts of appeal is Article III’s case-or-controversy limitation on the jurisdiction of federal courts. This limitation requires an injuryin-fact that is traceable to the challenged Burden of Proof Issues of constitutional law are not the only area of divergence. Perhaps the most fundamental question related to class certification is the level of proof required of plaintiffs in order for a court to certify a class. This question, along with that of the appropriate level of rigorousness with which district courts should analyze plaintiffs’ proffered evidence, has led to serious disagreement among the circuits. A preliminary question relating to burdens Los Angeles Lawyer February 2011 21 hibiting any analysis at the class certification stage of issues that go to the merits of the case, even if those same issues are relevant and necessary to resolve the question whether a plaintiff has satisfied the requirements of Rule 23. The emerging consensus, however, is that courts are not only permitted but required to resolve issues that go to the merits when necessary to resolve an issue of Rule 23 certification.52 There was, for a time, a line of cases from the Second Circuit that held otherwise.53 Some district courts had cited those cases as support for eschewing any analysis of the merits of the case at class certification. But those decisions were disavowed in the Second Circuit’s landmark In re IPO decision, which held that district courts can and must resolve any merits inquiry that overlaps with a proper analysis of the Rule 23 requirements.54 Courts of appeal across the country have largely followed In re IPO. An interesting exception to this emerging trend is the Ninth Circuit’s en banc decision in Dukes v. Wal-Mart, which distinguished In re IPO and other similar cases, instead following a Southern District of New York decision rejecting such a rigorous analysis at class certification. The en banc court refused to follow In re IPO because it was a securities fraud case, not a Title VII case, and because the Second Circuit was analyzing Rule 23(b)(3)’s predominance requirement, rather than the Rule 23(a) commonality requirement at issue in Dukes. The approach in Dukes represents a clear break with the In re IPO line of cases, and it remains to be seen whether the court’s reasoning will gain traction with the Supreme Court or in other appellate courts. The final issue relating to burden of proof is the question of how district courts are to deal with competing expert testimony offered by the parties in support of and in opposition to class certification. The use of expert testimony in support of class certification has continued to grow as class actions become more widespread and more complex. And the proper level of scrutiny district courts should engage in with respect to expert testimony offered in support of or in opposition to class certification has been the subject of much controversy, recently creating a circuit split on the issue. When expert evidence is offered by a plaintiff in support of class certification, the initial question becomes whether a district court should analyze the testimony, analysis, or report for admissibility under Rule 702 of the Federal Rules of Evidence. The Seventh Circuit recently held that a full Daubert analysis is required at the class-certification stage to ensure that district courts are only relying on admissible evidence.55 Other courts have recognized that some 22 Los Angeles Lawyer February 2011 scrutiny of expert testimony is warranted at the class-certification stage, and have therefore performed some Daubert analysis, without engaging in full-fledged Daubert scrutiny. This line of cases stems from a district court decision in In re Visa Check/MasterMoney Antitrust Litigation, in which the Eastern District of New York held that a full Daubert inquiry is inappropriate at class certification; the court must only inquire as to whether the expert opinion is “fatally flawed.”56 The “fatally flawed” standard does not require the same rigorous analysis as does Daubert and allows expert testimony at the class-certification stage that could ultimately be inadmissible for use at trial on the merits. Apart from the analysis of whether expert testimony is admissible, many courts have held that even this is insufficient scrutiny at the class-certification stage, when the district court is the finder of fact, and must therefore weigh expert testimony and determine whether a plaintiff’s evidence is sufficiently persuasive to meet his or her burden of establishing the Rule 23 factors. This was the focus of the Third Circuit’s Hydrogen Peroxide decision, in which the court held summarily in a footnote that the testimony was admissible57 but undertook significant further analysis to weigh the plaintiff’s testimony against the analysis of the defendant’s competing testimony.58 The Third Circuit’s analysis in Hydrogen Peroxide seems to be more in keeping with the Supreme Court’s admonition that a class action “may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.”59 As the Seventh Circuit remarked, failing to engage in this analysis would amount to a “delegation of judicial power to the plaintiffs,” who could obtain certification simply by hiring a competent expert.60 But this issue, particularly with respect to expert testimony, is far from settled in the courts of appeal. Certification of Penalties A final class certification issue that is still developing in the circuits is the question of how to handle certification of punitive damages or statutory penalties. Certification of penalties raises numerous questions about the superiority of a class action as well as the due process rights of defendants. As one scholar has put it, “[O]nce a class is certified, a statutory damages defendant faces a bet-thecompany proposition and likely will settle rather than risk shareholder reaction to theoretical billions in exposure even if the company believes the claim lacks merit.”61 Based on a 1972 district court decision, Ratner v. Chemical Bank NewYork Trust Company, several courts have held that statutory penalties may in some circumstances be inappropriate in Rule 23(b)(3) class actions, because the existence of a penalty makes the class action not “superior” to individual actions, as Rule 23(b)(3) requires.62 In Ratner, Judge Marvin E. Frankel, one of the principal architects of Rule 23, held that paying the statutory minimum of $100 to each of the 130,000 class members for violations of the Truth in Lending Act “would be a horrendous, possibly annihilating punishment, unrelated to any damage to the purported class or to any benefit to defendant, for what is at most a technical and debatable violation.…”63 The court further held that “the allowance of thousands of minimum recoveries like plaintiff’s would carry to an absurd and stultifying extreme the specific and essentially inconsistent remedy Congress prescribed as the means of private enforcement.” Courts in the Sixth, Ninth, Tenth, and Eleventh Circuits have followed Ratner,64 but a recent decision casts some doubt on whether the Ninth Circuit will continue to follow it.65 This superiority rule is intended to balance the values of a class action, such as providing a mechanism for claims that otherwise would not be brought in individual actions, with the risks a proposed class raises. The existence of a built-in statutory penalty may increase the likelihood that individual claims will be brought, because of the incentive of increased potential recovery. A built-in penalty may at the same time raise the risks of a class adjudication, given that such a penalty, when aggregated across tens or hundreds of thousands of class members, would result in a damages award so large that it violates the defendant’s right to due process. Here again, courts have not uniformly followed Ratner. Some circuits have held that concerns over the excessiveness of penalties are inappropriate at the class-certification stage, as an unconstitutionally excessive penalty can be reduced postverdict.66 The problem with this argument is that postverdict review in many class actions may not be a realistic or practically feasible check, because once a class has been certified, class actions— particularly those involving potential penalties—settle at an overwhelmingly high rate. The risk of an extremely high penalty award that courts such as Ratner have highlighted is thus extremely important at the class-certification stage. This is therefore another issue of class-certification law that seems ripe for Supreme Court review. Several core issues of class-certification law have led to deep divisions in the courts of appeal and are ripe for Supreme Court review. The three-way split on the proper standard for determining the extent (if any) to which monetary damages are permissible in a (b)(2) class presents an important and recurring question. And the so-called hybrid class action—a potential, but extremely problematic, response to plaintiffs’ attempts to include monetary damages in a (b)(2) class action—has not been sanctioned by the Supreme Court or uniformly adopted by the courts of appeal. Other issues, such as the standing of absent class members, the burden of proof on plaintiffs at class certification, and the propriety of certifying classes seeking punitive damages or other penalties, raise important and recurring issues that have similarly split the circuits. ■ 1 See Robert W. Fischer Jr., California Tops Litigation Wave, L.A. DAILY J., Dec. 2, 2009. 2 Stephen G. Grygiel, The Impact of Four Years of Precedent on Litigating Class Actions, in CLASS ACTION LITIGATION 2009: PROSECUTION AND DEFENSE STRATEGIES 267 (2009). 3 FED. R. CIV. P. 23(f). 4 Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999). 5 See Mark A. Perry & Rachel S. Brass, Rule 23(b)(2) Certification of Employment Class Actions: A Return to First Principles, 65 N.Y.U. ANN. SURV. AM. L. 681, 689 (2010) [hereinafter Perry & Brass]; Jon Romberg, The Hybrid Class Action as Judicial Spork: Managing Individual Rights in a Stew of Common Wrong, 39 J. M ARSHALL L. R EV . 231, 253 (2006) [hereinafter Romberg]. 6 See Romberg, supra note 5, at 243. 7 See id. 8 Ticor Title Ins. Co. v. Brown, 511 U.S. 117, 120–21 (1994). 9 Allison v. Citgo Petroleum Corp., 151 F. 3d 402, 415 (5th Cir. 1998). 10 Id. 11 See Reeb v. Ohio Dep’t of Rehab. & Corr., 435 F. 3d 639 (6th Cir. 2006); Barabin v. Aramark Corp., 2003 WL 355417 (3d Cir. Jan. 24, 2003) (unpublished); Murray v. Auslander, 244 F. 3d 807 (11th Cir. 2001); Jefferson v. Ingersoll Int’l, Inc., 195 F. 3d 894 (7th Cir. 1999). 12 Robinson v. Metro-North Commuter R.R. Co., 267 F. 3d 147, 164 (2d Cir. 2001). 13 Id. (citation omitted). 14 See id. 15 Dukes v. Wal-Mart Stores, Inc., 603 F. 3d 571, 616 (9th Cir. 2010) (en banc), cert. granted, 79 U.S.L.W. 3128 (U.S. Dec. 6, 2010) (No. 10-277). 16 Id. (internal quotations and brackets omitted). 17 Id. 18 Id. at 617. 19 Ortiz v. Fibreboard Corp., 527 U.S. 815, 864-65 (1999); Perry & Brass, supra note 5, at 682–83. 20 See Romberg, supra note 5, at 283; Tobias Barrington Wolff, Preclusion in Class Action Litigation, 105 COLUM. L. REV. 717, 737 (2005). 21 See, e.g., Jefferson v. Ingersoll Int’l, Inc., 195 F. 3d 894, 898 (7th Cir. 1999); Eubanks v. Billington, 110 F. 3d 87, 95–96 (D.C. Cir. 1997); Romberg, supra note 5, at 283. 22 FED. R. CIV. P. 23(c)(2). 23 Romberg, supra note 5, at 254–55. 24 Ellis v. Costco Wholesale Corp., 240 F.R.D. 627, 642-44 (N.D. Cal. 2007) (currently before the Ninth Circuit on interlocutory review). 25 See id. at 643. 26 See Perry & Brass, supra note 5, at 699. 27 See Jefferson v. Ingersoll Int’l, Inc., 195 F. 3d 894, 898 (7th Cir. 1999). 28 See id. 29 See, e.g., Gianzero v. Wal-Mart Stores Inc., No. 09-00656, 2010 U.S. Dist. LEXIS 38426, at *13 (D. 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For More Information Call 213-617-7775 Or visit us on the web at www.hmlinc.com BUSINESS VALUATION • LOSS OF GOODWILL • ECONOMIC DAMAGES • LOST PROFITS Los Angeles Lawyer February 2011 23 Colo. 2010) (glossing over the four factors pertinent to certifying under Rule (b)(3)); Mathers v. Northshore Mining Co., 217 F.R.D. 474, 487 (D. Minn. 2003) (failing to analyze any of the (b)(2) or (b)(3) factors). 30 U.S. CONST. amend. VII. “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.” 31 See, e.g., Dukes v. Wal-Mart Stores, Inc., 603 F. 3d 571, 621 (9th Cir. 2010) (en banc), cert. granted, 79 U.S.L.W. 3128 (U.S. Dec. 6, 2010) (No. 10-277). 32 See id.; Romberg, supra note 5, at 287–92. 33 See Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S. 494, 497 (1931); 1 JOSEPH M. MCLAUGHLIN, MCLAUGHLIN ON CLASS ACTIONS §8:3 (6th ed. 2009). 34 See Romberg, supra note 5, at 287–92. 35 See FED. R. CIV. P. 23(b)(3)(D). 36 U.S. CONST. art. III; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). 37 Bates v. UPS, Inc., 511 F. 3d 974, 985 (9th Cir. 2007) (en banc). 38 Denney v. Deutsche Bank AG, 443 F. 3d 253, 263 (2d Cir. 2006). 39 Kohen v. Pacific Inv. Mgmt. Co., 571 F. 3d 672, 677 (7th Cir. 2009). 40 See id. 41 Denny, 443 F. 3d at 264. 42 7AA CHARLES A. WRIGHT, ARTHUR R. MILLER & MARY K. KANE, FEDERAL PRACTICE AND PROCEDURE §1785.1 (3d ed. 1998). 43 In re Hydrogen Peroxide Antitrust Litig., 552 F. 3d 305, 320 (3d Cir. 2008). 44 See, e.g., Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F. 3d 196, 202 (2d Cir. 2008); Oscar Private Equity Invs. v. Allegiance Telecom, Inc., 487 F. 3d 261, 269 (5th Cir. 2007). Califano v. Yamasaki, 442 U.S. 682, 700–01 (1979). 46 L. Elizabeth Chamblee, Comment, Between “Merit Inquiry” and “Rigorous Analysis”: Using Daubert to Navigate the Gray Areas of Federal Class Action Certification, 31 FLA. ST. U.L. REV. 1041, 1048 (2004) [hereinafter Chamblee]. 47 See, e.g., In re PolyMedica Corp. Sec. Litig., 432 F. 3d 1, 17 (1st Cir. 2005) (acknowledging that “generalities” on the issue of burden of proof “are the best we can do”); CE Design Ltd. v. Cy’s Crabhouse N., Inc., 259 F.R.D. 135, 140 (N.D. Ill. 2009) (concluding that the Seventh Circuit has not adopted a burden of proof, “but it has stated that district courts ‘should make whatever factual and legal inquiries are required under Rule 23’”) (citing Szabo v. Bridgeport Machs., Inc., 249 F. 3d 672, 675-76 (7th Cir. 2001)). 48 Chamblee, supra note 46, at 1048. 49 Reed v. Bowen, 849 F. 2d 1307, 1309 (10th Cir. 1988). 50 Vallario v. Vandehey, 554 F. 3d 1259, 1265 (10th Cir. 2009). 51 Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974). 52 See, e.g., In re Hydrogen Peroxide Antitrust Litig., 552 F. 3d 305, 316-17 (3d Cir. 2008); Blades v. Monsanto Co., 400 F. 3d 562, 567 (8th Cir. 2005); Gariety v. Grant Thornton, LLP, 368 F. 3d 356, 36566 (4th Cir. 2004); Szabo, 249 F. 3d at 676–77. 53 In re Visa Check/MasterMoney Antitrust Litig., 280 F. 3d 124, 141 (2d Cir. 2001); Caridad v. MetroNorth Commuter R.R., 191 F. 3d 283, 292 (2d Cir. 1999). 54 In re IPO Sec. Litig., 471 F. 3d 24, 42 (2d Cir. 2006). 55 American Honda Motor Co. v. Allen, 600 F. 3d 813, 815–16 (7th Cir. 2010). 45 56 In re Visa Check/MasterMoney Antitrust Litig., 192 F.R.D. 68, 76-77 (E.D. N.Y. 2000). 57 Hydrogen Peroxide, 552 F. 3d at 315 n.13. 58 Id. at 323–25. 59 General Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161 (1982). 60 West v. Prudential Sec. Inc., 282 F. 3d 935, 938 (7th Cir. 2002). 61 Sheila B. Scheuerman, Due Process Forgotten: The Problem of Statutory Damages and Class Actions, 74 MO. L. REV. 103, 104 (2009); see also MARCY H. GREER, A PRACTITIONER’S GUIDE TO CLASS ACTIONS 503 (2010) (“Aggregated penalties…have the potential to distort the underlying legislative scheme, force defendants to settle meritless lawsuits, and result in a punishment that is grossly disproportionate to the reprehensibility of the defendant’s conduct.”). 62 Ratner v. Chemical Bank N.Y. Trust Co., 54 F.R.D. 412, 414 (S.D. N.Y. 1972). 63 Id. 64 See, e.g., Watkins v. Simmons & Clark, Inc., 618 F. 2d 398, 400 n.4 (6th Cir. 1980) (citing Ratner, 54 F.R.D. 412); Wilcox v. Commerce Bank of Kan. City, 474 F. 2d 336, 342 (10th Cir. 1973) (citing Ratner, 54 F.R.D. 412); London v. Wal-Mart Stores, Inc., 340 F. 3d 1246, 1255 n.5 (11th Cir. 2003) (citing Kline v. Coldwell, Banker & Co., 508 F. 2d 226 (9th Cir. 1974) and Ratner, 54 F.R.D. 412); Klay v. Humana, Inc., 382 F. 3d 1241, 1271 (11th Cir. 2004) (citing Ratner, 54 F.R.D. 412); see also Parker v. Time Warner Entm’t Co., 331 F. 3d 13, 22 (2d Cir. 2003) (adopting similar analysis). 65 See Bateman v. American Multi-Cinema, Inc., 623 F. 3d 708, 715-16 (9th Cir. 2010) (en banc petition pending). 66 See Murray v. GMAC Mortgage Corp., 434 F. 3d 948, 954 (7th Cir. 2006); Parker, 331 F. 3d at 22. Member Benefit Provider Trust your transactions to the only merchant account recommended by over 60 bar associations! Get Paid Increase Business Control Cash Flow Reduce Collections Lower Fees up to 25% LawPay 866.376.0950 credit card processing affiniscape.com/lacba AffiniPay is a registered ISO/MSP of Harris, N.A., Chicago, IL 24 Los Angeles Lawyer February 2011 MCLE ARTICLE AND SELF-ASSESSMENT TEST By reading this article and answering the accompanying test questions, you can earn one MCLE credit. To apply for credit, please follow the instructions on the test answer sheet on page 27. By CLAY WILKINSON and ERIC BROWN L O S S H O R I Z O N The economic loss doctrine is designed to establish a demarcation between contract and tort law In its basic form, the economic loss doctrine— a fixture in tort law—holds that a party will not be liable under a negligence theory for damages that represent the lost benefit of a bargain unless those damages are accompanied by personal injury or property damage. Since negligence requires harm to person or property, purely economic losses must be recovered in contract or warranty. While the economic loss doctrine frequently applies in the context of third-party liability lawsuits, it can also apply to parties in privity. The doctrine has well-recognized underpinnings in the common law of England and thrives in modern California jurisprudence. It is a liability-limiting doctrine—not unlike proximate causation—but is developing into somewhat of an enigma as a result of several contradictory California decisions. Even California courts have shown confusion over their own precedents regarding the doctrine and its impact on tort duty analysis and seem reluctant to follow them. Perhaps the most confusing wrench thrown into the doctrine’s development is J’Aire v. Gregory,1 a decision in which the California Supreme Court imposed tort liability in a case of pure economic loss. Despite the pomp and circumstance of the court’s methodology, its analysis—while couched in the terminology of tort law—was essentially identical to its approach for determining damages to third-party beneficiaries in contract cases. J’Aire is still good law, and it is unclear whether the multifactored analysis it embraces is really the exception to the liability-limiting economic loss doctrine. While the J’Aire court’s imposition of tort liability seems to be nothing more than a recasting, in tort parClay Wilkinson is an associate at Collins Collins Muir & Stewart LLP. His practice areas include defense of design professionals and general business litigation. Eric Brown is a senior associate at the firm. He is an appellate counsel and trial attorney in the areas of general business litigation, government entity defense, and construction law. Los Angeles Lawyer February 2011 25 lance, of liability to intended third-party beneficiaries in contract, it remains to be seen whether the California Supreme Court will affirmatively address J’Aire’s place in economic loss analysis. Doing so would provide the necessary clarity on which potential economic loss defendants can rely. Various theories underlie the purpose and rationale of the economic loss doctrine. Commentators view it as a line of demarcation between tort and contract law.2 They also find in the doctrine a means for avoiding limitless liability.3 In addition, the doctrine is seen as a brake on damages for harm that is less concrete, or more speculative, than harm to person or property.4 Robins Dry Dock & Repair Company v. Flint5 provides the classic formulation of the economic loss doctrine. The plaintiffs in the case chartered a steamship from its owners. The charter required the ship to dock every six months for repairs, and so long as the ship was docked, the chartering parties were not responsible for any payment to the owners for the hiring of the ship. While the steamship was in port, dock workers damaged the propeller, delaying the ship’s scheduled departure by two weeks. The dock and its workers had no knowledge of the charter between the ship’s owners and the plaintiffs until the delay had begun.6 The charterers sued on the theory that the two weeks of lost use caused by the dock workers violated a property right the charterers had in the ship. After they won at the district and circuit court levels, this argument did not go so well at the U.S. Supreme Court. The charterers raised the argument that they were third-party beneficiaries of the contract between the dry dock and the owners, but because the charterers and their arrangement with the ship’s owners were not known to the defendant, this argument was to no avail.7 Regarding a basis of liability in tort, the Court stated, “The question is whether the [charterers] have an interest protected by the law against unintended injuries inflicted upon the vessel by third persons who know nothing of the charter.”8 The Court concluded that if the charterers had a legally protected interest in the steamer, “it must be worked out through their contract with the owners, not on the postulate that they have a right in rem against the ship.” Reasoning that the damage was “material to [the charterers] only as it caused the delay in making the repairs, and that delay would be a wrong to no one except for [the charterers’] contract with the owners,” the Court noted the charterers loss “arose only through their contract with the owners.” Moreover, “no authority need be cited to show that, as a general rule…a tort to the person or property of one man 26 Los Angeles Lawyer February 2011 does not make the tortfeasor liable to another merely because the injured person was under a contract with that other, unknown to the doer of the wrong.”9 In essence, the Court held that to recover in tort the charterers needed to show that the dry dock negligently harmed the charterers’ physical property. Without that showing, the charterers had recourse only to their contract with the owners. California’s economic loss doctrine began in 1965 within the context of strict products liability in Seely v. White Motor Company.10 After the plaintiff in Seely purchased a truck from a dealership, the plaintiff discovered that the truck was defective and could not be used to advance the plaintiff’s business. The plaintiff sued the manufacturer of the truck not only for out-of-pocket losses (including the purchase price and repairs) but also for lost profits. The plaintiff’s claims were based on strict liability and the defendant’s express warranty that its product was free from defects. The defendant raised the lack of privity between itself and the plaintiff as a defense. After a comprehensive survey of the development of warranty and strict liability law up to the date of the ruling,11 the California Supreme Court in Seely found that warranty—a contractual promise—was the proper vehicle for the award of economic damages in the case. The defendant’s express warranty of its product obviated the need for privity.12 As to whether this rationale limited recovery of economic loss to contractual situations, the court stated: A consumer should not be charged at the will of the manufacturer with bearing the risk of physical injury when he buys a product on the market. He can, however, be fairly charged with the risk that the product will not match his economic expectations unless the manufacturer agrees that it will. Even in actions for negligence, a manufacturer’s liability is limited to damages for physical injuries and there is no recovery for economic loss alone.13 After Seely, the lower courts in California applied the doctrine in construction defect cases.14 On occasion, though, the courts would issue a decision that seemed far afield from Seely. Some cases articulated an exception from the economic loss rule for “professionals,” including engineers, architects, and developers.15 A similar exception was found when the contract was for the performance of services; according to the court of appeal in North American Chemical Company v. Superior Court (Trans Harbor Inc.), the plaintiff had an election of remedies— either suing in tort or contract, at the plaintiff’s preference.16 However, neither of these limitations of the doctrine would survive into the twenty-first century. Reign of the J’Aire Exception But the decision that created the largest divergence from Seely was J’Aire in 1979. According to the supreme court in J’Aire, foreseeability of harm trumped the lack of personal injury or property damage as the most important consideration in finding a duty in tort. For 20 years, J’Aire operated as an exception to the economic loss rule. But the J’Aire court seemed to conflate economic loss analysis with duty analysis. To understand whether J’Aire is a true exception to the economic loss doctrine in California or a hiccup in the state’s stare decisis on the issue first requires an examination of its most direct progenitor, the 1958 decision Biakanja v. Irving.17 In Biakanja, the plaintiff, who was not in contractual privity with the defendant, sought damages against the defendant for loss of an expectancy, or an intangible future interest. The case involved a notary who prepared a will for the plaintiff’s brother.18 While the will provided that the plaintiff would take the entirety of her brother’s estate, it was denied probate because it was insufficiently attested. Instead of taking all of the estate as a bequest, the plaintiff took only one-eighth by intestate succession. The plaintiff sued the notary for the difference and won at trial. On appeal, the supreme court framed the “principal” issue as “whether defendant was under a duty to exercise due care to protect plaintiff from injury and was liable for damage caused plaintiff by his negligence even though they were not in privity of contract.”19 The court addressed the issue of liability in circumstances involving harm to person or property and cited authority for the proposition that liability is present even when the harm is to intangible interests.20 However, the court’s holding did not address the type of harm about which the plaintiff complained: the loss of an expectancy, which is a purely economic loss. Rather, the court addressed the issue of duty. The Biakanja court held that liability under circumstances in which the defendant was not in privity of contract with the plaintiff is “a matter of policy” involving the “balancing of various factors.” These factors include: • The extent to which the transaction was intended to affect the plaintiff. • The foreseeability of harm to the plaintiff. • The degree of certainty that the plaintiff suffered injury. • The closeness of the connection between the defendant’s conduct and the injury suffered. • The moral blame attached to the defendant’s conduct. • The policy of preventing future harm.21 MCLE Test No. 200 The Los Angeles County Bar Association certifies that this activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 1 hour. MCLE Answer Sheet #200 LOSS HORIZON Name Law Firm/Organization 1. The economic loss doctrine generally bars recovery in tort absent harm to person or property. True. False. 2. The economic loss doctrine: A. Prevents limitless liability. B. Prevents recovery for speculative harm. C. Serves as a line of demarcation between tort and contract. D. A and B. E. A, B, and C. 3. Seely v. White Motor Company marked the beginning of the economic loss doctrine in California. True. False. 4. Cooper v. Jevne held that the economic loss doctrine applies to architects in professional negligence actions. True. False. 5. According to Rowland v. Christian, the foundation of negligence law in California is: A. Civil Code Section 1717. B. Civil Code Section 1714(c). C. Civil Code Section 1714(a). D. None of the above. 6. Biakanja v. Irving did not involve pure economic loss because the plaintiff had an expectancy that constituted harm to her property. True. False. 7. Company X chartered a steamboat owned by Y. While in dry dock, Company Z’s dock workers negligently damaged the steamboat’s propeller. X suffered harm because it could not charter the steamboat while the negligently inflicted damage was being repaired. Who, if anyone, has an action in tort against Z? A. X. B. Y. C. X and Y. D. Neither X nor Y. 8. Using the same hypothetical as Question 7, which party suffered pure economic loss only? A. X. B. Y. C. Z. D. X and Y. 9. J’Aire v. Gregory is an exception to the economic loss doctrine in California. True. False. 10. Which of the following, if any, are factors considered in tort duty analysis? A. Foreseeability of the harm. B. Intent to benefit the plaintiff. C. A and B. D. None of the above. 11. According to Bily v. Arthur Young & Company, courts “will not treat the mere presence of a foreseeable risk of injury to third persons as sufficient, standing alone, to impose liability for negligent conduct.” True. False. 12. Aas v. Superior Court held that “appreciable, non-speculative, present injury is an essential element of a tort cause of action.” True. False. 13. The Aas court characterized tort remedies in California for pure economic loss as “uncertain.” True. False. 14. Foreseeability in the J’Aire/Biakanja multifactored analysis is the functional equivalent of intent to benefit in third-party beneficiary analysis. True. False. 15. J’Aire confuses questions of duty with the type of harm suffered. True. False. 16. Which, if any, of the following statements are true? A. Strangers to the agreement cannot bring an action on it. B. Foreseeable beneficiaries of the agreement can bring an action on it. C. A and B. D. None of the above. 17. Aas characterized the J’Aire analysis as involving “fairly subjective judgments.” True. False. 18. Third-party beneficiary analysis would not relieve courts of the necessity to engage in “considerations of policy” in situations similar to J’Aire. True. False. 19. According to Civil Code Section 1559, only intended beneficiaries may bring an action on a contract to which they are not parties. True. False. 20. J’Aire is still good law. True. False. Address City State/Zip E-mail Phone State Bar # INSTRUCTIONS FOR OBTAINING MCLE CREDITS 1. Study the MCLE article in this issue. 2. Answer the test questions opposite by marking the appropriate boxes below. Each question has only one answer. Photocopies of this answer sheet may be submitted; however, this form should not be enlarged or reduced. 3. Mail the answer sheet and the $20 testing fee ($20 for non-LACBA members) to: Los Angeles Lawyer MCLE Test P.O. Box 55020 Los Angeles, CA 90055 Make checks payable to Los Angeles Lawyer. 4. Within six weeks, Los Angeles Lawyer will return your test with the correct answers, a rationale for the correct answers, and a certificate verifying the MCLE credit you earned through this self-assessment activity. 5. For future reference, please retain the MCLE test materials returned to you. ANSWERS Mark your answers to the test by checking the appropriate boxes below. Each question has only one answer. 1. ■ True ■ False 2. ■A 3. ■ True 4. ■ True 5. ■A 6. ■ True 7. ■A ■B ■C ■D 8. ■A ■B ■C ■D 9. ■ True 10. ■A 11. ■ True ■ False 12. ■ True ■ False 13. ■ True ■ False 14. ■ True ■ False 15. ■ True 16. ■A 17. ■ True ■ False 18. ■ True ■ False 19. ■ True ■ False 20. ■ True ■ False ■B ■C ■D ■E ■ False ■ False ■B ■C ■D ■ False ■ False ■B ■C ■D ■ False ■B ■C ■D Los Angeles Lawyer February 2011 27 Since, in the view of the Biakanja court, the “end and aim” of the transaction was to provide for the plaintiff’s brother’s estate to pass to the plaintiff, the defendant notary had a legal duty to prepare the will reasonably and prudently.22 The Biakanja court essentially held that the harm suffered by the plaintiff was pure economic loss—the loss of an expectancy—arising from a breach of contract to prepare a will between the plain- there is a duty of care owed by the defendant to the plaintiff.”26 It cited Biakanja, stating, “Where a special relationship exists between the parties, a plaintiff may recover for loss of expected economic advantage through the negligent performance of a contract although the parties were not in contractual privity.”27 After applying the factors from Biakanja, the J’Aire court concluded that the defendant contractor “had a duty to complete con- Superior Court, a case that was the direct progeny of Seely.31 Aas involved homeowners and a homeowners association bringing suit against the developer/general contractor and subcontractors on a condominium project.32 According to the court’s characterization, the plaintiffs’ homes suffered “from a variety of construction defects affecting virtually all components and aspects of construction.”33 The plaintiffs alleged causes of Indeed, the Aas court was reluctant to acknowledge that J’Aire represents an exception to the economic loss doctrine in California and that J’Aire, from its issuance in 1979 until the decision in Aas in 2000, virtually abrogated the economic loss doctrine in the state. tiff’s brother and the defendant notary.23 Prior authority allowed recovery when the harm was to person or property, and authority in other states allowed recovery for intangible interests. However, the court ultimately applied a multifactor analysis to determine whether the defendant owed the plaintiff a duty of care under the particular circumstances of the case. This analysis included a factor on the certainty of the harm suffered but not its type. The J’Aire court applied Biankanja in the context of construction defects. The dispute in J’Aire involved a delay in construction.24 The plaintiff operated a restaurant at the Sonoma County Airport in space leased from the county. The lease terms obligated the county to provide heat and air conditioning for the restaurant. The county contracted with the defendant contractor to renovate the heating and air and provide insulation. The contract did not specify a time for performing the renovation, but the defendant was urged to complete the construction promptly. Nevertheless, the defendant did not complete the work within a reasonable time. Plaintiff J’Aire sued the contractor for negligence because it suffered loss of business and lost profits during the delay. The defendant demurred successfully at trial.25 The J’Aire court began its discussion where Biakanja left off: “[L]iability for negligent conduct may only be imposed where 28 Los Angeles Lawyer February 2011 struction in a manner that would have avoided unnecessary injury to [the plaintiff’s] business.”28 The court admitted that the most important factor in its view was foreseeability: Rather than traditional notions of duty, this court has focused on foreseeability as the key component necessary to establish liability: “While the question whether one owes a duty to another must be decided on a case-by-case basis, every case is governed by the rule of general application that all persons are required to use ordinary care to prevent others from being injured as the result of their conduct.… [Foreseeability] of the risk is a primary consideration in establishing the element of duty.”29 Within this discussion on duty, the J’Aire court then made the statement that appears to have injected confusion and uncertainty into economic loss analysis in California: Where the risk of harm is foreseeable, as it was in the present case, an injury to the plaintiff’s economic interests should not go uncompensated merely because it was unaccompanied by any injury to his person or property.30 The Impact of Aas In 2000, the California Supreme Court surveyed the law of economic loss in Aas v. action for negligence and strict liability in tort as well as breach of implied warranty, contract, and express warranty.34 The court began its discussion by warily providing a general formulation of the doctrine: “Speaking very generally, tort law provides a remedy for construction defects that cause property damage or personal injury.”35 The court acknowledged that the legal question in the case was “fairly narrow” but “not simple” because it arose from the “nebulous and troublesome margin between tort and contract law.”36 Moreover, the court noted that in California “tort remedies have been uncertain” for defective products or negligent services causing neither personal injury nor property damage.37 The Aas court attempted to clarify the application of the doctrine in California. After reciting the development of case law on the subject, including the divergence of the doctrine into strict liability and negligence theories, the court held that “appreciable, nonspeculative, present injury is an essential element of a tort cause of action.”38 It explained that the “breach of a duty causing only speculative harm or the threat of future harm does not normally suffice to create a cause of action.”39 Much like the Robins Dry Dock court of 73 years before, the Aas court noted that the plaintiffs’ recourse for economic losses should be limited to contract (or, it also noted, war- ranty).40 In fact, the court underscored this observation with a recounting of its ruling in another landmark case, Erlich v. Menezes: This court recently rejected the argument that the negligent performance of a construction contract, without more, justifies an award of tort damages. (Erlich v. Menezes at pp. 550554 [reversing an award of damages for emotional distress for negligent construction].) In so doing, however, we reiterated that conduct amounting to a breach of contract becomes tortious when it also violates a duty independent of the contract arising from principles of tort law.41 The Aas court also limited the holdings of earlier lower court decisions in such a way as to strongly imply that “professionals” (contractors, subcontractors, or design professionals) could not be held liable in negligence without actual harm to person or property.42 However, the Aas court did not criticize J’Aire in any way that could be described as direct, even though it did say that application of the J’Aire test for finding a tort duty “tends to involve a court in making fairly subjective judgments.”43 An appellate court describing another court’s judgments as “subjective” is certainly not a ringing endorsement. The Aas court clearly noted the conundrum by observing that “tort remedies have been uncertain” when it comes to the economic loss doctrine as a result of case law development in California. While it reaffirmed the doctrine in California, the Aas court did not put to rest the questions springing from J’Aire or even the confusion regarding how to apply the economic loss doctrine in California in the face of J’Aire and its progeny. Indeed, the Aas court was reluctant to acknowledge that J’Aire represents an exception to the economic loss doctrine in California and that J’Aire, from its issuance in 1979 until the decision in Aas in 2000, virtually abrogated the economic loss doctrine in the state. The fact that the doctrine has exceptions is not in itself troublesome. Good law rarely applies uniformly across a broad universe of circumstances, and exceptions and nuance are necessary to ensure just outcomes. The J’Aire exception is problematic in its insistence on imposing a legal duty in situations in which one previously did not exist as well as its brief, perhaps even dismissive, treatment of the nature of the harm that the litigation sought to remedy. Third-Party Beneficiary Analysis So even while Aas succeeded in providing some guidance post-J’Aire, confusion remains. Still, whether the economic loss doctrine limits liability, polices the border between tort and contract, or is a damages-certain princi- ple, its applicability must relate to the harm caused and not whether a tort duty should be imposed. The California Supreme Court seemed to recognize this idea in Seely, and the J’Aire exception apparently does not apply in the strict products liability line of cases.44 If the plaintiff’s harm is to an expectancy, or if economic losses flow from the expected performance of a party not in privity of contract with the plaintiff, the plaintiff should be limited to whatever contract remedies the plaintiff has. The plaintiff’s harm is more akin to a contractual expectation interest. J’Aire confuses the issue by injecting the question of duty, and thereby policy, into the question of the type of harm suffered by the plaintiff. The relatively easy question of whether the plaintiff experienced physical harm thus becomes a more nebulous question as to whether a duty was owed.45 Along with the confusion and greater complexity comes uncertainty. Economic transactions rely upon certainty in the law. If liability is indeterminate because of multifactored tests in situations in which the plaintiff and the defendant have no contract, and the harm is measured purely in terms of what benefit one party expected to receive, how can potential defendants adequately account for risk? Since the harm is to an expectancy interest, and the remedy is to make good the expectation, contract law can eliminate the indeterminacy created by the J’Aire exception.46 The general rule at common law and in California is that a stranger to the agreement cannot bring an action on it.47 However, the courts recognized an exception for intended beneficiaries of the agreement,48 and this exception was codified at Civil Code Section 1559.49 The contracting parties must intend to benefit the third party.50 It is sufficient that the promisor must have understood that the promisee had this intent. No specific manifestation by the promisor of an intent to benefit the third person is required.51 Persons who are only incidentally or remotely benefited cannot enforce the agreement.52 The third party bears the burden of proving that it was an intended beneficiary.53 The situations in which the J’Aire exception applies will always be those in which the plaintiff could claim to be a third-party beneficiary on a contract claim. When analyzing the application of the J’Aire factors to a given fact pattern, “California courts have held that the defendant’s transactions must have been ‘specifically intended to affect the particular needs’ of the plaintiff.”54 If a potential plaintiff is a third-party beneficiary of an agreement, there is no need for the court to engage in “those considerations of policy” necessary to imposing a tort duty. The factfinder need only look to the agreement between the contracting parties. If there was an intention to benefit a third party, that party’s expectation interest would be protected against all breaches, negligent or otherwise. If there was no such intention, there would be no recovery: The economic loss doctrine would clearly and definitively bar recovery in tort for pure economic loss. In this analysis, “intention” supplants “foreseeability,” the keystone in the J’Aire court’s imposition of tort liability.55 Indeed, one can argue that intention and foreseeability are functional equivalents—at least in light of the willful overtones that J’Aire ascribes to foreseeability.56 However, while foreseeability is expansive, and courts have virtually limitless discretion to decide what is and is not foreseeable, the parties’ agreement provides structure and parameters to the parties’ intentions. Third-party beneficiary analysis takes the mystery out of what constitutes a “special relationship”: It is simply the relationship of an intended third-party beneficiary to the contracting parties. Perhaps the greatest doctrinal advantage of third-party beneficiary analysis is that it unifies the interest to be protected (expectancy) with the legal apparatus (contract) designed to protect it. ■ 1 J’Aire Corp. v. Gregory, 24 Cal. 3d 799 (1979). Dan B. Dobbs, An Introduction to Non-Statutory Economic Loss Claims, 48 ARIZ. L. REV. 713, 723 n.35 (2006). See also Vincent R. Johnson, The BoundaryLine Function of the Economic Loss Rule, 66 WASH. & LEE L. REV. 523, 546 (2009). For an overview of the issues and current debate in economic loss scholarship, see Ellen M. Bublick, Economic Torts: Gains in Understanding Losses, 48 ARIZ. L. REV. 693 (2006). 3 See Dobbs, supra note 2, at 715. 4 See Johnson, supra note 2, at 542. This view makes little sense considering that economic harm is no more “speculative” or difficult to measure than harm to dignity or reputation—both of which are compensable in tort. 5 Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927) (superseded by statute). 6 Id. at 307. 7 Id. at 308-09. 8 Id. at 308. 9 Id. at 308-09. 10 Seely v. White Motor Co., 63 Cal. 2d 9 (1965). 11 Id. at 16-18. 12 Id. at 15. 13 Id. at 18. 14 See, e.g., Cooper v. Jevne, 56 Cal. App. 3d 860 (1976). 15 Id. at 868. Cooper held that the economic loss rule does not apply to architects accused of professional negligence in the design of a construction project. But this statement was disapproved as mere dicta. See infra note 42. See also Huang v. Garner, 157 Cal. App. 3d 404, 421-22 (1984). 16 North Am. Chem. Co. v. Superior Court (Trans Harbor Inc.), 59 Cal. App. 4th 764, 773-74 (1997). See also Gagne v. Bertran, 43 Cal. 2d 481, 489 (1954). 17 Biakanja v. Irving, 49 Cal. 2d 647 (1958). Biakanja represents a general liberalization and expansion of tort liability in California that even led to renewed interest in an 1872 statute, codified at Civil Code §1714(a), 2 See Los Angeles Lawyer February 2011 29 Anita Rae Shapiro SUPERIOR COURT COMMISSIONER, RET. PRIVATE DISPUTE RESOLUTION PROBATE, CIVIL, FAMILY LAW PROBATE EXPERT WITNESS TEL/FAX: (714) 529-0415 CELL/PAGER: (714) 606-2649 E-MAIL: [email protected] http://adr-shapiro.com INVESTIGATIONS — DISCRETION AND CONFIDENTIALITY — Locates Asset Investigations Rush & Difficult Service of Process Surveillance The Power of Knowledge. 23 Years of Experience 818.344.2193 tel | 818.344.9883 fax | [email protected] PI 14084 www.shorelinepi.com 800.807.5440 30 Los Angeles Lawyer February 2011 which does not distinguish between injury to person or property and economic interests. The California Supreme Court in Rowland v. Christian cited §1714(a) as “a civil law” that serves as the foundation of negligence law in California. Rowland v. Christian, 69 Cal. 2d 108, 112 (1968) (superseded by statute on other grounds). 18 Biakanja, 49 Cal. 2d at 648. 19 Id. 20 Id. at 649. For the latter proposition, the Biakanja court cited Glanzer v. Shepard, a famous break with the economic loss doctrine authored by then-Judge Benjamin Cardozo. Glanzer v. Shepard, 233 N.Y. 236 (1922). 21 Biankaja, 49 Cal. 2d at 650. 22 See id. at 650-51 (quoting the “end and aim” language from Glanzer, 233 N.Y. 236). 23 The Biakanja court did not miss the fact that a notary prepared the will, stating that the notary’s conduct was “not only negligent but was also highly improper” because he “engaged in the unauthorized practice of law.” Id. at 601. However, as to actual attorneys, the court soon imposed a tort duty on attorneys to nonclient bequest recipients for negligently drawn wills. Lucas v. Hamm, 56 Cal. 2d 583 (1961); Heyer v. Flaig, 70 Cal. 2d 223 (1969). In addition to citing Biankaja, J’Aire cited to these cases for the proposition that, in the absence of privity, a “special relationship” would allow for the recovery of purely economic damages for the negligent performance of a contract. See J’Aire Corp. v. Gregory, 24 Cal. 3d 799, 804 (1979). 24 J’Aire, 24 Cal. 3d at 802. 25 Id. at 803. 26 Id. 27 Id. at 804. 28 Id. at 805. 29 Id. at 806 (quoting Weirum v. RKO Gen. Inc., 15 Cal. 3d 40, 46 (1975) (footnote omitted)). 30 Id. at 805. 31 Aas v. Superior Court, 24 Cal. 4th 627 (2000) (superseded by statute as to residential properties). The Aas decision led to the enactment of Civil Code §§895-945.5 and particularly §§896 and 942, which provide a statutory procedure for the owners of residential property to seek damages for construction defects even in the absence of harm to person or property. These statutes thus allow a path around the economic loss doctrine in this limited context. 32 Aas, 24 Cal. 4th at 633. 33 Id. 34 Id. Only the homeowners alleged breach of contract and express warranty. 35 Id. at 635. 36 Id. 37 Id. at 636. 38 Id. at 646. The divergence into “two distinct” theories refers to the Seely line of cases (strict products liability in tort) and the Biakanja line of cases, including J’Aire (negligence). See Aas, 24 Cal. 4th at 638-39. 39 Aas, 24 Cal. 4th at 646. 40 See id. at 652. 41 Id. at 643 (citing Erlich v. Menezes, 2 Cal. 4th 543 (1995)). 42 See id. at 647-48. Aas disapproved Huang v. Garner, 157 Cal. App. 3d 404 (1984). That case had allowed the third successive purchasers of a commercial building to recover pure economic losses on a tort theory. Huang used J’Aire to find a duty in tort. 157 Cal. App. 3d at 422-23. Aas also limited the holding of Cooper v. Jevne, 56 Cal. App. 3d 860 (1976). The Cooper court ruled that Seely’s economic loss rule did not apply to professional negligence claims, basing this ruling primarily on attorney malpractice cases. 56 Cal. App. 3d at 868. The supreme court in Aas left Cooper intact because it reached the correct result but expressed displeasure with the rationale: “[T]he [Cooper] court’s conclusion that Seely’s economic loss rule does not apply to professional negligence claims [citation omitted] is dictum.” Aas, 24 Cal. 4th at 648. 43 Aas, 24 Cal. 4th at 646; see also id. at 636-37, 645. 44 See Seely v. White Motor Corp., 63 Cal. 2d 9, 18 (1965). The California Supreme Court’s most recent pronouncement on economic loss in the strict products liability context is Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979 (2004). Robinson does not mention J’Aire and instead follows Aas. The Robinson court held that the economic loss rule did not bar the plaintiff’s misrepresentation claims because they were “independent of [the defendant’s] breach of contract.” Id. at 991. The court explained that “[c]ourts will generally enforce the breach of a contractual relationship through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies.” Id. at 991-92. Accordingly, the court stated that “[t]he economic loss rule is designed to limit liability in commercial activities that negligently or inadvertently go awry, not to reward malefactors who affirmatively misrepresent and put people at risk.” Id. at 991. 45 See Anita M. Bernstein, Keep It Simple: An Explanation of the Rule of No Recovery for Pure Economic Loss, 48 ARIZ. L. REV. 773 (2006). 46 Indeed, tort and contract are fundamentally different in the interests that they seek to protect. Tort concerns itself with making the plaintiff whole. Contract concerns itself with giving the plaintiff the benefit of the bargain. J’Aire exposes the gap between tort and contract in which the type of harm cannot be remedied in tort but no bargain exists between the plaintiff and the defendant. Rather than impose a tort duty based on a multifactored analysis, why not introduce consistency and predictability by applying a third-party beneficiary analysis? 47 See McLaren v. Hutchinson, 18 Cal. 80 (1861). 48 See Sacramento Lumber Co. v. Wagner, 67 Cal. 293 (1885). 49 Civil Code §1559 states: “A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” 50 Hess v. Ford Motor Co., 27 Cal. 4th 516, 524 (2002). 51 Lucas v. Hamm, 56 Cal. 2d 583, 591 (1961). 52 Id. at 590. 53 Garcia v. Truck Ins. Exch., 36 Cal. 3d 426, 436 (1984). 54 Avago Techs. United States, Inc. v. Venture Corp., 2008 U.S. Dist. LEXIS 105528 (N.D. Cal. 2008) (quoting Greystone Homes, Inc. v. Midtec, Inc., 168 Cal. App. 4th 1194, 1231 (2008)). 55 Even though the J’Aire court relied heavily on the foreseeability factor, the California Supreme Court has since discounted its importance. In Bily v. Arthur Young & Co., 3 Cal. 4th 370, 398 (1992), the court stated that foreseeability is “but one factor to be considered in the imposition of negligence liability.” Perhaps in implied rejection of J’Aire, the Bily court stated: “In line with our recent decisions, we will not treat the mere presence of a foreseeable risk of injury to third persons as sufficient, standing alone, to impose liability for negligent conduct.” Id. at 399. The Bily court added three more factors for consideration in imposing a tort duty: 1) liability out of proportion to fault, 2) the prospect of private ordering, and 3) the effect of imposing liability to or in favor of third parties on the particular class of defendant. Id. at 399-405. 56 See the J’Aire court’s discussion of contractors who willfully fail to complete a construction project and compare with their discussion of the defendant contractor failing to speed up construction even after the danger of the plaintiff’s economic loss was brought to his attention. J’Aire Corp. v. Gregory, 27 Cal. 3d 799, 804-05 (1979). The court seems to intertwine the plaintiff’s “foreseeable” injury with the contractor’s “intentional” choice to not behave more reasonably. “Industry Specialists For Over 23 Years” A t Witkin & Eisinger we specialize in the Non-Judicial Foreclosure of obligations secured by real property or real and personal property (mixed collateral). When your client needs a foreclosure done professionally and at the lowest possible cost, please call us at: WANT RESULTS? COLLECTION OF JUDGMENTS AND DEBTS Specializing in statewide pre- and postjudgment collection litigation: lawsuits, arbitrations, writs, liens, levies, examinations, garnishments, attachments, asset searches and seizures. Contingent fees available. Law Offices of Matthew C. Mickelson www.mickelsonlegal.com [email protected] • 818.382.3360 —Taking On the Hard Cases Others Refuse— It’s More Than Just a Referral It’s Your Reputation Make the Right Choice Personal Injury • Products Liability Medical Malpractice • Insurance Bad Faith Referral Fees per State Bar Rules www.cdrb-law.com 310.277.4857 The More You Know About Us, The Better Choice You Will Make 10100 Santa Monica Blvd., Suite 2460, Los Angeles, California 90067 310.277.4857 office ■ 310.277.5254 fax www.cdrb-law.com Los Angeles Lawyer February 2011 31 BY JOHN B. LOUGH Jr. TEST RESULTS WRITTEN EXAMS can serve as a legitimate gatekeeper into many careers, but they also have a nefarious history of being used to keep out minorities.1 As Justice Ruth Bader Ginsburg observed in Ricci v. DeStefano, “Firefighting is a profession in which the legacy of racial discrimination casts an especially long shadow.”2 While exams can remove nepotism and subjectivity from the selection process,3 not all exams are the same, nor does committing something to paper necessarily mean that impermissible biases have disappeared. The touchstone of a fair exam or practice is how accurately it tests for the requisite skills.4 In the employment setting, the exam or practice is not fair if 1) it disproportionately impacts those with a protected identity, such as race, color, sex, national origin, religion, disability, or age (40 or older),5 2) it is not job related, and 3) a less discriminatory one exists but is not used. In Lewis v. City of Chicago,6 black firefighter applicants claimed they faced an unfair practice. In Lewis, the city failed to justify its use of an entry-level firefighter exam with a score cutoff of 89 that had a disparate impact on black applicants. The applicants’ victory, however, depended on a statute of limitations question: May a “plaintiff who does not file a timely charge challenging the adoption of a practice—here, an employer’s decision to exclude employment applicants who did not achieve a certain score—…assert a disparate-impact claim in a timely charge challenging the employer’s later application of that practice[?]”7 The answer is yes. Lewis may be compared to Ricci v. DeStefano.8 Both cases involved firefighters and written exams. In Ricci, white firefighters sued the city of New Haven, Connecticut, for disparate-treatment discrimination. The city did not certify a promotion exam because of a good faith belief that disparate-impact liability would result. The U.S. Supreme Court held that the city lacked a strong basis in evidence that it would face disJohn B. Lough Jr. practices employment law in the San Francisco Bay area. He thanks Elizabeth Kristen for her thoughtful comments. 32 Los Angeles Lawyer February 2011 MICHAEL CALLAWAY Despite the ruling in Lewis, employees still face an uphill battle in discrimination cases parate-impact liability, so its refusal to certify the results amounted to intentional discrimination against white firefighters. In Lewis, black firefighter applicants sued the city for disparate-impact discrimination because the city used an exam with a score cutoff that had a disparate impact. The similarities, however, end there. Ricci addresses the supposed tension between disparate-impact and disparate-treatment discrimination, while Lewis focuses on when the courthouse doors are closed. Thus, Lewis does not modify Ricci.9 In fact, Lewis seems more like a companion to Ledbetter v. Goodyear Tire & Rubber Company, which involved timeliness and disparate treatment.10 The facts of the Lewis case start in 1995, when the city of Chicago administered a written exam to over 26,000 people to compile an eligibility list for entry-level firefighters. The 1995 test had two parts: a written multiple choice section (weighted 15 percent) and a video demonstration section (85 percent). The written section was designed “to measure an applicant’s ability to comprehend written information.” The video section was designed to measure an applicant’s ability to understand oral instructions, take notes, and learn from a demonstration of a fictitious device.11 The city sorted the applicants into three categories: “well qualified” for scores 89 or above (out of 100), “qualified” for 65 to 88, and “not qualified” for 64 or below. The city set the well-qualified cutoff at 89 “because it was the most administratively convenient way to trim the list of potential applicants to a manageable number while still fulfilling the [Fire Department’s] hiring needs.”12 On January 26, 1996, the city sent letters informing applicants of their results, stating that it would likely not invite qualified candidates for further processing. But the letters said that the city would keep the applicant’s name on the eligibility list for as long as it used the list. The city also issued a press release that announced the general results, next steps for well-qualified applicants, and the racial makeup of those applicants. In the pool of more than 26,000 applicants, 11,649 (45 percent of test takers) were white and 9,497 (37 percent) were black. The city categorized 1,782 (6.8 percent) of the applicants as well qualified: 75.8 percent white and 11.5 percent black.13 Of the 11,649 white applicants, 10,877 (93 percent) passed the exam (scores 65 or above); and of the passing white applicants, 1,350 (12 percent) scored 89 or above. Of the 9,497 black applicants, 6,855 (72 percent) passed; and of the passing black applicants, 204 (3 percent) scored 89 or above.14 The cutoff meant that white applicants were five times more likely than blacks to advance to the next stage.15 The racial makeup disappointed the city, 34 Los Angeles Lawyer February 2011 but it planned to proceed with hiring.16 From 1996 to 2001, the city used the eligibility list 11 times to fill 11 classes of entry-level firefighters. The city filled 10 classes with wellqualified applicants (and certain qualified paramedics and veterans) and filled the 11th class with the remaining well-qualified applicants before drawing from the qualified candidates. The plaintiffs,17 qualified black applicants, filed an EEOC charge of discrimination on March 31, 1997, more than 300 days after the results came out on January 26, 1996, but within 300 days of the city’s second use of the eligibility list on October 1, 1996. Receiving right-to-sue letters, the plaintiffs sued in federal district court. The city moved for summary judgment for failure to file a timely charge, but the district court denied the motion because “the City’s ‘ongoing reliance’ on the 1995 test results constituted a ‘continuing violation.’” Undeterred, the city conceded that the 1995 test with a cutoff had a disparate impact but argued that business necessity justified its practice. In a bench trial, the district court rejected the city’s business-necessity defense and found, among other things, that the 1995 test may not have been a reliable measure of the four specified cognitive skills, and the 89-score cutoff was “statistically meaningless” as “it fail[ed] to distinguish between candidates based on their relative abilities.”18 Further, even assuming that the city could justify its discriminatory practice, a less discriminatory alternative existed, which it later adopted: the random selection of candidates who passed the exam.19 The district court ordered the city to hire 132 randomly selected class members and awarded back pay to be divided among the remaining members. The U.S. Court of Appeals for the Seventh Circuit reversed, holding that the plaintiffs failed to timely challenge the sorting of applicants, the only discriminatory act. The Supreme Court granted review. As an aside, the city announced in 2005 that it would administer the firefighter/EMT entrance exam every three years, rather than letting a decade lapse between tests.20 And, since 2006, the city has used a pass–fail approach, so applicants who passed could become firefighters.21 Under the new policy, the Chicago Fire Academy continues to produce quality firefighters.22 Title VII of the Civil Rights Act of 1964 prohibits employment practices that discriminate against a person because of the individual’s race, color, religion, sex, or national origin.23 Three forms of discrimination violate Title VII: 1) intentional discrimination (disparate treatment), 2) discrimination, regardless of intent, that occurs when “practices…are fair in form, but dis- criminatory in operation” (disparate impact), and 3) harassment.24 The black firefighter applicants asserted disparate impact. To prove that an employment practice has a disparate impact under 42 USC Section 2000e-2(k), plaintiffs must specifically identify the employment practice that allegedly causes the disparate impact and then must demonstrate through statistical evidence that the employer “uses a particular [facially neutral] employment practice that causes a disparate impact” on a protected class. The burden then shifts to the employer to demonstrate that the employment practice is “job related” and “consistent with business necessity.” If the employer meets its burden, the plaintiffs can still prevail if they can demonstrate that a less discriminatory alternative exists and the employer refuses to adopt it. But before complainants can prove liability, they need to file an EEOC charge of discrimination within 300 days of the discriminatory act (or 180 days in those jurisdictions without a state or local fair employment practice agency).25 A Unanimous Decision The Supreme Court (with Justice Antonin Scalia writing) held that a complainant may file a timely EEOC charge that asserts a disparate-impact claim each time the employer applies a practice.26 The Court focused on Title VII’s text and emphasized its role in interpreting statutes: “It is not for us to rewrite the statute so that it covers only what we think is necessary to achieve what we think Congress really intended.”27 Before bringing a Title VII suit, the plaintiff must file a timely charge that precisely identifies the unlawful employment practice. The Court looked to Title VII’s disparateimpact provision for the essential elements of a disparate-impact claim, emphasizing the word “uses.” A cognizable claim arises when an employer uses an employment practice that causes a disparate impact. In Lewis, the employment practice was “the exclusion of passing applicants who scored below 89 (until the supply of scores 89 or above was exhausted) when selecting those who would advance.” According to the Court, “Although the City had adopted the eligibility list (embodying the score cutoffs) earlier and announced its intention to draw from the list, it made use of the practice of excluding those who scored 88 or below each time it filled a new class of firefighters.” This practice of sorting could form the basis of a claim.28 Rather than adopting the city and the Seventh Circuit’s limited view of “use,” the Court gave “use” its plain meaning. The city argued that the only unlawful employment practice occurred when it used the exam results to create the eligibility list, limited hiring to well-qualified applicants, and notified the plaintiffs in 1996. Since no one challenged this initial decision, later uses of the unchallenged, and now not actionable, practice do not create new violations.29 The city and the Seventh Circuit’s position rested on the view that the Evans line of cases30 asserts present effects, and automatic consequences of past but time-barred discrimination cannot violate Title VII. While the Court agreed that the decision to adopt the cutoff score and create the eligibility list gave rise to a disparate-impact claim, the Court clarified that these cases actually assert that a “present violation” must occur within the limitations period.31 The type of claim determines when a present violation occurs. Disparate-treatment claims require plaintiffs to demonstrate deliberate discrimination within the limitations period. Disparate-impact claims, however, do not require discriminatory intent, so plaintiffs only need to show that the employer uses the practice within the limitations period. In Lewis, the plaintiffs asserted disparateimpact discrimination, so new and present violations could flow from each use of the cutoff decision.32 The Seventh Circuit resisted recognizing the plaintiffs’ claims because it viewed disparate-treatment and disparate-impact claims as two different means to intentional discrimination, so these means should cover the same wrongs, but the Court disagreed. If Title VII’s text recognizes some claims under one theory but not the other, this “is the product of the law Congress has written,” which the Court must follow, even if it thinks Congress meant something else.33 Practical Concerns Faced with competing interpretations and policy concerns, the Court stuck to the text. The city and its amici warned that the Court could create practical problems for employers and employees; that is, new disparateimpact claims for practices used for years and the loss of evidence needed to assert the business necessity defense. If an employer uses an unlawful practice and no one files a timely challenge, then the employer could use the practice with impunity despite the disparate impact. While equitable tolling or estoppel would help some, others would have no recourse. Further, the city’s reading would encourage plaintiffs to file premature lawsuits upon the mere announcement of a practice. The Court stated, “In all events, it is not our task to assess the consequences of each approach and adopt the one that produces the least mischief. Our charge is to give effect to the law Congress enacted.”34 If Congress did not intend the disparateimpact provision to cover claims regardless of the employer’s motive or prior use of the same practice, Congress, not the federal courts, should fix this.35 Thus, the black firefighter applicants had a cognizable disparateimpact claim each time the city used the eligibility list, without having to challenge the list’s adoption. The Court enabled the firefighter applicants to attack a discriminatory practice that would otherwise be untouchable, but the battle is not over. The Court’s plain reading employers will express dismay about possible forthcoming litigation, their alarm ignores the importance of the disparate-impact theory and the state of federal employment litigation. First, when Title VII was enacted, “Employers responded to the law by eliminating rules and practices that explicitly barred racial minorities from ‘white’ jobs. But removing overtly race-based job classifications did not usher in genuinely equal opportunity. More subtle—and sometimes of the disparate-impact provision meant that each use of the cutoff was an independent, actionable harm. The plaintiffs timely challenged the use of the cutoff not in the first hiring round but in the second and those that came after.36 The Court remanded to the Seventh Circuit to determine if the judgment needed to be modified and if the parties had preserved the issue of whether each use of the cutoff caused a disparate impact.37 Almost 15 years after the litigation began, it now turns on the 89-score cutoff’s disparate impact in each round. The city contends that the plaintiffs failed to prove this, but the plaintiffs’ experts testified that each time the city used the discriminatory cutoff in each of the 11 hiring rounds, the city selected black applicants at “rates far lower than the percentage they represented in the pool of testpassers.”38 The argument continues. unintended—forms of discrimination replaced once undisguised restrictions.”39 Second, disparate-impact cases are difficult to win. One may expect disparate-impact plaintiffs to do well in court because they do not have to prove intent, but there is no evidence to suggest these cases are easier than disparate-treatment ones; in fact, they may even be more difficult.40 The business-necessity defense is one hurdle for plaintiffs. While courts have established standards to evaluate testing cases, courts do not have clear standards on how to evaluate, for instance, subjective employment practices. When required to make a normative judgment of discrimination, courts tend to defer to the employer’s explanation because of the courts’ general “reluctan[ce] to identify ambiguous behavior as discriminatory.”41 Finally, it is worth noting that employment discrimination plaintiffs tend to fare poorly in federal court, compared to other plaintiffs.42 A possible explanation for this trend is that some federal judges are skeptical of employment and civil rights plaintiffs because they do not identify or empathize with them, which can influence how much discrimination the judges see.43 Thus, Lewis’s detractors may cry foul, but the reality is that plaintiffs—regardless of the strengths of their cases—face an uphill battle. What Employers Can Do Following the Court’s employee-unfriendly results in Ledbetter (paycheck discrimination) and Ricci (firefighter promotion exam), Lewis could have gone against the black firefighter applicants, but fortunately for them, the Court gave “use” its ordinary meaning. Now, disparate-impact plaintiffs can challenge unlawful practices that employers continue to use many years after adoption. While Los Angeles Lawyer February 2011 35 VIGOROUS STATE BAR DEFENSE JAMES R. DIFRANK A PROFESSIONAL LAW CORP. TEL 562.789.7734 www.BarDefense.net E-MAIL [email protected] • • • • • • Disciplinary Defense Reinstatements Bar Admissions Moral Character Criminal Defense Representation within the State of California FORMER: State Bar Sr. Prosecutor Sr. State Bar Court Counsel As the Lewis litigation demonstrates, the employer-employee relationship can be a contentious one, but it does not have to be. Employers are important players in the civil rights movement. They are in the best position to protect civil rights and ensure equal opportunity through their practices and conduct. Employers should keep three lessons in mind: 1) They should review their policies regularly to ensure compliance, 2) if they suspect a present practice might violate Title VII, they should stop using it, and 3) if they suspect a proposed practice might violate Title VII, they should not use it. Employers can be the good guys too. While Lewis does not signal a proemployee trend by the Court under Chief Justice John Roberts, workers can take some small solace that the Roberts Court is probably not antiworker. Workers can still seek enforcement of their civil rights, and employers need to remain vigilant in ensuring that their practices provide true equal opportunity. ■ 1 Home of Sir Winston Pictured Above 36 Los Angeles Lawyer February 2011 See, e.g., Thomas D. Russell, “Keep the Negroes Out of Most Classes Where There Are a Large Number of Girls”: The Unseen Power of the Ku Klux Klan and Standardized Testing at the University of Texas, 1899–1999 at 41–47 (U. of Denver Legal Studies Research Paper No. 10-14, Mar. 22, 2010), available at http://www.ssrn.com. 2 Ricci v. DeStefano, 129 S. Ct. 2658, 2690 (2009) (Ginsburg, J., dissenting). 3 See generally Malcolm Gladwell, Getting In: The Social Logic of Ivy League Admissions, NEW YORKER, Oct. 10, 2005, available at http://www.gladwell.com /pdf/getting_in.pdf. 4 See, e.g., University of California, Berkeley, School of Law, Law School Admission Project: Looking Beyond the LSAT, http://www.law.berkeley.edu/beyondlsat (last visited June 12, 2010). 5 Civil Rights Act of 1964, tit. VII, 42 U.S.C. §§2000e to 2000e-17 (as amended); Americans with Disabilities Act of 1990, 42 U.S.C. §§12101–12213; Age Discrimination in Employment Act of 1967, 29 U.S.C. §§621–34. State and local laws can protect more identities. See, e.g., GOV’T CODE §12940(a) (sexual orientation, marital status). 6 Lewis v. City of Chicago, 130 S. Ct. 2191 (2010). 7 Id. at 2195 (emphasis in original). 8 Ricci v. DeStefano, 129 S. Ct. 2658, 2664, 2681 (2009). 9 See Briscoe v. City of New Haven, No. 3:09-cv-1642 (CSH), 2010 WL 2794231, at *1–4 (D. Conn. July 12, 2010) (adhering to its prior dismissal of black firefighter’s disparate-impact challenge to the same exam challenged in Ricci). 10 Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 621 (2007) (holding that pay-setting decision, not paycheck receipt, is discrete, actionable act), superseded by statute, Lilly Ledbetter Fair Pay Act of 2009, Pub. L. No. 111-2, 123 Stat. 5 (Jan. 29, 2009) (codified as amended in scattered sections of 29 U.S.C. and 42 U.S.C.). 11 Lewis v. City of Chicago, No. 98 C 5596, 2005 WL 693618, at *3–4 (N.D. Ill. Mar. 22, 2005). 12 Id. at *5. 13 Id. at *2, *5. 14 Joint Appendix at JA 24-27, Lewis v. City of Chicago, 130 S. Ct. 2191 (2010) (No. 08-974). 15 Lewis, 2005 WL 693618, at *2. 16 Joint Appendix at JA 51, 54, Lewis, 130 S. Ct. 2191. 17 The African American Fire Fighters League of Chicago, Inc., later joined. 18 Lewis, 2005 WL 693618, at *9. 19 Id. at *14. 20 Press Release, Office of the Mayor, City of Chicago, Fire Department Announces Plans for New Entrance Exam (Oct. 26, 2005), available at http://egov .cityofchicago.org. 21 David G. Savage, Supreme Court Backs Black Applicants in Firefighter Discrimination Suit, L.A. TIMES, May 25, 2010, available at http://articles.latimes .com. 22 See Lewis, 2005 WL 693618, at *14. 23 42 U.S.C. §§2000e to 2000e-17. 24 Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971); Race and Color Discrimination §15, 15-9 to 15-22 in EEOC COMPLIANCE MANUAL (No. 915.003, 2006), available at http://www.eeoc.gov/policy/docs/racecolor.pdf. 25 42 U.S.C. §2000e-5(e)(1). The Department of Fair Employment and Housing is California’s fair employment practice agency, and it enforces California’s Fair Employment and Housing Act. G O V ’ T C O D E §§12900–12996. Complainants have one year to file a complaint that alleges FEHA violations. GOV’T CODE §12960(d). 26 Lewis v. City of Chicago, 130 S. Ct. 2191, 2195, 2200 (2010). 27 Id. at 2200. 28 Id. at 2196–98. 29 Id. at 2198-99. 30 United Air Lines, Inc. v. Evans, 431 U.S. 553, 558 (1977); see, e.g., Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007). 31 Lewis, 130 S. Ct. at 2198–99. 32 Id. at 2199. 33 Id. at 2199–2200. 34 Id. at 2200. 35 Id. 36 Unlike the district court, the Court did not invoke the continuing violation doctrine, which the plaintiffs later abandoned, to preserve the plaintiffs’ claim. The Court has been reluctant to expand the doctrine beyond harassment claims. See, e.g., Ledbetter, 550 U.S. at 638–40. The California Supreme Court, however, has expanded the doctrine under the FEHA. See, e.g., Yanowitz v. L’Oreal USA, Inc., 36 Cal. 4th 1028, 1056 (2005) (retaliation). 37 Lewis, 130 S. Ct. at 2200–01. 38 See Reply Brief for the Petitioners at 13-14 and Brief for Respondent at 32, Lewis, 130 S. Ct. 2191; see also Cynthia Dizikes, Supreme Court Rules in Favor of Blacks for Chicago Firefighter Jobs, CHI. TRIB., May 24, 2010, available at http://www.chicagotribune.com. 39 Ricci v. DeStefano, 129 S. Ct. 2658, 2696 (2009) (Ginsburg, J., dissenting); see also Katharine T. Bartlett, Making Good on Good Intentions: The Critical Role of Motivation in Reducing Implicit Workplace Discrimination, 95 VA. L. REV. 1893, 1956, 1960–71 (2009). 40 Michael Selmi, Was the Disparate Impact Theory a Mistake?, 53 UCLA L. REV. 701, 734–40 (2006). 41 Id. at 768–69. 42 Kevin M. Clermont & Stewart J. Schwab, Employment Discrimination Plaintiffs in Federal Court: From Bad to Worse?, 3 HARV. L. & POL’Y REV. 103, 104–05, 127–32 (2009). 43 See Elizabeth M. Schneider, The Changing Shape of Federal Civil Pretrial Practice: The Disparate Impact on Civil Rights and Employment Discrimination Cases, 158 U. PA. L. REV. 517, 562–68 (2010); Selmi, supra note 40, at 770. 2011 GUIDE TO TRIAL SUPPORT SERVICES AS THE MEDIA CAPITAL OF THE WORLD, Los Angeles is understandably at the forefront of trial presentation—from the O.J. Simpson and Robert Blake murder trials to the recent highly publicized Dodgers divorce trial of Frank and Jamie McCourt, during which David Boies appeared daily in Judge Gordon’s Downtown courtroom and then evenings on every local TV news program. If a high-profile trial happens in Los Angeles, chances are the rest of the world is watching. Regardless of who may or may not be watching your case on the evening news, it is critical to remember that there are 12 people in the courtroom with you and that your primary responsibility is to convince them that your client should win the trial. Every reasonable effort should be made to provide the best representation possible, and this can include bringing in some help with trial preparation and court presentation. Where do you begin? In part, by reading what you are reading now. The 2011 Guide to Trial Support Services features many of the top local providers of services you’ll need to help make your trial presentation run smoothly and flawlessly. Make no mistake—trial is not the place to try new things or do it yourself. You’re better off calling in the experts who do this sort of thing daily—especially in larger and/or high-profile matters. Even smaller matters can take advantage of the technology, however. Gone are the days when a firm’s size would determine the level of technology at its disposal. Now, with the increased accessibility and availability of litigation and trial support software, consultants, and highly specialized vendors, the scales have truly been leveled. There are a few key steps necessary when entering the next generation of trial presentation. They include preparing a trial support database, creating demonstrative exhibits, preparing deposition video designations, and finally, the trial presentation. Trial Support Database Once you’ve identified all or part of your potential trial exhibits, you’ll need to have them scanned into a digital format, such as PDF or TIFF images. Most litigation-specific vendors will know what to do and how to do it properly. Simply taking it to a copy vendor may produce files that cannot be used with trial presentation software. It is not uncommon (if you expect to go to mediation or trial) to bring in a trial presentation consultant at the early stages of case workup to help ensure that everything is done right the first time. Database organization and file structure are critical, and if not done properly, may result having to do it over—or worse yet, problems during the trial. Demonstrative Exhibits There is no topic that cannot benefit from visual display. Simple bullet-point slides, document callouts, timelines, or even complex animations may be used. Studies have repeatedly shown that we (read: jurors) learn and retain more when we can see what is being explained. Blowups may be used for a few key items, and a large quantity of demonstratives can quickly be displayed onscreen. This is particularly important for opening and closing, as well as with expert witnesses in explaining how things work. Deposition Video Designations Although you may think it is boring to watch an absentee witness testify via video, it is far worse to read the testimony into evidence. With video, the actual witness testifies to the jury, and exhibits may be displayed simultaneously so the jury can follow along. And, what about impeachment? There is no comparison between reading that “gotcha” statement from the transcript and watching it on video. The jury sees two versions of one witness—a very powerful tool for damaging credibility. It is recommended that you videotape any witness of importance to your case. Trial Presentation All the aforementioned steps potentially lead to trial, mediation, settlement conferences, or other ADR. Trial presentation can be used effectively to communicate to audiences, be they the judge, mediator, opposing counsel, or the jury. You simply cannot try a case more effectively or efficiently than when bringing in state-of-the-art technology. Your jurors understand and retain your message better, your trial will go much faster, and you will be able to get far more evidence introduced, displayed, and admitted. There is no matter so small or large that it cannot benefit greatly from the best available tools for your client. Cost does not always equal value. Check each vendor’s reputation, and remember that each vendor included in this guide is an active supporter of your LACBA. Ted Brooks is a trial consultant, author and speaker, with offices in Los Angeles and San Francisco. He has provided trial presentation services in many high-profile and high-stakes matters, including the Dodgers McCourt divorce and People v. Robert Blake. You may read more of Ted’s articles on his blog: http://trial-technology.blogspot.com. Los Angeles Lawyer February 2011 37 ANIMATION PROLUMINA Los Angeles and Orange Counties, (213) 985-7411. Web site: www.prolumina.net. Contact Noah Wick. STRESS LESS,WIN MORE™. Prolumina is nationally recognized for its design and development of trial graphics, animations and demonstrative evidence—across all types of cases. Please view our graphics samples at http://www.prolumina.net /services/trial-graphics. Different ways to present demonstrative evidence: opening and closing arguments, PowerPoint, flowcharts, timelines, callouts, enlargements in trial exhibits, graphs, charts, 2-D/3-D animation, and trial boards and courtroom displays. See display ad on this page. AUDIO VISUAL EQUIPMENT RENTAL FOR TRIALS WOVA - WORLD OF VIDEO & AUDIO 8717 Wilshire Boulevard, Beverly Hills, CA 90211, (310) 6595959, fax (310) 659-8247, e-mail: [email protected]. Web site: www.wova.com. Contact Ben Parnassi. Over 28 years in business. We offer equipment rentals for all your audio/visual needs, including audio, video, AV/presentation, projectors, screens, visual presenters, computers, LCD, and Plasma monitors, office equipment, and more. WOVA also offers delivery and setup. COURT REPORTERS BEN HYATT CERTIFIED DEPOSITION REPORTERS 17835 Ventura Boulevard, Suite 310, Encino, CA 91316, (888) 272-0022, fax (818) 343-7119, e-mail: mhyatt@benhyatt .com. Web site: www.benhyatt.com. Contact Mitch Hyatt. Ben Hyatt Certified Deposition Reporters is a full-service court reporting company based in Los Angeles and operating throughout the entire United States and internationally. We offer a full spectrum of litigation support services. Beyond standard court reporting services, Ben Hyatt offers interactive real-time reporting, legal videography services, videoconferencing, and interpretation services. See display ad on page 39. We Take You Inside th the e Jury Room ❊JURY BEHAVIOR RESEARCH INC www.JuryBehavior.com Serving Los Angeles County since 1981 Persuasion Tools for a Psychological Edge PRE-TRIAL JURY SELECTION Focus Groups Mock Trials Online Surveys Juror Profiles Juror Ques onnaires In-Court Consulta on TRIAL WITNESS PREP Trial Monitoring Shadow Jury One-on-One Training Group Workshops POST-TRIAL TRIAL GRAPHICS Juror Interviews Juror Affidavits PowerPoint/Flash Anima ons 38 Los Angeles Lawyer February 2011 HAHN & BOWERSOCK, INC., CERTIFIED COURT REPORTERS 151 Kalmus, Suite L-1, Costa Mesa, CA 92626, (800) 6603187. Web site: www.hahnbowersock.com. Hahn & Bowersock is one of the most technologically advanced court reporting firms in the nation. Count on us for services that streamline deposition delivery, storage and review. Complimentary online deposition and exhibit repository 24/7, digital signatures, and scanned and hyperlinked exhibits with every deposition. Serving California and across the nation with worldclass court reporting. Over 150 deposition suites across the state and you never pay for an interpreter cancellation fee in California. We have in-house videographers with state-of-theart equipment and deposition video synching. We have fullyequipped IP and ISDN videoconference suites in Los Angeles and Costa Mesa and we are networked with hundreds of videoconference facilities worldwide to always give you the best rate on a room in any state, any nation. Last-minute settings are never a problem. See display ad on page 41. SOUSA COURT REPORTERS (800) 843-7348. Web site: www.sousa.com. Contact Karina Sousa. Now is the time to take advantage of all the technology available to bring your case to life. Our goal is to provide you with powerful technological solutions that address your litigation needs while increasing productivity through tools such as a full searchable CD-rom depository, e-transcripts with exhibits, effective trial presentations and interactive animations. We will provide all the trial tools, Elmos, screens, projectors and more at a fraction of the cost. Sousa Court Reporters is your one stop for all your litigation and trial needs, give us a call today! COURTROOM PRESENTATION TECHNOLOGY COURTROOM PRESENTATIONS, INC. 835 Wilshire Boulevard, Suite 310, Los Angeles, CA 90017, (213) 488-9600, fax (213) 488-9630, e-mail: kelly @CourtRoomPres.com. Web site: www.CourtRoomPresentationsInc.com. Contact Kelly G. Chrisman. Los Angeles premier litigation support service, trial technicians/digital trials, trial equipment rental, power points, charts, graphs, timelines, animations, illustrations, and document scanning. INTERACTIVE PRESENTATION SOLUTIONS (IPS) 18401 Burbank Boulevard, Suite 107, Tarzana, CA 91356, (818) 776-3470. Web site: www.ipsone.com. Contact Christine Froehlich. IPS offers superior trial presentation and graphic services while still keeping your client’s budget in mind. Our track record speaks for itself—over 2000 cases with a 90 percent success rate. We have full-time graphic artists on site. We work one-on-one with expert witnesses and counsel to create animations, presentations, time lines, flow charts, and exhibit boards. We are specialists in evidence presentation and video clip playback. All of our presentation equipment is available for rent and installation. When you need a high quality, cost-effective presentation, you need IPS. LITIGATION-TECH LLC 555 West 5th Street, Suite 3100, Los Angeles, CA 90013, (213) 798-6608, e-mail: [email protected]. Web site: www.litigationtech.com. Contact Ted Brooks. With offices in Los Angeles and San Francisco, Litigation-Tech provides full-service trial support to law firms for trial, mediation and ADR. Clients and cases include the Los Angeles Dodgers divorce trial (with David Boies), People v. Robert Blake (with M. Gerald Schwartzbach), Western MacArthur v. USF&G ($3 billion), May-Carmen v. Wal-Mart (defense verdict), PG&E v. U.S., Shropshire v. City of Walnut Creek ($27.5M), Liou v. Caltrans ($12.5M), and a large number of others on both sides of civil, criminal, and family law matters. See display ad on page 5. ON THE RECORD, INC. 5777 West Century Boulevard, Suite 1415, Los Angeles, CA 90045, (310) 342-7170, fax (310) 342-7172, e-mail: ken @ontherecord.com. Contact Ken Kotarski. On The Record, Inc.TM (OTR) is a full-service litigation support firm specializing in the preparation and presentation of evidentiary material at trials as well as other dispute resolution proceedings. We work as a part of your trial team to integrate document images, photographs, graphics, video, animation, and other exhibits into a clear and convincing computer-based courtroom presentation. From discovery to verdict to final appeal, OTR provides customized presentation support services and equipment configurations for any litigation communications challenge and venue in the United States. On The Record, Inc.TM— The Trial Presentation Professionals. See display ad on page 39. PROLUMINA Los Angeles and Orange Counties, (213) 985-7411. Web site: www.prolumina.net. Contact Noah Wick. STRESS LESS, WIN MORE™ Prolumina’s PhD-trained trial services team has extensive experience in matters ranging from simple arbitrations and mediations to extensive Daubert hearings, and full-scale major litigation across the country. Services we provide: database construction and management, electronic courtroom setup and integration, trial presentation, war room design, and staffing and equipment rentals. For more information visit: http://www.prolumina.net/services/trial-technology. See display ad on this page. DEMONSTRATIVE EVIDENCE/TRIAL GRAPHICS EXECUTIVE PRESENTATIONS, INC. 3345 Wilshire Boulevard, Suite 1234, Los Angeles, CA 90010, (213) 480-1644, fax (213) 480-1838, Web site: www.epdelivers.com. Established in 1986 we specialize in complete trial, video, and graphic services. No matter the size or complexity of your case, our consultants, technicians, and designers have the skills and experience to produce effective presentations that visually simplify and enhance case themes. Our services include graphic design (timelines, charts, and graphs), PowerPoint presentations, forensic photography, animation, video documentaries, Sanction II trial presentations, and equipment rental packages, including complete installation and teardown services. EP delivers unmatched quality, outstanding service, and quick turnaround. LITIGATION-TECH LLC 555 West 5th Street, Suite 3100, Los Angeles, CA 90013, (213) 798-6608, e-mail: [email protected]. Web site: www.litigationtech.com. Contact Ted Brooks. With offices in Los Angeles and San Francisco, Litigation-Tech provides full-service trial support to law firms for trial, mediation and ADR. Clients and cases include the Los Angeles Dodgers divorce trial (with David Boies), People v. Robert Blake (with M. Gerald Schwartzbach), Western MacArthur v. USF&G ($3 billion), May-Carmen v. Wal-Mart (defense verdict), PG&E v. U.S., Shropshire v. City of Walnut Creek ($27.5M), Liou v. Caltrans ($12.5M), and a large number of others on both sides of civil, criminal, and family law matters. See display ad on page 5. PROLUMINA Los Angeles and Orange Counties, (213) 985-7411. Website: www.prolumina.net. Contact Noah Wick. STRESS LESS, WIN MORE™, Prolumina is nationally recognized for its design and development of trial graphics, animations and demonstrative evidence—across all types of cases. Please view our graphics samples at http://www.prolumina.net/services/trialgraphics. Different ways to present demonstrative evidence: opening and closing arguments, PowerPoint, flowcharts, timelines, callouts, enlargements in trial exhibits, graphs, charts, 2-D/3-D animation, and trial boards and courtroom displays. See display ad on page 38. DEPOSITION SUMMARIES DEPOSUMS DEPOSITION SUMMARIES 2183 Santa Anita Avenue, Suite A, Altadena, CA 91001, (800) 789-DEPO, e-mail: [email protected]. Web site: www.deposums.biz. Contact John Harnagel. The acknowledged leader for deposition summaries in Southern California! Why use an outside vendor for your summaries? Lower cost, greater efficiency, and better allocation of your personnel resources. We focus on precision, succinctly and carefully capturing all substantive testimony. And we will prepare your summaries in any format you chose! Call us at (800) 789DEPO for rates and samples. See display ad on page 41. INTERNET DEPOSITION STREAMING HAHN & BOWERSOCK, INC., CERTIFIED COURT REPORTERS 151 Kalmus, Suite L-1, Costa Mesa, CA 92626, (800) 6603187. Web site: www.hahnbowersock.com. Do you need to travel to an out-of-state deposition, but want to save on the high-cost of travel expenses and reduce your carbon footprint at the same time? Our Internet Deposition Streaming services allow you to attend depositions across the state or worldwide from your desktop. No special software of videographer needed—just an internet and phone connection. Would you like to have co-counsel, clients, experts, or “war room” participants attend an important deposition remotely from their laptops? With Internet Deposition Streaming it is possible and cost-effective. Our multipoint interactive technology allows for up to 250 participants to attend. Call us for a demonstration today. See display ad on page 41. injury and consumer litigation, employment, civil rights, criminal defense, and government litigation. investigations. Background and general investigations as well as difficult and rush service of process. See display ad on page 30. JURY BEHAVIOR RESEARCH, INC. 400 Continental Boulevard, LAX-Continental Grand, Suite 600, El Segundo, CA 90245, (310) 372-8140, fax (310) 426-2001, e-mail: [email protected]. Web site: www .JuryBehavior.com. Contact Aaron R. Abbott, Ph.D. JBR provides mock trials, online surveys, witness preparation, juror questionnaires, jury selection, courtroom graphics design, and posttrial juror interviews and juror affidavits. Our Ph.D. specialists offer expertise in psychology, communications, research design, and statistics. We use the science of persuasion and experience of nearly 30 years of jury research and trial consulting to help you connect with the hearts and minds of the people in the jury box who will decide your next case. See display ad on page 38. JURY/TRIAL CONSULTANTS BONORA D’ANDREA, LLC 115 Sansome Street, Suite 125, San Francisco, CA 94104, (415) 773-0100, fax (415) 773-0330, e-mail: will @bonoradandrea.com, Web site: www.bonoradandrea.com. Contact: Will Rountree, J.D., Ph.D. Our experienced consultants have been leading the field for over three decades. Our services include assistance with developing case themes and arguments, opening statement and closing arguments, and trial strategy; mock jury research; witness evaluation; jury selection; trial monitoring; graphics consulting; community attitude surveys; venue evaluation; and post-trial interviews. Our practice areas include: complex business litigation, intellectual property, professional negligence, product liability, personal Concentrating on providing the highest quality reporting in the United States, with an emphasis on general reporting and expertise in the management of discovery in complex litigation Members of the Los Angeles County Bar Association receive a special discount. 17835 Ventura Blvd., Suite 310, Encino, California 91316 888.272.0022 ■ 818.343.7040 ■ 310.273.5040 ■ 323.225.2040 www.benhyatt.com ■ Fax 818.343.7119 ■ E-mail [email protected] —EXCLUSIVELY SERVING THE LEGAL COMMUNITY SINCE 1987— VERBATIM VIDEO LEGAL VIDEO PRODUCTIONS • MEDIATION VIDEOS • SETTLEMENT BROCHURES “When Professionalism Counts” • CERTIFIED TRIAL PRESENTERS • PROFESSIONAL OPERATORS LOS ANGELES AND SURROUNDING COUNTIES [email protected] WEB: www.verbatimdepos.com E-MAIL: 800-520-8273 818-886-5824 INVESTIGATIONS HERMANN & HERMANN INVESTIGATION AGENCY P.O. Box 398, Tujunga, CA 91043, (818) 352-6274, fax (818) 352-1273, e-mail: [email protected]. Contact Mitch Hermann. We conduct professional and highly personalized investigations in English and Spanish, spoken Armenian, other languages as required throughout Los Angeles and Southern California; service of process, jury polls,relocate witness, detailed witness statements, full background investigations, surveillance, assets research and public records. When you need it done fast and expertly call us. SHORELINE INVESTIGATIONS 18455 Burbank Boulevard, Suite 203, Tarzana, CA 91356, (818) 344-2193 fax (818) 344-9883, e-mail: ken@shorelinepi .com. Web site: www.shorelinepi.com. Contact Ken Shigut. Over 23 years of experience in locate asset, and surveillance New York 212.430.5959 • Los Angeles 310.342.7170 • San Francisco 415.835.5958 Los Angeles Lawyer February 2011 39 LITIGATION-TECH LLC 555 West 5th Street, Suite 3100, Los Angeles, CA 90013, (213) 798-6608, e-mail: [email protected]. Web site: www.litigationtech.com. Contact Ted Brooks. With offices in Los Angeles and San Francisco, Litigation-Tech provides full-service trial support to law firms for trial, mediation and ADR. Clients and cases include the Los Angeles Dodgers divorce trial (with David Boies), People v. Robert Blake (with M. Gerald Schwartzbach), Western MacArthur v. USF&G ($3 billion), May-Carmen v. Wal-Mart (defense verdict), PG&E v. U.S., Shropshire v. City of Walnut Creek ($27.5M), Liou v. Caltrans ($12.5M), and a large number of others on both sides of civil, criminal, and family law matters. See display ad on page 5. MOLLY MURPHY TRIAL CONSULTANT/ MEDIATOR 1541 Ocean Avenue, 2nd Floor, Santa Monica, CA 90401, (310) 458-7720, fax (310) 458-7298, e-mail: mickeyslaw @yahoo.com. Web site: www.jury-trialconsultant.com. Contact Molly M. Murphy, MDR. Theme development, voir dire strategy, jury questions, jury questionnaires and jury selection, trial/evidence strategy, strategy and design of case presentation, preparation of expert/lay witnesses, presentation and strategy for opening statement/closing argument, mock trials, jury monitoring throughout the trial, and post-trial jury interviews. NATIONAL JURY PROJECT/WEST 1901 Harrison Street, Suite 1550, Oakland, CA 94612, (510) 832-2583, fax (510) 839-8642. Web site: www.njp.com. Contact Lois Heaney. Highly respected trial consultants with over 30 years’ experience providing full range of services, including trial simulations, focus groups, surveys, jury selection, voir dire materials, witness preparation, venue evaluation, and courtroom graphics. Expert testimony and posttrial interviews available. Nationwide service. Areas of specialization include commercial litigation, intellectual property, personal injury, products liability, mass torts, and criminal defense. PROLUMINA Los Angeles and Orange Counties, (213) 985-7411. Web site: www.prolumina.net. Contact Noah Wick. STRESS LESS, WIN MORE™. Our jury consultants can help you identify and test key issues for your case, prepare your witnesses for deposition and trial, manage the details of jury selection, and design the overall presentation blueprint. Key services: case/theme strategy, witness preparation, focus groups, mock trials, online jury research, and jury selection. For more information visit: http://www.prolumina.net/services/litigation-strategy. See display ad on page 38. VERDICT SUCCESS LLC (310) 545-7914, e-mail: [email protected]. Web site: www.verdictsuccess.com or www.linkedin.com/in /cynthiacohenphd. Contact Cynthia R. Cohen, Ph.D. Explore strategic solutions for jury trials in a focus group facility or via online mock trials. Professionals in persuasive verbal and visual communication, settlement decision-making, venue changes, jury selection, jury questionnaires, jury interviews, detecting lying behavior, virtual shadow juries, witness preparation, and voir dire workshops for complex civil litigation. Established in 1986. LANGUAGE SERVICES/TRANSLATION/ INTERPRETER AGNEW TECH-II DBA AGNEW MULTILINGUAL 741 Lakefield Road, Suite C, Westlake Village, CA 91361, (805) 494-3999, fax (805) 494-1749, e-mail: i.agnew @agnew.com. Web site: www.agnew.com. Contact Irene Agnew or Silvia Scally. Document translation, Web site translation, voiceover recording-subtitles, interpretation, consecutive and simultaneous. AMERICAN LANGUAGE SERVICES “Making the World a Little Smaller” 1849 Sawtelle Boulevard, Suite 600, Los Angeles, CA 90025, (800)-951-5020, (310) 829-0741, fax (866) 7738591, e-mail: [email protected]. Contact Alan Weiss. American Language Services (ALS) is one of the premier interpreting, translating, and transcription providers in the United 40 Los Angeles Lawyer February 2011 States. ALS is a Southern California based agency and has served the legal community since 1985. We provide cost-effective, highly responsive language services, worldwide, to prominent law firms, in-house legal departments, governmental institutions, as well as to corporate America. We work in over 200 languages and provide a high level of expertise for document translations, verbal interpreting and audio transcription services. We offer qualified and certified interpreters for all languages and provide both simultaneous and consecutive interpreters. Our linguists are native speakers from around the world, specializing in legal matters such as depositions, arbitrations, mediations, hearings, trials, medical exams, insurance statements and client meetings. Our certified/notarized translations are completed by credentialed and experienced legal translators who possess specialized skills in legal terminology and handle matters such as patents, employee handbooks business contracts, litigation and medical documents among many others. Our service is outstanding, our rates are cost competitive and we provide fast quotes, last minute scheduling and quick turnaround times. To answer any questions you may have, please call (800) 951-5020, e-mail, or visit our Web site at www.alsglobal.net to submit orders on-line. LITIGATION SUPPORT SERVICES LITIGATION-TECH LLC 555 West 5th Street, Suite 3100, Los Angeles, CA 90013, (213) 798-6608, e-mail: [email protected]. Web site: www.litigationtech.com. Contact Ted Brooks. With offices in Los Angeles and San Francisco, Litigation-Tech provides full-service trial support to law firms for trial, mediation and ADR. Clients and cases include the Los Angeles Dodgers divorce trial (with David Boies), People v. Robert Blake (with M. Gerald Schwartzbach), Western MacArthur v. USF&G ($3 billion), May-Carmen v. Wal-Mart (defense verdict), PG&E v. U.S., Shropshire v. City of Walnut Creek ($27.5M), Liou v. Caltrans ($12.5M), and a large number of others on both sides of civil, criminal, and family law matters. See display ad on page 5. PROLUMINA Los Angeles and Orange Counties, CA, (213) 985-7411. Web site: www.prolumina.net. Contact Noah Wick. STRESS LESS, WIN MORE™. Prolumina’s PhD-trained trial services team has extensive experience in matters ranging from simple arbitrations and mediations to extensive Daubert hearings, and fullscale major litigation across the country. Services we provide: database construction and management, electronic courtroom setup and integration, trial presentation, war room design, and staffing and equipment rentals. For more information visit: http://www.prolumina.net/services /trial-technology. See display ad on page 38. LITIGATION/TRIAL PROJECT MANAGEMENT LITIGATION-TECH LLC 555 West 5th Street, Suite 3100, Los Angeles, CA 90013, (213) 798-6608, e-mail: [email protected]. Web site: www.litigationtech.com. Contact Ted Brooks. With offices in Los Angeles and San Francisco, Litigation-Tech provides full-service trial support to law firms for trial, mediation and ADR. Clients and cases include the Los Angeles Dodgers divorce trial (with David Boies), People v. Robert Blake (with M. Gerald Schwartzbach), Western MacArthur v. USF&G ($3 billion), May-Carmen v. Wal-Mart (defense verdict), PG&E v. U.S., Shropshire v. City of Walnut Creek ($27.5M), Liou v. Caltrans ($12.5M), and a large number of others on both sides of civil, criminal, and family law matters. See display ad on page 5. POLYGRAPH JACK TRIMARCO & ASSOCIATES POLYGRAPH INC. 9454 Wilshire Boulevard, 6th Floor, Beverly Hills, CA 90212, (310) 247-2637, e-mail: [email protected]. Web site: www .jacktrimarco.com. Contact Jack Trimarco. Former manager of the Federal Bureau of Investigation’s polygraph program in Los Angeles. Former Inspector General Polygraph Program— Department of Energy. Nationally known and respected polygraph expert. I have the credentials you would want when you have a client polygraphed, a case reviewed, or a motion made regarding polygraph. My unique background allows me to bring the highest levels of service and expertise to any polygraph situation. Current member of the board of directors and chairman of the Ethics Committee, California Association of Polygraph Examiners (CAPE). Hundreds of appearances on national TV, including Dr. Phil, Oprah, Greta, Nancy Grace, O’Reilly Factor, and Hannity. Degrees/licenses: BS Psychology; Certified APA, AAPP, CAPE, AAFE. See display ad on page 9. QUESTIONED DOCUMENTS RILE, HICKS, & MOHAMMED, FORENSIC DOCUMENT EXAMINERS HOWARD C. RILE, JR., A. FRANK HICKS, LINTON A. MOHAMMED 100 Oceangate, Suite 670, Long Beach, CA 90802, (562) 9013376. Web site: www.rileandhicks.com. Certified by American Board of Forensic Document Examiners. Members: ASQDE, SWAFDE, SAFDE, AAFS, FSS, CSFS, ASTM. Decades of experience in examination and evaluation of disputed documents, including wills, deeds, checks, contracts, medical records, anonymous notes, journals, sign-in sheets, etc., involving handwriting and signatures, ink, paper, typewriting and printing processes, obliterations, indentations, and alterations question. Fully-equipped laboratory, including VSC-4C and ESDA. Testified more than 700 times. TRANSLATION SERVICES THE TRANSLATION SPACE 655 North Central Avenue. 17th Floor, Glendale, CA 91203, (818) 649-8550, (805) 435-3761, e-mail: info@thetranslationspace .com. Web site: www.thetranslationspace.com. Contact James Keller, VP Business Development. Services available: The Translation Space provides full-service translation, localization, and interpreting services to clients around the world. Founded and managed by experienced translation industry professionals, we look forward to assisting you with all your language needs, from translation of legal and technical documents, reports, and employee handbooks all the way to localization of your software or Web site. We also offer interpreting services. TRIAL SUPPORT SERVICES LITIGATION-TECH LLC 555 West 5th Street, Suite 3100, Los Angeles, CA 90013, (213) 798-6608, e-mail: [email protected]. Web site: www.litigationtech.com. Contact Ted Brooks. With offices in Los Angeles and San Francisco, Litigation-Tech provides full-service trial support to law firms for trial, mediation and ADR. Clients and cases include the Los Angeles Dodgers divorce trial (with David Boies), People v. Robert Blake (with M. Gerald Schwartzbach), Western MacArthur v. USF&G ($3 billion), May-Carmen v. Wal-Mart (defense verdict), PG&E v. U.S., Shropshire v. City of Walnut Creek ($27.5M), Liou v. Caltrans ($12.5M), and a large number of others on both sides of civil, criminal, and family law matters. See display ad on page 5. ON THE RECORD, INC. 5777 West Century Boulevard, Suite 1415, Los Angeles, CA 90045, (310) 342-7170, fax (310) 342-7172, e-mail: ken @ontherecord.com. Contact Ken Kotarski. On The Record, Inc.TM (OTR) is a full-service litigation support firm specializing in the preparation and presentation of evidentiary material at trials as well as other dispute resolution proceedings. We work as a part of your trial team to integrate document images, photographs, graphics, video, animation, and other exhibits into a clear and convincing computer-based courtroom presentation. From discovery to verdict to final appeal, OTR provides customized presentation support services and equipment configurations for any litigation communications challenge and venue in the United States. On The Record, Inc.TM— The Trial Presentation Professionals. See display ad n page 39. PROLUMINA Los Angeles and Orange Counties, (213) 985-7411. Web site: www.prolumina.net. Contact Noah Wick. STRESS LESS, WIN MORE™ Prolumina’s PhD-trained trial services team has extensive experience in matters ranging from simple arbitrations and mediations, to extensive Daubert hearings, and full-scale major litigation across the country. Services we provide: database construction and management, electronic courtroom setup and integration, trial presentation, war room design and staffing and equipment rentals. For more information visit: http://www.prolumina.net/services/trial-technology. See display ad on page 38. VIDEOTAPING VERBATIM VIDEO LEGAL VIDEO PRODUCTIONS Los Angeles, (800) 520-8273. Web site: verbatimdepos.com. Providing legal video services to the Los Angeles legal community for over twenty years! Experience videographers, sharp editors, and attentive trial presenters. NCRA member, certified legal video specialist, certified trial presenters. Window and Mac family. DVDs turned around within days of the deposition. See display ad on page page 39. VERBATIM VIDEO LEGAL VIDEO PRODUCTIONS Los Angeles, (800) 520-8273. Web site: verbatimdepos.com. Providing legal video services to the Los Angeles legal community for over twenty years! Experience videographers, sharp editors, and attentive trial presenters. NCRA member, certified legal video specialist, certified trial presenters. Window and Mac family. DVDs turned around within days of the deposition. See display ad on page 39. VIDEO/AUDIO TRANSFER AND DUPLICATION VISUAL EQUIPMENT FOR TRIALS WOVA - WORLD OF VIDEO & AUDIO 8717 Wilshire Boulevard, Beverly Hills, CA 90211, (310) 6595959, fax (310) 659-8247, e-mail: [email protected]. Web site: www.wova.com. Contact Ben Parnassi. Over 28 years in business. Video/audio transfer, duplication, and conversions. Audio restoration, micro audio cassette transfers, Deposition video copies, video editing, DVD authoring, video to QuickTime files, and more. VIDEOCONFERENCING BEN HYATT CERTIFIED DEPOSITION REPORTERS 17835 Ventura Boulevard, Suite 310, Encino, CA 91316, (888) 272-0022, fax (818) 343-7119, e-mail: mhyatt@benhyatt. com. Web site: www.benhyatt.com. Contact Mitch Hyatt. Ben Hyatt Certified Deposition Reporters is a full-service court reporting company based in Los Angeles and operating throughout the entire United States and internationally. We offer a full spectrum of litigation support services. Beyond standard court reporting services, Ben Hyatt offers interactive real-time reporting, legal videography services, videoconferencing, and interpretation services. See display ad on page 39. VIDEOGRAPHY BEN HYATT CERTIFIED DEPOSITION REPORTERS 17835 Ventura Boulevard, Suite 310, Encino, CA 91316, (888) 272-0022, fax (818) 343-7119, e-mail: mhyatt@benhyatt. com. Web site: www.benhyatt.com. Contact Mitch Hyatt. Ben Hyatt Certified Deposition Reporters is a full-service court reporting company based in Los Angeles and operating throughout the entire United States and internationally. We offer a full spectrum of litigation support services. Beyond standard court reporting services, Ben Hyatt offers interactive real-time reporting, legal videography services, videoconferencing, and interpretation services. See display ad on page 39. HAHN & BOWERSOCK, INC., CERTIFIED COURT REPORTERS 151 Kalmus, Suite L-1, Costa Mesa, CA 92626, (800) 6603187. Web site: www.hahnbowersockcom. Our experienced in-house videographers have the talent and technology to capture your legal videos on time and on budget. Our in-house video technicians can synchronize any video to the deposition text so that your team can create professional quality clips for trial with our complimentary embedded software. Training to create trial clips is always complimentary. We offer editing and duplication services and also provide optional equipment rental for courtroom multimedia playback. We understand the power of legal video technology and have the experience and expertise to deliver the highest-quality legal video services across the state. See display ad on this page. PASCAL PRODUCTION 726 Santa Monica Boulevard, Suite 212, Santa Monica, CA 90401, (310) 656-1155, cell (310) 666-5606, 24/7, fax (310) 862-1880, e-mail: [email protected]. Web site: www.allvideoproductions.com. Contact Pascal Sangary. Video deposition, legal videography, day-in-the-life videos, accident reconstruction video production, editing and courtroom playback, audio streaming, video streaming, video digitization, trial presentation, digitizing photos, equipment rentals and intrial technicians. INTERACTIVE PRESENTATION SOLUTIONS (IPS) 18401 Burbank Boulevard, Suite 107, Tarzana, CA 91356, (818) 776-3470. Web site: www.ipsone.com. Contact Christine Froehlich. IPS offers superior trial presentation and graphic services while still keeping your client’s budget in mind. Our track record speaks for itself—over 2000 cases with a 90 percent success rate. We have full-time graphic artists on site. We work one-on-one with expert witnesses and counsel to create animations, presentations, time lines, flow charts, and exhibit boards. We are specialists in evidence presentation, and video clip playback. All of our presentation equipment is available for rent and installation. When you need a high quality, cost-effective presentation, you need IPS. ON THE RECORD, INC. 5777 West Century Boulevard, Suite 1415, Los Angeles, CA 90045, (310) 342-7170, fax (310) 342-7172, e-mail: ken @ontherecord.com. Contact Ken Kotarski. On The Record, Inc.TM (OTR) is a full-service litigation support firm specializing in the preparation and presentation of evidentiary material at trials as well as other dispute resolution proceedings. We work as a part of your trial team to integrate document images, photographs, graphics, video, animation, and other exhibits into a clear and convincing computer-based courtroom presentation. From discovery to verdict to final appeal, OTR provides customized presentation support services and equipment configurations for any litigation communications challenge and venue in the United States. On The Record, Inc.TM— The Trial Presentation Professionals. See display ad on page 39. WAR ROOM SUPPORT SERVICES LITIGATION-TECH LLC 555 West 5th Street, Suite 3100, Los Angeles, CA 90013, (213) 798-6608, e-mail: [email protected]. Web site: www.litigationtech.com. Contact Ted Brooks. With offices in Los Angeles and San Francisco, Litigation-Tech provides full-service trial support to law firms for trial, mediation and ADR. Clients and cases include the Los Angeles Dodgers divorce trial (with David Boies), People v. Robert Blake (with M. Gerald Schwartzbach), Western MacArthur v. USF&G ($3 billion), May-Carmen v. Wal-Mart (defense verdict), PG&E v. U.S., Shropshire v. City of Walnut Creek ($27.5M), Liou v. Caltrans ($12.5M), and a large number of others on both sides of civil, criminal, and family law matters. See display ad on page 5. California’s Premier Full-Service Court Reporting Company • Statewide Coverage • Internet Deposition Streaming • Over 150 CA Deposition Suites • Realtime Court Reporters • In-house Videographers • Videoconference Facilities • Never Pay an Interpreter Cancellation Fee 800.660.3187 www.hahnbowersock.com DepoSums DEPOSITION SUMMARIES ➤ Experienced summarizers ➤ 3-step proof-reading process ➤ E-mailed direct to your computer Los Angeles’ Finest Digesting Service FOR MORE INFORMATION: 800.789.DEPO • www.deposums.biz Los Angeles Lawyer February 2011 41 Business Opportunities WANT TO PURCHASE MINERALS and other oil/gas interests. Send details to: P.O. Box 13557, Denver, CO 80201. Conference Room Space for Rent THE LOS ANGELES COUNTY BAR ASSOCIATION HAS CONFERENCE ROOM RENTALS AVAILABLE. Plan your next business meeting or networking conference right here at the Los Angeles County Bar Association. Projection screens, state-of-the art audio/video, conference streaming, program seating up to 125 people, Webcasting and recording capabilities, spectacular views of downtown Los Angeles. For more information, call Kevin Good at 213.896.6515 or e-mail roomreservations @lacba.org. Consultants and Experts COMPETENCE TO SIGN A WILL assessed by Alex D. Michelson, M.D., Diplomate American Board of Psychiatry and Neurology with additional certification in forensic psychiatry. www.drmichelson.yourmd.com. Evaluations and testimony in disabilityconflicting employment, malpractice, hospital standards, sexual harassment, custody evaluations, retirement defense, testamentary capacity, and probate conservatorship. Call (949) 462-9114. NEED AN EXPERT WITNESS, legal consultant, arbitrator, mediator, private judge, attorney who outsources, investigator, or evidence specialist? Make your job easier by visiting www.expert4law.org. Sponsored by the Los Angeles County Bar Association, expert4law—the Legal Marketplace is a comprehensive online service for you to find exactly the experts you need. Law Practice For Sale SELLING OR BUYING A LAW PRACTICE? Call Ed Poll. See www.lawbiz.com or call (800) 837-5880. LAW PRACTICE FOR SALE. Contingency litigation practice focuses on lucrative practice areas such as construction defects, personal injury, and complex business matters; practice includes hourly billing for business/corporate contracts and disputes, and construction defect matters. Significant growth history. Small office. See www.lawbiz.com or call (800) 837-5880 for more information. 42 Los Angeles Lawyer February 2011 Accident Reconstruction Specialists, p. 17 Litigation-Tech LLC, p. 5 Tel. 562-743-7230 www.FieldAndTestEngineering.com Tel. 213-798-6608 www.litigationtech.com Affiniscape Merchant Solutions, p. 24 MCLE4LAWYERS.COM, p. 30 Tel. 866-376-0950 www.lawpay.com Tel. 310-552-5382 www.MCLEforlawyers.com Ahern Insurance Brokerage, p. 2 Mediation Alliance, Inc., p. 6 Tel. 800-282-9786 x101 [email protected] Tel. 213-383-0438 e-mail: [email protected] Ben Hyatt Certified Deposition Reporters, p. 39 Michael Marcus, p. 17 Tel. 888-272-0022 www.benhyatt.com Tel. 310-201-0010 www.marcusmediation.com Cheong, Denove, Rowell & Bennett, p. 31 Law Offices of Matthew C. Mickelson, p. 31 Tel. 310-277-4857 www.cdrb-law.com Tel. 818-382-3360 www.mickelsonlegal.com Cook Construction, p. 23 On The Record, Inc., p. 39 Tel. 818-438-4535 e-mail: [email protected] Tel. 310-342-7170 www.ontherecord.com Lawrence W. Crispo, p. 8 Pacific Health & Safety Consulting, Inc., p. 36 Tel. 213-926-6665 e-mail: [email protected] Tel. 949-253-4065 www.phsc-web.com Crowe Horwath, LLP, Inside Front Cover Prolumina, p. 38 Tel. 800-599-2304 www.crowehorwath.com Tel. 213-985-7411 www.prolumina.net DepoSums Deposition Summaries, p. 41 Receivership Specialists, p. 6 Tel. 800-789-DEPO (800-789-3376) www.deposums.biz Tel. 310-552-9064 www.receivershipspecialists.com James R. DiFrank, PLC, p. 36 Anita Rae Shapiro, p. 30 Tel. 562-789-7734 www.bardefense.net Tel. 714-529-0415 www.adr-shapiro.com E. L. Evans & Associates, p. 4 Shoreline Investigations, p. 30 Tel. 310-559-4005 Tel. 800-807-5440, 818-344-2193 www.shorelinepi.com Steven L. Gleitman, Esq., p. 4 Thomson West, Back Cover Tel. 310-553-5080 Tel. 800-762-5272 www.west.thomson.com Hahn and Bowersock, p. 41 Trope and Trope, p. 23 Tel. 800-660-3187 www.hahnbowersock.com Tel. 310-207-8228 www.TropeandTrope.com Higgins, Marcus & Lovett, Inc., p. 23 USC Gould School of Law Continuing Legal Education, p. 15 Tel. 213-617-7775 www.hmlinc.com Tel. 213-740-2582 www.law.usc.edu/cle Jack Trimarco & Associates Polygraph, Inc., p. 9 University of LaVerne College of Law, Inside Back Cover Tel. 310-247-2637 www.jacktrimarco.com Tel. 877-858-4529 www.law.ulv.edu Jury Behavior Research, Inc., p. 38 Verbatim Video, p. 39 Tel. 310-372-8140 www.jurybehavior.com Tel. 800-520-8273 e-mail: [email protected] Kantor & Kantor, LLP, p. 8 Walzer & Melcher, p. 1 Tel. 877-783-8686 www.kantorlaw.net Tel. 818-591-3700 e-mail: [email protected] The Keller Law Firm, p. 4 Waronzof Associates, p. 17 Tel. 310-343-9893 www.calcodes.com Tel. 310-954-8060 www.waronzof.com Lawyers’ Mutual Insurance Co., p. 7 Witkin & Eisinger, LLC, p. 31 Tel. 800-252-2045 www.lawyersmutual.com Tel. 818-845-4000 New E-Discovery Competency Requirements ON THURSDAY, FEBRUARY 10, the Los Angeles County Bar Association will present a program on what lawyers need to know about e-discovery competency requirements. California and the Federal Rules of Civil Procedure now require counsel to become competent with complex electronic discovery concepts, rules, and protocols. Counsel who are not up to speed with electronic discovery are ethically required to withdraw from representation or associate competent counsel. This program is the first step toward meeting competency requirements. Speaker Alexander H. Lubarsky will explore the new California Electronic Discovery Act, cutting edge technologies, and best practices pertaining to managing electronically stored evidence at trial. The program will take place at the Los Angeles County Bar Association, 1055 West 7th Street, 27th floor, Downtown. Parking is available at 1055 West 7th and nearby parking lots. On-site registration will begin at 4:30 P.M., with the program continuing from 5 to 8:45 P.M. This program is also available as a live Webcast. The registration code number is 011185. The prices below include the on-site meal. $60—CLE+PLUS member $75—Small and Solo Division member $100—LACBA member $115 to $150—live Webcast $130—all others 3.5 CLE hours CROSS-BORDER DISTRESSED TRANSACTIONS ON THURSDAY, FEBRUARY 17, the International Law and Corporate Law Departments Sections will host a program on the purchase and sale of distressed companies in the United States and abroad. Speakers Monique C. Bedford, Miranda Clark, and Malhar S. Pagay will highlight the specialized regulations that companies need to comply with when dealing with distressed companies as well as the most effective negotiation tips and due diligence required to ensure that companies achieve their intended objectives. The program is designed for in-house counsel and other professionals advising on cross-border transactions involving distressed companies. The program will take place at the Los Angeles County Bar Association, 1055 West 7th How to Manage Archived Data in Litigation ON WEDNESDAY, FEBRUARY 16, the Los Angeles County Bar Association will host a program on archival data, which often is found on backup tapes, removable drives, and Web repositories. Speaker Alexander H. Lubarsky will explore the rules, case law, techniques, technology, and best practices for identifying, requesting, retrieving, reviewing, and producing archival data. The program will take place at the Los Angeles County Bar Association, 1055 West 7th Street, 27th floor, Downtown. Parking is available at 1055 West 7th and nearby parking lots. On-site registration will begin at 4:30 P.M., with the program continuing from 5 to 8:45. This program is also available as a live Webcast. The registration code number is 011186. The prices below include the on-site meal. $60—CLE+PLUS member $75—Small and Solo Division member $100—LACBA member $115 to $150—live Webcast $130—all others 3.5 CLE hours Street, 27th floor, Downtown. Parking is available at 1055 West 7th and nearby parking lots. On-site registration will begin at 5:30 P.M., with the program continuing from 6 to 8. This program is also available as a live Webcast. The registration code number is 011112. The prices below include the on-site meal. $25—CLE+PLUS member $55—Corporate Law Departments Section and International Law Section member $65—LACBA member $75—all others $85—at-the-door registrants $95 to $105—live Webcast 2 CLE hours The Los Angeles County Bar Association is a State Bar of California MCLE approved provider. To register for the programs listed on this page, please call the Member Service Department at (213) 896-6560 or visit the Association Web site at http://calendar.lacba.org/where you will find a full listing of this month’s Association programs. Los Angeles Lawyer February 2011 43 closing argument BY LAUREN WOLKE Kids’ Court Childhood fairy tales are filled with heartache and violence, conTHE AMERICAN LEGAL SYSTEM DICTATES that ignorance of the law is no excuse for breaking it. Even if we do not know the speed limit, fusion and compromise. Jack’s mom asked him to sell his best friend we are still expected to obey it. However, the real problem is not that (the cow) to help feed the family. Little Red Riding Hood and Hansel people do not know the law; it’s that they do not care why it exists and Gretel all learned the dangers of walking in the woods and relyin the first place. This apathy is responsible for the curious lack of ing on the kindness of strangers. Dorothy melted the Wicked Witch, respect that many Americans have for the most innovative legal sys- and Peter Pan sent Captain Hook back into the crocodile’s mouth. tem on the planet. To remedy that void, high schools across the Obviously, each of these acts cries out for litigation! The trials the nation conduct mock trials and moot courts to help our youth Laurence students conduct, unlike the stories they are based on, censor the Grimm details for the sake of the delicate sensibilities of develop an understanding of the American judicial system. Unfortunately, for most kids, high school is too late. If we want their intended audience. However, the message is the same, and the to improve the civic responsibility of our future citizens, we need to start young. Very young. Reading, writing, and arithmetic are no longer Young students, perhaps even more than adults, have a enough. There is a fourth “R” that our schools are ignoring at the peril of the future of American jurisprudence—reality. seemingly innate sense of what is right and what is just. High school baseball stars first learn to swing a bat in little league. The leads in your local school’s production of The Music Man probably learned to sing before they could count all the way up to impact the process has on its participants, is nothing short of profound. Kids’ Court’s sixth graders take on the roles of various courtroom 76 trombones. Yet mock trial participants typically have to wait until high school to argue their first salient point before a jury of admin- actors in these trials—judge, bailiff, witnesses, and prosecution and istrators and peers. It is possible that sports and creative endeavors defense lawyers. All of the students in the school are taught about are inherently more popular than law-themed clubs. However, a courtroom procedure, and all students are served with jury notices simple shift in priority and focus could have lasting effects on the future and questionnaires and then involved in the voir dire process. A random jury is selected and, after the trial, it deliberates and decides of this nation. First, let us dispel some popular misconceptions. Many people guilt or innocence. This is a lot of fun. But is it useful? And, more importantly, is it assume that mock trial is intended for future lawyers, and some would argue that we do not need to encourage more students to go appropriate? The law is based upon reasonable people thinking in a reasonable to law school. However, just a fraction of 1 percent of high school athletes will go on to play professional sports, and the vast majority way, and young students, perhaps even more than adults, have a seemof drama students will never set foot onto a Broadway stage. Still, mil- ingly innate sense of what is right and what is just. Even though the lions of children participate in these activities in order to develop self- setting is fantasy in Kids’ Court proceedings, the legal process it confidence, discipline, a sense of teamwork, and a variety of other soft illustrates is very realistic. And the children, as it turns out, respond skills. Perhaps if students were exposed to the power of argument, to this reality as long as it is a reality that they can grasp on their own precedent, and deliberation at a younger age, mock trial teams would terms. We have a unique and inspiring justice system in America, and be holding the same cutthroat auditions and tryouts as their coun- this brand of fantasy-infused reality is doing wonders to help children see the positive side of that system early in their lives. True respect terparts in the theater and on the field. Perhaps the question we should be asking is whether elementary for something as complex as law and justice comes when a person school students are, in fact, ready to face reality before they hit gets it on his or her own terms and appreciates it in a way that fits puberty. We do not simply believe that they are; at Laurence School, his or her personal needs. Our nation can only benefit from having its children see the legal we have proven it. In 1989, I created Kids’ Court, a law and ethics program for the elementary schoolchildren of our school in Valley system as their ally rather than their enemy. And this battle is best won Glen, California. The program encourages students to explore the early. By playing out and then analyzing the decisions of their childworld of law through debates, mock trial, trial strategy, creative hood heroes and villains, our future lawyers, jurors, and, most imporwriting, and public speaking—all on a level commensurate with tantly, children will grow up seeing the legal system as something to their maturation and cognitive ability. For 21 consecutive years the embrace rather than fear—something they can be a part of rather than ■ program has delivered fairy tale justice (literally) as the kids debate something they hope to avoid. the legal merit of actions taken by some of their favorite storybook Lauren Wolke is an attorney and the head of Laurence School. characters. 44 Los Angeles Lawyer February 2011 GREAT LAWYERS make the most of their opportunities. This is is Soheila Sohe So heililila he a Azizi, Aziz Az izi,i, Principal iz Pri P rinc ri ncip nc ipal ip al of of Soheila Sohe So heililila he a Azizi Aziz Az izii & Associates iz Asso As soci so ciat ci ates at es This and Class Clas Cl asss of 1993 as 199 1 993 99 3 graduate. grad gr adua ad uate ua te.. te and Read Re ad Soheila’s Soh S ohei oh eila ei la’s la ’s ssto story tory to ry a att www.go2lavernelaw.com/soheila www. ww w.go w. go2l go 2lav 2l aver av erne er nela ne law. la w.co w. com/ co m/so m/ sohe so heililila he a The University Unive Un iversi ive rsity rsi ty of La Verne Verne College Colleg Col legee of leg of Law Law has been been provisionally provis pro vision vis ionall ion allyy approved all appr appr pprove ovedd by ove by the the Council Counci Cou ncill of nci of the the Section Sectio Sec tionn of tio of Legal Lega Lega egall Education Educ Educ ducati ation ati on and Admissions Admis Ad missio mis sions sio ns to the Bar Bar of of the the American Americ Ame rican ric an Bar Association Assoc As sociat soc iation iat ion since since 2006. 2006. The The Section Sect Sect ection ion of Legal Legal Education Educa Ed ucatio uca tionn may tio may be contacted contac con tacted tac ted at 321 321 North Nort Nort orthh Clark Clar Clar larkk Street, Stre Stre treet, et, Chicago, Chica Ch icago, ica go, IL 60610 60610 or by phone phone at (312) (312) 988-6738. 988-6 98 8-6738 8-6 738.. 738 SURE YOU’RE SEEING THE WHOLE PICTURE? Westlaw Litigator® puts everything you need in a single location, so you won’t miss critical information. Millions of online briefs and trial documents. ALR.® Forms. Jury Verdicts. Enhanced Cases. Expert Reports, Case Management tools, and much more. All the tools, content, and solutions you need at every stage of a case, fully integrated, easily accessible. Find what you need quickly, and with confidence that you’ve missed nothing. See the full picture for yourself. 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