Protecting Our Elders PLUS 2009 Guide to Trial Support Services

2009 Guide to Trial Support Services
February 2009 /$4
E A R N MCLE CR E D I T
Private
Investigations
of Jurors
page 21
Protecting
Our Elders
Los Angeles lawyer
Robin Allen analyzes the
elements of the crime of
elder abuse page 14
PLUS
Federal ADA Amendments page 10
Class Action Coupon Settlements page 26
Text Messaging to Clients page 38
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A MEMBER BENEFIT OF
F E AT U R E S
14 Protecting Our Elders
BY ROBIN ALLEN
Under the criminal elder abuse statute, prosecutors must prove that the perpetrator
knew or should have known that the victim of a crime was 65 or older
21 The Private Lives of Jurors
BY TRACY J. HASPER AND GORDON F. LULL
When investigating potential jurors, private investigators are agents of the
attorneys who employ them and must observe the Rules of Professional Conduct
and the Private Investigator Act
Plus: Earn MCLE legal ethics credit. MCLE Test No. 178 appears on page 23.
26 Clipping Coupons
BY DAVID MARTINEZ AND REBECKA BIEJO
Unlike federal courts, California courts have rejected the notion that coupon
settlements of class actions are inherently suspect
32 Special Section
2009 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 2009
Volume 31, No. 11
COVER PHOTO: TOM KELLER
9 Barristers Tips
How malpractice insurance ERPs apply to
LLP partners
40 By the Book
The Buffalo Creek Disaster
REVIEWED BY JEFFREY D. WOLF
BY DAN MCKENNA
10 Practice Tips
Recent amendments to federal law
increase protection for the disabled
44 Closing Argument
The new pet trust statute is certain to
dog the judiciary
BY KENNETH W. KOSSOFF
BY LYNNE M. HOOK AND STACEY A. LEE
42 Classifieds
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38 Computer Counselor
What lawyers need to know about text
messaging with clients
42 Index to Advertisers
BY DAVID SCHNIDER
43 CLE Preview
02.09
HONORABLE
LAWRENCE W. CRISPO
(RETIRED)
A
pril 6, 2009, will mark the 15-year anniversary of the
deaths of Presidents Habyarimana of Rwanda and
Ntaryamira of Burundi, whose downed plane ignited
a raging genocidal campaign that left 800,000 dead—a great
many of them women and children—in less than a month.
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Four years later, President Bill Clinton would tell the Rwandan people: “All over
the world there were people like me sitting in offices who did not fully appreciate
the depth and the speed with which you were being engulfed by this unimaginable
terror.”
In 2004, historians and international observers came together to mark the 10year anniversary of the Rwandan genocide. As they did, many remarked on the haunting parallels between what happened in 1994 and what was then unfolding in
Darfur, a region of Sudan roughly the size of Texas, where a brutal cycle of ethnic
cleansing had already claimed the lives of 200,000 and made over 1 million refugees.
In July 2004, the U.S. Congress—in an extraordinary act of bipartisanship for an
election year—concluded unanimously that “genocide” accurately described what
was happening in Darfur. By November 2004, both President George Bush and
Senator John Kerry likewise had expressed that view.
By 2007, attacks on humanitarian workers reached extraordinary levels, while
devastating malnutrition and catastrophic mortality rates for children under five
became particularly grim signals of the enormity of the Darfur crisis. Firsthand reports
of the genocide evoked the worst of the twentieth century: sadistic extremes of violence, unspeakable horrors inflicted on women and girls, and brazen interference with
relief efforts. The statistics have continued to leap forward: As many as 450,000 have
perished, and over 2 million displaced.
Without question, attorneys across the country now face a full array of stresses
and uncertainties, both within and beyond our practices. At the same time, the reality of the twenty-first century’s first recognized genocide marks a unique moral imperative. This is all the more so because a number of grass roots organizations—as well
as twenty-first century technology—have made it particularly easy for us to participate in efforts to halt the genocide. Those with very little time can make a toll-free
telephone call to 1-800-GENOCIDE. The antigenocide hotline, brilliantly conceived by the Genocide Intervention Network, connects callers to their elected officials and provides updated information and talking points. In a similar vein, the Save
Darfur Coalition has mounted a postcard and e-mail campaign aimed at urging the
new administration to work with the international community to ensure an end to
the killings and the safe and swift delivery of desperately needed humanitarian aid.
Bar associations, law firms, and public officials can go a step further. Hosting discussions or meetings with Sudanese survivors, aid workers, and antigenocide leaders; promoting genocide education and awareness; and supporting nonpartisan
efforts to deliver relief to the victims are just a few of the ways in which we can go
beyond “sitting in offices.”
Genocide is, after all, not only a humanitarian crisis but also the civilized world’s
worst known crime. The late Senator Paul Simon famously noted that if each member of Congress had just received 100 letters from home, the Rwandan genocide might
have been stopped. While the information age may have altered the formula, all of
us—as attorneys and citizens who recognize the broader meaning of “justice”—should
participate in efforts to end the genocide in Darfur.
■
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Angela J. Davis is an assistant U.S. attorney and the 2008-09 chair of the Los Angeles Lawyer
Editorial Board. Her views do not necessarily reflect those of the U.S. Department of Justice.
4 Los Angeles Lawyer February 2009
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LosAngelesLawyer
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See how we can protect your firm by contacting
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8 Los Angeles Lawyer February 2009
ASSOCIATION OFFICERS
President
DANETTE E. MEYERS
President-Elect
DON MIKE ANTHONY
Senior Vice President
ALAN K. STEINBRECHER
Vice President
ERIC A. WEBBER
Treasurer
LINDA L. CURTIS
Assistant Vice President
PATRICIA EGAN DAEHNKE
Assistant Vice President
ANTHONY PAUL DIAZ
Assistant Vice President
MARGARET P. STEVENS
Assistant Vice President
JULIE K. XANDERS
Immediate Past President
GRETCHEN M. NELSON
Executive Director
STUART A. FORSYTH
Associate Executive Director/Chief Financial Officer
BRUCE BERRA
Associate Executive Director/General Counsel
W. CLARK BROWN
BOARD OF TRUSTEES
P. PATRICK ASHOURI
SUE M. BENDAVID-ARBIV
GEORGE F. BIRD JR.
KIMBERLY H. CLANCY
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TANJA L. DARROW
BEATRIZ D. DIERINGER
DANA M. DOUGLAS
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CAMILLA M. ENG
IRA M. FRIEDMAN
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JACQUELINE J. HARDING
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SOUTHERN CALIFORNIA CHINESE LAWYERS ASSOCIATION
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barristers tips
BY DAN MCKENNA
How Malpractice Insurance ERPs Apply to LLP Partners
THE PROFESSIONAL BUSINESS STATUS of a limited liability partnership (LLP) has existed in California since the adoption of the
Uniform Partnership Act in 1996.1 Lawyers can take advantage of this
hybrid business form, gaining the benefits of running an informal practice between partners without the concern of personal liability for the
negligence or wrongful acts of the other partners. Of course, there is
a price to pay for this corporate veil. Recent revisions to Section 16956
of the Corporations Code governing LLPs contain an ambiguity that
can trap the unwary at the worst possible time—after dissolution. All
California attorneys, especially those just beginning their practice in
California as a member of an LLP, should be aware of the ambiguity and take necessary precautions.
LLPs have flourished over the past 12 years; there are now over
1,900 law firm LLPs in this state. In fact, many LLPs have been formed
strictly as a means of sharing costs. Some attorneys barely know their
fellow partners, and they are not concerned about the ability of their
other partners to practice law. They believe they are isolated from liability for a partner’s incompetence.
Section 16956 of the Corporations Code, relating to security for
claims against the LLP and effective January 1, 2008, mandates that
LLPs must meet either a financial security threshold or purchase
malpractice insurance. If the partners elect the securitization option
in lieu of purchasing malpractice insurance, subdivision (b) applies,
and it prescribes the amount and types of security.
Most LLPs purchase insurance. If the partners elect to purchase
malpractice insurance in lieu of securitization, subdivision (a) applies.
Under the subdivision, the insurance for “partnerships with five or
fewer licensed persons shall not be less than one million dollars…and
for partnerships with more than five licensees…an additional one hundred thousand dollars…of insurance shall be obtained for each additional licensee; however, the maximum amount of insurance is not
required to exceed seven and a half million dollars.…”
Professional liability policies are typically issued with per-claim and
aggregate limits. The 2008 revision only mentions the aggregate
limit of exposure. Thomas Clark, the staff counsel for the Assembly
Judiciary Committee, confirmed that the revision was not intended
to increase the per-claim limit, only the aggregate.2 The per-claim limit
of liability is the maximum that the insurance company will pay on
behalf of an insured for any one claim. The aggregate limit of liability is the maximum the carrier will pay on behalf of an insured for
an entire policy period, without regard to the number of claims.
Most California professional liability policies are sold on a claimsmade and reported policy form. The responsible insurance carrier is
the one insuring the entity when the claim is actually made as opposed
to when the reported act occurred. What happens when the LLP dissolves?
Clearly, the legislative intent was to continue protecting the general public (clients) through financial securitization or mandated
professional liability insurance. The issue of dissolution was addressed
in subdivision (a) of Section 16956: “Upon the dissolution…of the
partnership, the partnership shall, with respect to any insurance policy or policies…maintain [them]…for a minimum of three years if reasonably available from the insurer.”
Reasonably Available
The ambiguity in the statute is how to interpret “if reasonably available from the insurer.” The extended reporting period endorsement
(ERP), or tail coverage, is an additional premium paid to the insurer
to extend the period of time to report claims after the policy has
expired or been canceled. If an ERP is not purchased, the insured cannot report claims to the insurer. Some insurers will not allow an ERP
to be purchased if the insured is canceled for nonpayment of premium.
If the dissolving partnership finds the cost of the ERP unreasonably
expensive, does the prohibitive cost mean the endorsement is not “reasonably available from the insurer” to afford the benefit of the LLP
status? If the LLP does not purchase the ERP, the negligent attorney
is exposed to a claim—and an innocent partner likely will now also
be exposed on a vicarious liability theory if the LLP does not purchase
the three-year ERP. When contemplating formation of an LLP, partners should be sure their professional liability policy offers at least a
three-year ERP—many do not—and that the limits of liability are reinstated upon the purchase of the ERP.
Again, under the provisions of many policies, the limits available
are less any monies paid out in claims during the last policy period.
It is possible that if these requirements are not met, an attorney will
be financially exposed to the negligent acts of any partner. For example, if an LLP dissolves on December 31, 2008, and a client of one
attorney sues the other attorneys in the LLP, those other attorneys could
be financially responsible for any damages that the client’s attorney
cannot satisfy if the proper ERP was not in place.
The statutory language “maintain or obtain an extended reporting period endorsement.…if reasonably available from the insurer”
is an extremely ambiguous way of affording protection to the partnership’s former clients and allowing the isolated exposure benefit to
limited partners. This gray area creates a business decision for the partners. The partners can continue gaining the protection of the LLP status by purchasing a minimum three-year ERP with the required limits, or, if they find the cost unreasonably high, the partners may elect
to lose the LLP protection. The California Legislature may soon
address the ambiguity in the phrase “if reasonably available from the
insurer” and increase the minimum per-claim limit. Any potential
changes to these requirements will be posted at the California
Assembly’s Judiciary Committee Web site (http://www.assembly.ca.gov
/acs/newcomframeset.asp?committee=15).
■
1
2
See CORP. CODE §§16100, 16951 et seq.
Conversation with Thomas Clark, Aug. 2008.
Dan McKenna heads Mitchell & Mitchell’s Professional Liability Program in
Novato, California.
Los Angeles Lawyer February 2009 9
practice tips
BY LYNNE M. HOOK AND STACEY A. LEE
RICHARD EWING
Recent Amendments to Federal Law Increase Protection for the Disabled
IN AN EFFORT TO BROADEN THE PROTECTION afforded to individuals with disabilities in the workplace, President George W. Bush signed
the ADA Amendments Act of 2008 (ADA Amendments) in September
2008. This new legislation went into effect January 1, 2009. However,
California employers should be aware that in certain significant
areas of the law, the California Fair Employment and Housing Act
(FEHA)1 provides a broader scope of protection than even the
amended ADA for individuals with disabilities in the workplace.
The FEHA dictates that the broader definitions will prevail. California
employers and their counsel nevertheless should be aware of the
new provisions in the federal law.
The new legislation responds to and specifically rejects a series of
U.S. Supreme Court cases that, in favor of employers, narrowed the
definition of “disability” and the scope of individuals protected
under the ADA. The ADA Amendments instruct courts that “the question of whether an individual’s impairment is a disability under the
ADA should not demand extensive analysis.” Specifically, the new legislation rejects the standard announced by the U.S. Supreme Court
in Sutton v. United Air Lines, Inc.,2 which required that the determination of whether an impairment substantially limits a major life
activity be balanced against the “ameliorative effects of mitigation measures,” such as medication or medical devices.
The ADA Amendments also reject the standards set forth by the
Supreme Court in Toyota Motor Manufacturing, Kentucky, Inc. v.
Williams,3 which held that 1) the terms “substantially limited” and
“major life activities” must be strictly construed when determining
the existence of a qualifying disability and 2) an individual must show
that the disability prevents or severely restricts him or her from
“doing activities that are of central importance to most people’s
lives.” The rejection of these decisions calls into question numerous
court decisions that have denied protection for various conditions—
including diabetes, epilepsy, heart disease, mental disabilities, and cancer. Changing the definitions of the ADA fundamentally alters the
understanding of and policies regarding accommodation of disabilities in the workplace.
The ADA Amendments will broaden the federal definition of
“disability.” Under the revisions, an individual has a “disability” if
he or she: 1) has a physical or mental impairment that substantially
limits one or more major life activities, 2) has a record of such an
impairment, or 3) is regarded as having such an impairment.4 In order
to be considered a disability, an impairment only needs to limit one
major life activity. The definition includes impairments that are
episodic or in remission if they would substantially limit a major life
activity when active.5
The amendments, however, do not specifically define “substantially
limits.” Instead, Congress has authorized the Equal Employment
Opportunity Commission, the attorney general, and the secretary of
transportation to issue regulations defining this term and further
defining “disability” in accordance with the purposes of the ADA
Amendments. Presently, the EEOC Web site states the agency is in the
10 Los Angeles Lawyer February 2009
process of “evaluating the impact of these changes on its enforcement
guidances and other publications addressing the ADA.”6
Until regulations are issued, it is unknown how “substantially limits” will ultimately be defined and whether the new provisions of the
ADA will afford more or less protection to employees than what is
currently provided by the FEHA. At this point, it is unclear what
impact, if any, the ADA Amendments will have on California employers with respect to the extent to which an impairment or condition
must restrict a major life activity.
Under the ADA Amendments, certain activities and major bodily
functions are designated as “major life activities.” A nonexclusive list
of activities that qualify as a major life activity includes caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading,
concentrating, thinking, communicating, and working.7 Major bodily functions include, but are not limited to, functions of the immune
system, normal cell growth, digestive, bowel, bladder, neurological,
brain, respiratory, circulatory, endocrine, and reproductive functions.8
The most significant change under the ADA Amendments is the
Lynne M. Hook is a partner in the Labor & Employment Department of Fox
Rothschild LLP’s Los Angeles office, and Stacey A. Lee is an associate in the
same department of Fox Rothschild in San Francisco.
A MEMBER BENEFIT OF
(949) 388-0524
www.dmv-law.pro
12 Los Angeles Lawyer February 2009
elimination of the restrictions on “working”
as a major life activity. Currently, the ADA
requires that an individual’s ability to perform
a class of jobs or a broad range of positions be
significantly restricted in order to be considered
substantially limited in the major life activity
of working. However, the new language of
the ADA Amendments will bring the ADA in
line with the FEHA, in which the inability to
perform one’s present job is enough to limit the
major life activity of working.
The ADA Amendments specify that in
order to be regarded as having an impairment, an individual only needs to prove that
he or she was subjected to an action that is
prohibited because of an actual or perceived
physical or mental impairment, regardless of
whether that physical or mental impairment
limits or is perceived to limit a major life
activity.9 The ADA Amendments, however,
will prevent the ADA’s protection from extending to minor illnesses, such as a common cold
or flu. An individual with an impairment that
is transitory and minor, with an actual or
expected duration of six months or less, will
not be regarded as having a disability.10
In addition, the ADA Amendments eliminate the consideration of mitigating measures in determining whether an individual’s
impairment substantially limits a major life
activity, with the exception of “ordinary
glasses and contact lenses.” Under the language of the ADA Amendments, the mitigating measures that are not to be considered
include medication; medical supplies, equipment, or appliances; low-vision devices;
prosthetics; hearing aids and implanted hearing devices; mobility devices; oxygen therapy equipment and supplies; use of assistive
technology; reasonable accommodations or
auxiliary aids or services; or learned behavioral or adaptive neurological modifications.11 To ensure compliance with the newly
enacted ADA Amendments, California
employers will need to continue to adhere to
the protection afforded by the FEHA to
individuals with disabilities in the workplace. If the FEHA provides a broader scope
of protection than the ADA, the FEHA will
take precedence.
Under the FEHA, an individual has a disability if he or she: 1) has a physical or mental disability that limits one or more major life
activities, 2) has a history or record of such
an impairment that is known to the employer,
3) is regarded or treated as having or having
had such an impairment that limits a major
life activity, or 4) is regarded or treated as having or having had an impairment that has no
present disabling effect but may become a
physical disability in the future.12
The FEHA indicates that a disability limits a major life activity “if it makes the achievement of the major life activity difficult.”13 An
individual only needs to show that his or her
impairment makes a major life activity more
difficult than it is for an average person without the impairment. The FEHA broadly defines
“major life activity” to include physical, mental, and social activities, as well as working.14
The FEHA regards employees as having a disability if their employers treat them as though
they have, or have had, a health condition or
impairment that limits a major life activity.15
Even if an impairment or condition presently
has no disabling effect, if it could become a disability limiting a major life activity in the
future, an individual will be regarded as having a disability that is subject to protection. In
addition, the FEHA’s definition of disability
places no minimum duration of an impairment or condition for it to be considered a disability that has protection. By protecting future
disabilities and not restricting impairments to
a certain minimum duration, the FEHA
appears to have a more expansive scope than
the ADA regarding who may be regarded as
having a disability.
The ADA Amendments require employers to show that use of a qualification standard,
employment test, or other selection criteria
that is based upon an individual’s uncorrected
vision is related to the job or a business necessity. This change will have no effect on
California employers, however, since the FEHA
provides a greater scope of protection than will
be provided by the new provisions of the ADA.
Under the FEHA, California employers are
prohibited from considering mitigating measures or devices in determining whether a condition limits a major life activity unless a mitigating measure or device itself limits a major
life activity.16 Unlike the ADA Amendments,
no exception exists under the FEHA for ordinary eyeglasses or contact lenses.
Coverage of which individuals will be
regarded as having a disability, subject to
protection under the FEHA, may be slightly
expanded under the ADA Amendments. If an
employer takes a prohibited action against an
employee because of an actual or perceived
physical or mental impairment—whether or
not that impairment actually limits or is actually perceived to limit a major life activity—
the employee will be regarded as having a disability under the ADA.
For the most part, until regulations are
issued to provide guidance on the definition
of “substantially limits,” the FEHA will continue to provide broader protection to individuals with disabilities in the workplace
than the new federal provisions under the
ADA Amendments. For now, California
employers should review their policies and
ensure that they are in strict compliance with
the FEHA. California employers should also
continue to engage in an interactive process
with employees who have disabilities, as
defined by state law, and ensure that they
are provided with the reasonable and necessary accommodations required to perform
their job functions.
However, as regulations defining “substantially limits” and further defining the
definition of “disability” under the ADA are
promulgated, the protection provided by the
ADA may become broader than what is
granted under California law. In such a case,
the FEHA holds that the more expansive
protection prevails.
■
1 GOV’T
2
CODE §§12900 et seq.
Sutton v. United Air Lines, Inc., 527 U.S. 471, 130
F. 3d 893 (1999).
3 Toyota Motor Mfg., Ky., Inc. v. Williams, 534 U.S.
184, 224 F. 3d 840 (2002).
4 42 U.S.C. §12102.
5 42 U.S.C. §12101(4)(D).
6 See http://www.eeoc.gov/ada/amendments_notice
.html.
7 42 U.S.C. §12102(2)(A).
8 42 U.S.C. §12102(2)(B).
9 42 U.S.C. §12102(3)(A).
10 42 U.S.C. §12102(3)(B).
11 42 U.S.C. §12102(4)(E).
12 GOV’T CODE §12926.
13 GOV’T CODE §§12926(k)(1)(B)(ii), (i)(1)(B).
14 GOV’T CODE §12926(k)(1)(B)(iii), (i)(1)(C).
15 GOV’T CODE §12926(k)(4).
16 GOV’T CODE §12926(k)(1)(B)(i), (i)(1)(A).
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Los Angeles Lawyer February 2009 13
by Robin Allen
PROTECTING
OUR ELDERS
Penal Code Section 368 is the starting point for
all elder and dependent adult criminal cases
14 Los Angeles Lawyer February 2009
Section 368 contains critical definitions. It
provides that an elder is “any person who is
65 years of age or older.”1 A “dependent adult
[is]…any person who is between the ages of 18
and 64 who has physical or mental limitations, which restrict his or her ability to carry
out normal activities or to protect his or her
rights,2 including, but is not limited to, persons
who have physical or developmental disabilities, or whose physical or mental abilities
have diminished because of age.”3 The disabilities can be permanent or temporary.
These definitions apply to all prosecutions pursuant to Penal Code Section 368.
However, for specified sex crimes prosecutions, the age distinction becomes moot. A
senior victim must fit within the definition of
a dependent adult in order to prove the elements of the crime.4
Analyzing a theft case for possible pros-
ecution under the elder abuse statute requires
consideration of the wide variety of ways in
which an elder can be victimized. This process
helps prosecutors focus on the type of evidence required to prove the crime. One category of theft involves the taking of property,
including money or other valuable items,
without the victim’s permission. A common
scenario involves seniors who park and lock
their car in their driveway, only to return
later to find the car gone, without having
given anyone permission to take the car. In a
case like this, the theft victim will be required
Robin Allen is a deputy district attorney in the Los
Angeles County District Attorney’s Office and is currently assigned to the Elder Abuse Section. She
was the prosecutor in People v. Cleaver, People v.
Cooper, People v. Hong, People v. Incion, and People
v. Rock.
AMANE KANEKO
CALIFORNIA LAW recognizes that elder
and dependent adults should receive special
protection as members of a group particularly
vulnerable to crime. Crimes against elder and
dependent adults run the gamut, including
neglect, theft, and murder. These adults fall
victim to crimes that are also perpetrated
against younger and healthier people, but
elder and dependent adults are often less able
to protect themselves, recover from being
victimized, and participate in the legal process
of reporting and pursuing those who committed the crimes.
Penal Code Section 368 is California’s
elder abuse statute, the starting point for all
criminal cases involving abuse against elder
and dependent adults. The three categories of
crimes that are prosecuted most frequently
under Section 368 are theft, neglect by others, and physical abuse.
to go to court and testify. With seniors and
disabled adults, time is critical. They must
come to court and sometimes submit to a
conditional examination, which may be necessary to preserve their testimony.
Another category of theft involves apparent consent, which is consent obtained through
trickery or deceit. Thieves may induce an
elder or dependent adult to give them property or money based on a fraud. For instance,
in People v. Cleaver,5 the defendant convinced
a dozen seniors to invest their life savings in
an annuity that the defendant was marketing.
In fact, the annuity was a sham. All the money
that the seniors invested—in excess of $1 mil-
the use of expert testimony from geriatricians and neuropsychologists regarding the
victim’s dementia or delirium. Prosecutors
need the expert to render an opinion that
the victim was incapable of consenting to
the transaction because of his or her cognitive impairment. In these cases, the victim
usually does not testify. These cases can be
very challenging to prove and require extensive documentation.
People v. Cooper, one of the few published cases in the elder abuse area, involved
a cognitively impaired elder victim.6 The victim was unable to testify during the criminal
proceedings but was interviewed twice before
dant knew, or reasonably should have known,
that the victim was an elder or dependent
adult10 or that the defendant was a caretaker
for the elder or dependent adult victim.11
This must be proven in addition to the underlying act of thievery.
Most perpetrators of theft crimes against
elders are aware of the victim’s age because
they personally know the victim, or they have
had face-to-face dealings with the elder and
can ascertain the victim’s approximate age.
Many of those suspected of theft are caretakers of elders or dependent adults. The
statute defines “caretaker” as “any person
who has the care, custody or control of, or
who stands in a position of trust with, an elder
or dependent adult.”12
Neglect and Physical Abuse
lion—was stolen by the defendant to fund her
lavish lifestyle and a lawsuit that she was
pursuing against her former employer. None
of the seniors would have agreed to give
her any money if they had known that the
annuity in which they were investing did
not exist. The victims came to court and
testified to the details of the scam. The
defendant was convicted of multiple counts
of elder abuse, sentenced to five years in
state prison, and ordered to pay restitution
to all her victims.
Theft can also involve the exercise of
undue influence to induce a senior to give consent and relinquish property. This occurs
when a victim’s will is overcome by another
person’s actions. An agreement under such circumstances is not consensual. Consent must
be voluntary, knowing, and intelligently
obtained from the person who is seemingly
agreeing to part with his or her property.
These victims must come to court and testify
regarding their experiences.
Another form of theft involves elders who
cannot consent to a financial transaction
because they are too cognitively impaired to
understand it. Prosecuting these cases requires
16 Los Angeles Lawyer February 2009
the case was filed by the police and case
workers from Adult Protective Services and
the Department of Mental Health. Videotapes
of these interviews were provided to the prosecution’s neuropsychologist, who relied upon
them in forming an opinion that the victim
could not consent to the financial transactions
at issue in the case.
The court ruled that the videotaped evidence did not violate the confrontation clause
and was admissible but subject to Evidence
Code Section 352.7 The court also cited
Evidence Code Sections 801 and 802, which
allow experts to testify regarding the sources
on which they base their opinions, including
hearsay reasonably relied upon by professionals in their field.8 The neuropsychologist
could testify regarding the contents of the
tape recordings and be cross-examined on
the subject.9 The defendant was eventually
convicted of elder abuse and ordered to pay
restitution to the estate of the victim.
When the victim of a theft is 65 years of
age or older, prosecutors can charge the crime
under the elder abuse statute regardless of the
type of thievery. To prove criminal elder theft,
the prosecution must establish that the defen-
Neglect of seniors and dependent adults is a
serious and growing problem. There are two
basic types of neglect: self-neglect and neglect
by others. Self-neglect is the failure of an
individual to provide for his or her basic
needs. This is a significant societal problem,
but it is not a crime. Social service providers
such as Adult Protective Services and the
Department of Mental Health provide service
to those seniors who cannot take care of
themselves.
Neglect by others is a crime. Unlike children, there is no person who is designated by
law to be a caretaker for an elderly or dependent adult. Children of elders are not obligated
to care for their parents or grandparents, but
once they assume those responsibilities,
whether on a paid or unpaid basis, they have
a responsibility to do a reasonable job. They
have a duty to provide for necessities of life
such as food, clothing, shelter, medical care,
and hygiene.
Many neglect cases involve catastrophic
injuries and death to the victims, who fail to
receive appropriate medical care or adequate
nutrition. They are often found dead or near
death, lying in their own urine and feces and
most commonly covered in pressure sores.
These sores can worsen to the point of becoming gaping holes that go through skin and
muscle and reach all the way to the bone.
They are portals for infection that can result
in sepsis and cause organ failure and death.
In People v. Hong, 13 the defendant
brought her aunt to the United States from
China to work as a nanny for her family.
The defendant was physically abusive to her
aunt, who as a result became increasingly
incapacitated. Eventually her condition worsened so that she could not protect herself or
provide for her own needs. Moreover, the
defendant failed to provide nutrition and
medical care for her aunt. The defendant
eventually deposited her aunt at LAC+USC
Medical Center, where she succumbed to her
wounds. In this case, the defendant had
assumed responsibility for her aunt and therefore was required to care for her needs. After
the coroner and an expert geriatrician testified that the aunt had died from neglect, the
defendant was convicted of elder abuse causing death and of involuntary manslaughter.
Physical abuse against elders is another
crime on the rise in Los Angeles County.
Sometimes an elder is targeted simply for
being an elder; sometimes attacks are completely random.
The decision to prosecute physical abuse
and neglect cases involves first considering
whether the conduct at issue took place under
circumstances likely to cause great bodily
injury or death. If the abuse or neglect was
committed in such a manner, the case can
be prosecuted as a felony.14 If not, a misdemeanor prosecution is appropriate. In evaluating the conduct of an abuser for prosecution, another factor to consider is whether
the same level of force exerted against an
80-year-old and a 20-year-old would result in
the same or a different outcome. In People v.
Bulajic,15 the defendant attacked her elder
landlord by slamming a door in the victim’s
face and then pushing the victim in the chest.
This assault caused the senior to fall and
fracture her hip, and the victim required hip
replacement surgery.
The sentencing range for felony prosecution under Penal Code Section 368 is from
two to four years in state prison.16 The maximum possible sentence for a misdemeanor
prosecution under this section is one year in
county jail and a fine of $2,000.17 The value
of the loss in a theft case must exceed $400
for a felony prosecution.18 The statute contains enhancements that cause a defendant to
serve additional time in custody if the value
of the theft is in excess of $65,000, $200,000,
$1.3 million, and $3.2 million.19 The enhancements range from one to four years of additional time in state prison beyond the amount
of time received on the underlying charge.20
Defendants also face sentencing enhancements if their crime involves causing great
bodily injury and death to an elder or dependent adult. These range from three to seven
additional years in state prison beyond the
amount of time received on the underlying
charge.21 Further, Probate Code Sections 250
and 259 prevent those convicted of elder or
dependent adult abuse under Penal Code
Section 368 from receiving an inheritance
from their victims.22
Sexual Abuse and Murder
Sexual crimes perpetrated against elders and
dependent adults are handled much the same
as those prosecuted against any member of
society. However, lawmakers have crafted
sections of the Penal Code that delineate two
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Los Angeles Lawyer February 2009 17
crimes specifically aimed at protecting the
disabled from sexual abuse by a caregiver.
These laws have been drawn as part of a
statute prohibiting child molestation. Under
Penal Code Section 288(b)(2), “any person
who is a caretaker and commits an act
described in subdivision (a) upon a dependent
person by use of force, violence, duress, menace or fear of immediate and unlawful bodily injury on the victim or another person” is
guilty of a crime.23 Under Penal Code Section
288(c)(2), “any person who is a caretaker and
commits an act described in subdivision (a)
upon a dependent person” is guilty of a
crime.24 Section 288(a) proscribes lewd or lascivious acts committed with the “intent of
arousing, appealing to, or gratifying the lust,
passions, or sexual desires” of the perpetrator or the victim.25
The language of subdivision (a) from the
child molestation statute is expressly referenced in the code section proscribing sexual
abuse of the disabled. There is no specific
provision for elders, but they are included
within the subdivision of Penal Code Section
288 dealing with the disabled. Penal Code
Section 288(f)(3) defines a disabled person as
“any person who has a physical or mental
impairment that substantially restricts his or
her ability to carry out normal activities or to
protect his or her rights, including, but not
limited to, persons who have physical or
developmental disabilities or whose physical or mental abilities have significantly diminished because of age.”26 It also includes “any
person who is admitted as an inpatient to a
24-hour health facility….”27
In People v. Incion,28 the defendant was
a caretaker for a senior who was wheelchair
bound and had previously suffered an incapacitating stroke. The defendant touched the
victim on her chest and took her hand and
placed it on his genitals. Not only did the victim not consent to any of the touching, she
also was scared and told her family about the
incident later that day. The defendant was
convicted of violating Penal Code Section
288(c)(2).29 The defendant was the victim’s
caretaker, the victim was disabled, and the
touching was done for the defendant’s sexual
gratification.
Finally, the law also addresses the prosecution of those who murder elder and disabled adults. Frequently the most extreme
cases of neglect are filed as homicides. These
cases are being prosecuted under an implied
malice theory: The caretaker exercised a conscious disregard for human life.
A significant number of elder abuse cases
involve mentally ill adult offspring commit-
ting crimes against their aged parents. The
worst of these cases result in the death of the
senior. Many of these elders never wanted to
institutionalize their sons or daughters. As the
parents and their children age, and the parents become unable to provide care and stability for their adult dependents, it is hard to
discern who are the caregivers—the parents
or the adult dependents. The worst possible
scenario occurred in People v. Rock,30 in
which the defendant, who suffers from schizophrenia, killed his mother by beating her
head into a wall. Following the killing, he
moved his mother’s body from inside the
home onto the front porch. He confessed his
crimes to the neighbors, several children who
walked by his home, and law enforcement. He
believed that his mother was the devil.
Prosecution and defense psychiatrists all
believed that the defendant was legally insane
at the time of the killing. The defendant
pleaded guilty to murder, after which the
court found that he was not guilty by reason
of insanity.
Elder and dependent adults often require
a team of professionals working together to
deal with the challenges that their cases present. These professionals are aided by the
fact that laws prohibiting abuse have been
augmented to provide additional protections
to the elder and dependent adults who are
increasingly becoming victims of crime. ■
1 PENAL
2 PENAL
CODE §368(g).
CODE §368(h).
3 Id.
4 PENAL
CODE §288(f)(3).
v. Cleaver, L.A. County Superior Ct. Case No.
BA274666 (sentenced Dec. 11, 2007).
6 People v. Cooper, 148 Cal. App. 4th 731 (2007).
7 Id. at 746; see also EVID. CODE §352.
8 Cooper, 148 Cal. App. 4th at 746; see also EVID. CODE
§§801-802.
9 Cooper, 148 Cal. App. 4th at 747.
10 PENAL CODE §368(d).
11 Id.
12 PENAL CODE §368(i).
13 People v. Hong, L.A. County Superior Ct. Case No.
KA073441 (sentenced Apr. 10, 2007).
14 PENAL CODE §368(b)(1).
15 People v. Bulajic, L.A. County Superior Ct. Case No.
LA055842 (sentenced May 27, 2008).
16 PENAL CODE §368(b)(1), (d), (e), (f).
17 PENAL CODE §368(c).
18 PENAL CODE §368(d)-(e).
19 PENAL CODE §12022.6.
20 Id.
21 PENAL CODE §368(b)(2)-(b)(3).
22 PROB. CODE §§250, 259.
23 PENAL CODE §288(b)(2).
24 PENAL CODE §288(c)(2).
25 PENAL CODE §288(a).
26 PENAL CODE §288(f)(3).
27 Id.
28 People v. Incion, L.A. County Superior Ct. Case
No. KA076304 (sentenced Mar. 9, 2007).
29 PENAL CODE §288(c)(2).
30 People v. Rock, L.A. County Superior Ct. Case No.
PA055152 (sentenced Mar. 21, 2007).
5 People
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by Tracy J. Hasper and Gordon F. Lull
Jurors
THE PRIVATE LIVES OF
Litigators must be cautious when
employing private investigators to look
into the background of jurors
In
the 2003 film Runaway Jury,
Rankin Fitch, a ruthless trial
consultant played by Gene
Hackman, strikes a cynical note
about jurors: “You think your average juror
is King Solomon? No, he’s a roofer with a
mortgage. He wants to go home and sit in his
Barcalounger and let the cable TV wash over
him. And this man doesn’t give a single, solitary droplet…about truth, justice or your
American way.” As a contrast, consider the
banner prominently displayed at several Los
Angeles County courthouses: “To Our
Jurors…Embodying Justice, Serving the
Community. Thank You For Your Service.”
As much as we may all want to believe in
the ideal proclaimed by the banner, litigators in high stakes trials often see a different
reality. Some jurors, far from “embodying justice,” embrace prejudice. Some, emboldened
by jargon gleaned from daytime television,
believe they bring a wealth of legal wisdom
to their jury service. Other jurors harbor
deep biases. How does a trial attorney separate the good jurors from the bad, the jurors
that will judge his or her case fairly from
those that will wreak havoc?
In recent years, attorneys have begun to
tap a growing body of experts, consultants,
and litigation support providers to assist
them in finding fair jurors. These experts
provide an array of services, such as focus
groups, mock trials, online juror testing, body
language analysis, and draft questions for
voir dire.
One increasingly controversial trend is
Tracy J. Hasper, an attorney licensed by the State
of California, is a licensed private investigator and
the director of investigations at Batza & Associates
Inc. Gordon F. Lull is a licensed private investigator who is also employed at Batza.
Los Angeles Lawyer February 2009 21
the use of licensed private investigators to
assist in sharpening the focus on jurors—
before and after trial. The time-honored and
vital role that investigators generally have
played for lawyers includes locating missing
witnesses, obtaining relevant public records,
serving process, and finding assets. Now, in
the ever-changing Internet age, investigators
also access public and proprietary databases.
This traditional use of private investigators
usually draws little if any attention. However,
recent investigative excesses have become
headline news, putting the investigative industry on the defensive, attorneys on the fence,
and judges in a rage. Consider these examples:
• During 2006, defense attorneys—including
Kenneth W. Starr, the dean of Pepperdine
Law School and former special prosecutor in
against Bryan Wagner and Cassandra Selvage,
the owners of Eye in the Sky Investigations,
Inc. FTC fines levied against the couple totaled
$538,762, and they faced federal charges in
connection with the scandal.2 Meanwhile,
HP settled the spying charges brought against
it by agreeing to pay $14.5 million to the State
of California. In her testimony before a congressional committee, ousted chair Dunn
remarked, “I never doubted…that what they
[the investigators] were doing was legal.”3
• During December 2007, 10 private investigators in five states were indicted on charges
of identity theft. The investigators obtained
personal financial, tax, and medical information of more than 12,000 people through
the use of pretexting. According to published reports, the ultimate clients in the pre-
Investigators can profitably
mine dozens of popular social
networking Web sites, such
as Facebook and MySpace,
for critical information.
the impeachment investigation of President
Bill Clinton—attempted to gain clemency
for Michael Morales, convicted of the January
8, 1981, rape and murder of 17-year-old
Terri Winchell, a Lodi, California, high
school student. The defense team hired investigator Kathleen Culhane to follow up with
jurors in the criminal trial. Culhane proceeded to draft false declarations for five of
the jurors. The declarations were submitted
in a clemency filing, only to be withdrawn
after the forgeries were discovered. Culhane
was later convicted on perjury and forgery
charges1 and is currently serving a five-year
prison sentence.
• During 2005, Hewlett-Packard faced a
series of embarrassing leaks to the media
from its board meetings. The company’s chair
of the board, Patricia Dunn, hired a Massachusetts-based private detective agency to
identify who was responsible for passing
along the sensitive information. The detective
contracted with five investigators nationwide, each of whom utilized a form of subterfuge, referred to as pretexts, with telephone company employees to obtain the
telephone records of board members, HP
employees, and journalists. The exposure of
this caper triggered state and federal probes.
The Federal Trade Commission brought suit
22 Los Angeles Lawyer February 2009
texting schemes were lawyers, insurance
companies, collection firms, and other private
investigators.4
• The recent trial, conviction, and sentencing
of “private investigator to the stars” Anthony
Pellicano constitute a shot across the bow for
investigators and attorneys alike. Pellicano
was convicted in federal court of 76 racketeering counts, including illegal wiretapping,
computer fraud, identity theft, and wire fraud.
The attorney who hired him, Terry Christensen, founder of a well-known Century City
law firm, was also convicted on two felony
counts and sentenced to prison, sending shock
waves throughout the legal community.5
Clearly, something is amiss in the manner
in which some attorneys hire and manage
investigators. Attorneys are obligated to vigorously pursue the interests of their clients,
including using all available tools to help
them during the jury selection process. Private
investigators may be instrumental in this
task. But there are risks involved in using
investigators as agents of the trial attorney.
How should investigators be educated and
managed? What criminal or tort liabilities
might an attorney incur if an investigator
crosses the line from aggressive performance
to violation of the law? In fact, in criminal or
civil trials, when the stakes are so high, why
use investigators at all?
Generally, investigators find and report
information for their clients. Investigators
glean this information from three broad categories of sources: public records, interviews,
and on-site observation (often documented
through photography or videography).
Public records can yield a wealth of information regarding jurors. During trial, with
frequent, imminent deadlines, investigators
can offer the most efficient means by which
to generate solid information quickly. Public
records routinely accessed by private investigators include property transaction records,
mortgages, assignments, substitutions,
releases, notices, agreements, affidavits, tax
liens, judgments, civil and small claims
records, traffic records, local ordinance violation records, probate cases, criminal matters, federal court records (civil, criminal,
and bankruptcy), vital records (birth, marriage, and death), corporate and partnership
records, fictitious business names, records of
political affiliation and contributions, licenses,
and certifications.
Other records are available, although they
are not technically public because they cannot be certified as authentic by a government
agency. These include media accounts (print
and electronic), business records, city street
directories, records available at college and
university libraries, and information in local
history archives.
In addition, the Internet has spawned
myriad new sources of information that can
be used to develop a profile of jurors or to
assess the veracity of answers to juror questionnaires. Investigators can profitably mine
dozens of popular social networking Web
sites, such as Facebook and MySpace, for
critical information. During the recent Miami
federal trial of accused terrorist Jose Padilla,
for example, defense lawyers performed
searches on their laptops for all jurors and
determined that one female juror, who had
claimed no experience in the criminal court
system, was being investigated for malfeasance. She was summarily dismissed.6
As part of the effort to profile jurors,
some litigators hire investigators to perform
what is sometimes called a drive-by. This
involves a visit to, and careful observation of,
a juror’s residence and neighborhood. While
an investigator cannot directly contact a juror
or a juror’s family members or interview a
juror’s neighbors or acquaintances, a driveby is permissible and can sometimes yield
valuable information regarding the juror’s
economic, cultural, and social environment.
One investigator, for example, performed a
drive-by of a juror in a high-profile tobacco
industry case and observed a vehicle parked
in the driveway of the juror’s home bearing
a bumper sticker that read, “Cigarettes Kill!”
MCLE Test No. 178
The Los Angeles County Bar Association certifies that this activity has been approved for Minimum
Continuing Legal Education legal ethics credit by the State Bar of California in the amount of 1 hour.
MCLE Answer Sheet #178
THE PRIVATE LIVES OF JURORS
Name
Law Firm/Organization
1. In 2005, investigators who utilized subterfuge during the course of an investigation for Hewlett-Packard
were considered to be acting legally.
True.
False.
2. Information regarding potential jurors that is obtained
from public databases, online court records, and social
networking sites can provide grounds for a juror to be
dismissed from jury service for cause.
True.
False.
3. Driving by a juror’s home is considered to be “contact” with the juror and therefore is unacceptable.
True.
False.
4. Attorneys do not have a fiduciary duty to their clients
to conduct due diligence regarding the hiring of a private investigator as long as the investigator is licensed.
True.
False.
5. The status of an investigator’s license can be confirmed with the State Bar of California.
True.
False.
6. The definition of “private investigator” is set forth
in the California Rules of Professional Conduct.
True.
False.
7. A lawyer who knowingly engages a nonexempt, unlicensed investigator is guilty of a misdemeanor and
may receive a fine of $5,000 and/or imprisonment.
True.
False.
8. Applicants for an investigative license may be denied
licensure if their previous partners had their investigative licenses suspended.
True.
False.
9. Private investigators cannot lose their licenses for
impersonating a law enforcement officer.
True.
False.
10. Investigators face the suspension or revocation of
their licenses for acting as runners or cappers for an
attorney but not for knowingly violating a court order.
True.
False.
11. In Wayne v. Bureau of Private Investigators and
Adjustors, a licensed private investigator who misled
interviewees regarding his representation in a case
was not considered to be acting in a manner that con-
stituted dishonesty or fraud.
True.
False.
Address
City
12. The Private Investigator Act provides an exhaustive
list of guidelines to investigators and attorneys on the
type of conduct that is not permissible.
True.
False.
State/Zip
13. Investigators hired by attorneys are not required to
comply with the same ethical rules that govern attorneys but are bound solely by the Business and
Professions Code.
True.
False.
INSTRUCTIONS FOR OBTAINING MCLE CREDITS
1. Study the MCLE article in this issue.
14. The Rules of Professional Conduct prohibit an attorney from communicating with a juror except in official
proceedings.
True.
False.
3. Mail the answer sheet and the $15 testing fee
($20 for non-LACBA members) to:
15. An attorney who learns of improper conduct by a
juror toward another juror is not required to disclose
this information.
True.
False.
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.
16. Rule 5-320(E)-(F) of the Rules of Professional
Conduct prohibits an attorney from conducting an
investigation of a juror in a manner that will influence the state of mind of that juror regarding present
or future jury service.
True.
False.
E-mail
Phone
State Bar #
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.
Los Angeles Lawyer
MCLE Test
P.O. Box 55020
Los Angeles, CA 90055
ANSWERS
Mark your answers to the test by checking the
appropriate boxes below. Each question has only
one answer.
1.
■ True
■ False
2.
■ True
■ False
3.
■ True
■ False
4.
■ True
■ False
5.
■ True
■ False
6.
■ True
■ False
7.
■ True
■ False
8.
■ True
■ False
9.
■ True
■ False
10.
■ True
■ False
11.
■ True
■ False
12.
■ True
■ False
19. Evidence obtained by an investigator as a result of
a feigned friendship can be used in trial.
True.
False.
13.
■ True
■ False
14.
■ True
■ False
15.
■ True
■ False
16.
■ True
■ False
20. An attorney and an investigator should formulate
a written agreement to ensure compliance with the
Rules of Professional Conduct.
True.
False.
17.
■ True
■ False
18.
■ True
■ False
19.
■ True
■ False
20.
■ True
■ False
17. In Noble v. Sears, Roebuck & Company, the court
held that utilizing a pretext to gain admittance to a hospital room was a violation of the right to privacy.
True.
False.
18. In California, an attorney who hires a private investigator for an investigation may be liable for the intentional torts committed by the investigator (or the
employees of the investigator) in the course of the
investigation.
True.
False.
Los Angeles Lawyer February 2009 23
The range of tasks that can be assigned to
investigators is substantial. If an attorney is
knowledgeable about the rules that govern the
conduct of private investigators as well as the
applicable rules of professional responsibility, the risks of investigator excess can be
minimized.
Business and Professions Code
An attorney has a fiduciary obligation to his
or her client to exercise caution in hiring
outside parties who act as the attorney’s
agents at trial. Regarding private investigators,
the foundation of due diligence by the attorney is to confirm that the investigator is a
licensed private investigator.
The licensing and regulatory authority
for private investigators in California is the
covered under Section 489, 4) previous suspension or revocation of an investigator’s
license, 5) past status as an officer, partner, or
manager with one who has had a license suspended or revoked, 6) while unlicensed, having aided or abetted the commission of an act
that required licensure, and 7) lying on an
application.9
According to a subsequent section in the
PIA, a licensed investigator faces the suspension or revocation of his or her license as
a result of an array of conduct that includes
impersonating a law enforcement officer;
failing or refusing to render agreed upon
client services; committing assault, battery,
kidnapping, or using violence “without proper
justification”; knowingly violating (or assisting in the violation of) a court order; acting
The rule prohibits communication with, or otherwise
attempting to influence, any
member of a panel from
which a jury will be chosen.
Bureau of Security and Investigative Services
(BSIS), which operates as a division within the
state’s Bureau of Consumer Affairs. The status of an investigator’s license can be confirmed with the BSIS.
Additionally, understanding the rules governing an investigator’s conduct is critical
for attorneys who hire private investigators.
The regulations with which investigators
must comply are set forth in Business and
Professions Code Sections 7512 through
7573, which are generally referred to as the
Private Investigator Act (PIA). The PIA cites
Chapter 1, Division 5, of the California
Insurance Code for its definition of a “private
investigator,” and makes it clear that “no
person shall engage in the business of private
investigator…unless that person has applied
for and received a license….”7 Significantly,
the next section of the PIA8 states, “Any person…who knowingly engages a nonexempt
unlicensed person is guilty of a misdemeanor,”
subject to a fine of $5,000, imprisonment
for one year, or both.
Applicants for an investigative license
may be denied licensure on one or more of
seven different grounds: 1) an act that would
constitute a basis for suspension or revocation, 2) “any act constituting dishonesty or
fraud,” 3) acts or crimes involving weapons
24 Los Angeles Lawyer February 2009
“as a runner or capper for any attorney”; and
committing “any act in the course of the
licensee’s business constituting dishonesty or
fraud.”10 According to the PIA, the reference to “dishonesty or fraud” includes 1)
knowingly making a false statement relating
to evidence or information obtained in the
course of employment, or knowingly publishing a slander or a libel in the course of
business, 2) using illegal means in the collection or attempted collection of a debt or
obligation, 3) manufacturing evidence, and 4)
accepting employment that is adverse to a
client or former client “relating to a matter
with respect to which the licensee has
obtained confidential information by reason
of or in the course of his or her employment
by the client or former client.”
An appellate court applied the PIA in
Wayne v. Bureau of Private Investigators and
Adjustors, in which a licensed private investigator misled interviewees regarding his representation in a case. The investigator knew
that if he told the interviewees that he represented an adverse party he would likely not
obtain any information. So he introduced
himself as an investigator “checking out the
accident” and omitted any further disclosure.
Based on these facts, the appellate court
upheld the suspension of the investigator’s
license. The court adopted a broad interpretation of the phrase “dishonesty or fraud” in
the PIA, concluding, “There was a disposition
to deceive, betray, and mislead the interviewees. In other words, there was a lack of
complete integrity.”11
The PIA provides some guidelines to investigators and attorneys regarding the type of
conduct that is not permissible. However,
the PIA’s provisions are not exhaustive. All
agents of an attorney, including investigators, are also obligated to maintain the same
rigorous standards with which lawyers themselves are tasked in California’s Rules of
Professional Conduct. This includes the proscriptions in the rules regarding contact with
jurors and the need for juror privacy.
Rules of Professional Conduct
Thus when an attorney hires investigators
or consultants to act on his or her behalf, by
extension those agents are bound to comply
with the same ethical rules that govern the
attorney: the Rules of Professional Conduct.
In fact, the rules obligate an attorney to carefully monitor the work of all employees,
including investigators and other agents, to
ensure compliance with Rule 3-110 regarding professional competency: “A member
shall not intentionally, recklessly, or repeatedly fail to perform legal services with competence.” The Discussion section of this rule
states: “The duties set forth in rule 3-110
include the duty to supervise the work of
subordinate attorney and non-attorney
employees or agents.”12
Accordingly, attorneys cannot simply state
the task to the investigator and stand back.
Investigators must be carefully instructed and
monitored. This is particularly critical when
investigators are hired to work in connection
with jurors. Several specific principles must be
followed.
Rule 5-320 of the Rules of Professional
Conduct is devoted to the conduct of attorneys (and their agents) regarding jurors. The
rule prohibits communication with, or otherwise attempting to influence, any member
of a panel from which a jury will be chosen.
Specifically, an attorney cannot communicate directly or indirectly with a juror except
in official proceedings, cannot ask questions
designed to embarrass or harass a discharged
member of a jury, and must promptly reveal
to the court “improper conduct” by a juror
toward another juror or another juror’s family member.
Regarding any effect or influence an investigation during a trial may have, Rule 5320(E)-(F) is clear: “A member shall not
directly or indirectly conduct an out of court
investigation of a person who is either a
member of a venire or a juror in a manner
likely to influence the state of mind of such
person in connection with present or future
jury service. All restrictions imposed by this
rule also apply to communications with, or
investigations of, members of the family of a
person who is either a member of a venire or
a juror.”13 Thus a lawyer is obligated to
ensure that the agents that he or she hires
maintain this principle of no contact with
any jury member or the juror’s family members, and not engage in any undertakings
that will cause contact to be made or cause
a juror to be in any way influenced because
of the investigator’s activity.
Tort Liability
The requisite professional codes and rules
clarify the standards with which attorneys and
investigators must comply. Case law further
buttresses the general notion that attorneys
can be held legally responsible for the torts
committed by the investigators they hire.
In Noble v. Sears, Roebuck & Company,
the attorneys for Sears, Roebuck retained
a private investigator in connection with a
personal injury lawsuit. In an attempt to
locate the address of a witness in the case, an
employee of the investigator “gained admittance to a hospital room” and, utilizing a
pretext, “secured the address.” The plaintiff
brought suit against Sears, its attorneys, and
the private investigator for invasion of
privacy and negligent entrustment of agents.
The trial court sustained demurrers to the
plaintiff’s claims, and the plaintiff appealed.
The court of appeal reversed, finding that
“an unreasonably intrusive investigation may
violate a plaintiff’s right to privacy.”14 Additionally, the appellate court found that “in
California the hirer of a detective agency
for either a single investigation or for the protection of property, may be liable for the
intentional torts of employees of the private
detective agency committed in the course of
employment.”15
Additionally, if an attorney uses an investigator to obtain evidence in a “deceitful”
manner, the attorney risks a finding that the
evidence cannot be used at trial. In Redner v.
Workmen’s Compensation Appeals Board,
an insurance company orchestrated a “sting”
in which its retained investigator hired a man
to befriend an allegedly injured worker. The
supposed friend then invited the worker to his
ranch, offered the worker alcohol, and convinced him to go horseback riding. The investigator documented these activities on film,
including the actions of the worker that were
inconsistent with the claimed injury. At a
hearing on the worker’s claim for workers’
compensation, the insurance company sought
to introduce a medical report from a doctor
that had viewed the film and relied upon it in
rendering his opinion. The hearing referee
refused to admit the evidence, and the insur-
ance company appealed.
The California Supreme Court found
that the hearing referee “should have refused
to rely upon [the evidence] because the carrier obtained it by fraudulent inducement.”16
Elaborating on this concept, the supreme
court declared that “the carrier should not
profit from its own deceitful conduct. The
investigators feigned friendship and concealed their employer’s identity in bringing
about [the] applicant’s inebriation and effectuating his horseback ride….[Accordingly,]
the board may not rely upon evidence
obtained, as in the present case, by deceitful inducement of an applicant to engage in
activities which he would not otherwise
have undertaken.”17
Recommendations
Runaway Jury’s Rankin Fitch observes,
“Gentlemen, trials are too important to be left
up to juries.” Litigators involved in high
stakes trials may at least agree that trials are
too important to be left in the hands of unexamined jurors. Based upon case law as well
as statutes and rules regulating the conduct
of attorneys and the investigators they hire,
some recommendations may be gathered
regarding how an appropriate juror examination should take place.
Given the nature of their business and
training, private investigators can be used, to
great benefit, in profiling jurors. However, as
important as the assessment of potential
jurors may be, it is important to understand
that information gathered by ethically or
legally questionable means will invite consequences such as potential tort liability, discipline under the Rules of Professional Conduct, and exclusion of the evidence at trial.
The value of using private investigators to
profile jurors is directly related to the diligence with which the investigators are
selected and managed.
Attorneys have an obligation to their
clients to choose their investigators with great
care. BSIS licensing is a necessary but far
from sufficient qualification. Litigators should
formulate a written agreement with the investigators they hire that commits investigators
to fully comply not only with the PIA but also,
because they are agents, with the Rules of
Professional Conduct. This agreement should
ensure that the objective of the engagement
and its intended outcome are clear and agreed
to by the attorney and the investigator. It
should contain a promise by the investigator
to fully educate his or her entire staff on the
agreement’s provisions and an acknowledgment that the achievement of trial goals cannot include activities that violate any laws or
the Rules of Professional Conduct under
which they must operate. The agreement also
should be provided to the client.
Additionally, attorneys should maintain
ongoing communication with and management of investigators. In trial settings, it is critically important that attorneys scrutinize the
activities of their investigators to avoid not
only obvious violations of law but also any
signs of aggressiveness that may be technically
permissible but might create the appearance
of misconduct for some judges. Management
of investigators should be guided by key considerations in the requisite laws and rules
governing investigators and attorneys as well
as evolving principles from case law.
When case law is silent, attorneys and
their investigators should err on the side of
caution. Common sense is always a safe harbor. Attorneys should make this simple principle clear to the investigators they retain. By
following this and the guidelines established
by the appropriate laws and rules, attorneys
can represent their clients vigorously by
obtaining critical information about jurors
while minimizing potential liability for investigative excesses.
■
1
People v. Culhane, Sacramento County Superior Ct.
Case No. 07F01781 (sentenced Aug. 16, 2007); Louis
Sahagun, Death Penalty Foe Gets Five Years in Prison,
L.A. TIMES, Aug. 17, 2007, at B-1. See also Bob Egelko,
Starr Says He Supports Death Penalty, S.F. CHRONICLE,
Feb. 17, 2006, at B-1.
2 Hewlett-Packard Pretextors Fined, available at
http://www.piava.wordpress.com/2008/05/28. This
item includes a link to a Federal Trade Commission
press release regarding the settlement.
3 Damon Darlin, Hewlett-Packard Spied on Writers in
Leaks, N.Y. TIMES, Sept. 6, 2006. See also Ousted
Hewlett-Packard Chairwoman: I Consulted Others
in Leak Probe, Never Doubted Legality, Fox
News.com, Sept. 27, 2006, available at http://www
.foxnews.com/story/0,2933,216200,00.html.
4 Kim Zetter, Private Eyes Indicted in Massive IdentityTheft Scheme Involving HP-Style “Pretexting,” Wired
Blog Network, Dec. 7, 2007.
5 Marc Graser, Pellicano Convicted of Racketeering,
VARIETY, May 15, 2008. See also David B. Parker &
Pierre B. Pine, The Pellican’s Mess: Ethical
Considerations for Attorneys Who Hire Private
Investigators in the Wake of Pellicano, published in connection with the Film & Television Law Symposium,
Beverly Hills, CA (Sept. 29, 2006).
6 David Oscar Markus, Juror Research, Southern
District of Florida Blog, Aug. 13, 2008. This blog
entry cites a passage from a Daily Business Review article authored by Julie Kay.
7 BUS. & PROF. CODE §7523(a).
8 BUS. & PROF. CODE §7523(b).
9 BUS. & PROF. CODE §7538.
10 BUS. & PROF. CODE §7561.
11 Wayne v. Bureau of Private Investigators & Adjusters,
201 Cal. App. 2d 427, 437 (1962). See also John
Caragozian, Private Eyes, LOS ANGELES LAWYER, Dec.
2004, at 31.
12 CAL. RULES OF PROF’L CONDUCT R. 3-110A.
13 CAL. RULES OF PROF’L CONDUCT R. 5-320(E)-(F).
14 Noble v. Sears, Roebuck & Co., 33 Cal. App. 3d 654,
660 (1973).
15 Id. at 663.
16 Redner v. Workmen’s Comp. Appeals Bd., 5 Cal. 3d
83, 93-94 (1971).
17 Id. at 94-95.
Los Angeles Lawyer February 2009 25
by David Martinez and Rebecka Biejo
Clipping
Coupons
Coupon settlements come under a
higher level of scrutiny to ensure
fairness to absentee class members
David Martinez is a partner and Rebecka Biejo is an associate in the Los Angeles office of Robins, Kaplan,
Miller & Ciresi L.L.P., where they handle class actions and other complex business litigation.
26 Los Angeles Lawyer February 2009
KEN CORRAL
As
“guardians of the rights of absentee class members,”1 trial courts must determine whether proposed class action settlements are “fair, adequate and reasonable” to the class at large.2 In the wake of the federal Class Action
Fairness Act of 2005 (CAFA) and recent federal and state court decisions,
no other type of settlement has drawn greater scrutiny by trial courts conducting fairness hearings than so-called coupon settlements. This is the result of what CAFA’s proponents claimed
were abusive settlement practices that resulted in little value to class members but significant
fee awards to class counsel.3
Yet what exactly constitutes a coupon settlement remains unsettled, particularly in the
absence of a statutory definition in CAFA. These settlements can take various forms, including coupons, discounts, other in-kind compensation, or a combination of these elements. Indeed,
some courts have distinguished between “pure coupon settlements” and “variant[s] of the
coupon settlement[s]” based on whether class members receive discounts that require them
to make new purchases.4 Ultimately, any settlement with some provision for nonmonetary
compensation may be regarded as a coupon settlement.5
Coupon settlements create tough issues for courts to resolve when their actual value is difficult for the parties and the court to ascertain.6 Unlike cash settlements, coupon settlements
typically involve offers for discounted goods or services whose actual value may differ significantly from their face value. As a result, ascertaining fairness often requires a more complex economic analysis than other types of settlements, and in some cases expert testimony
is crucial.
Additionally, state and federal courts treat coupon settlements differently. While federal
courts strictly scrutinize these settlements under CAFA,7 California has no analogous legislation, and California state courts have rejected the notion that coupon settlements are
inherently suspect or improper.8
Court approval of coupon settlements hinges on how the settlement is structured, how
its value to the class is determined, and the venue in which the dispute is being resolved.
Approval also depends upon the breadth of information litigants provide the court to enable
it to properly assess the settlement’s fairness. Only after these matters are considered,
addressed, and supported by appropriate evidence can parties ensure that the settlement
will be approved at the fairness hearing.
Coupon Settlements under CAFA
In addition to significantly expanding federal jurisdiction over class actions,9 several
CAFA provisions require special scrutiny of
coupon settlements in class actions pending
in federal courts. These provisions are applicable for cases originally filed in federal court
and for those removed from state court.10
For example, prior to approving a coupon
settlement, federal courts must hold a hearing and make specific findings that the settlement is fair, reasonable, and adequate, and
that the class’s interests are adequately represented.11 This determination involves a
consideration of numerous factors:
1) The strength of the plaintiff’s case.
2) The risk, expense, complexity, and duration of further litigation.
3) The risk of maintaining class action status.
4) The amount offered in settlement.
5) The extent of the discovery that has been
completed.
6) The experience of counsel.
7) The presence of a governmental participant.
8) The reaction of class members to the proposed settlement.12
Courts have noted that the “fair, reasonable and adequate” standard under CAFA is
identical to the standard that has been in
place under Rule 23(e) of the Federal Rules
of Civil Procedure.13 Under this standard the
court usually presents its fairness determination in a writing after conducting the fairness hearing.14 Nevertheless, CAFA has been
invariably construed to require “the application of a higher level of scrutiny to the…criteria that existed pre-CAFA.”15 Courts applying this higher standard rely on CAFA’s
legislative intent. Further, they note that
coupon settlements “have been severely criticized by commentators in the field” and “are
strongly disfavored by the Attorneys General
of most of the states.”16
Prior to the enactment of CAFA’s coupon
settlement provisions, the Ninth Circuit Court
of Appeals held that fees may be based on the
value “of the entire common fund created for
the class, even if some [class] members make
no claims against the fund so that money
remains in it that otherwise would be returned
to the defendants.”17 This standard remains
applicable for settlements that do not include
coupon components.18
However, CAFA regulates attorney’s fees
in coupon settlements by providing that any
portion of fees attributable to the award of
the coupons “shall be based on the value to
class members of the coupons that are
redeemed” rather than the theoretical value
Los Angeles Lawyer February 2009 27
of the coupons available for redemption.19
Redemption rates can be affected by various
factors, including the eligibility and use restrictions associated with the coupons and the
transaction costs involved in redeeming them.
Further, because valuation can be complex,
CAFA provides that the court “may receive
expert testimony…on the actual value to the
class members of the coupons that are
redeemed.”20
Substantial creative energy has been spent
crafting settlements that resolve class actions
and provide class members with a benefit that
the parties believe a court will approve as
fair, adequate, and reasonable. Several postCAFA cases include parameters for how courts
should define and value coupon settlements
and illustrate the types of settlements that are
likely to receive court approval. Some of these
cases reflect an inherent bias against coupon
settlements and their derivatives.
In Synfuel Technologies, Inc. v. DHL
Express, 21 for example, the trial court
approved a settlement that offered up to four
prepaid DHL shipping envelopes or $30 cash
in addition to injunctive relief. Noting that the
trial court’s role in reviewing a settlement
agreement is “akin to the high duty of care
that the law requires of fiduciaries,”22 the
Seventh Circuit reversed because “the [trial]
court did not attempt to quantify the value of
[the] plaintiffs’ case or even the overall value
of the settlement offer to class members.”23
The court also criticized the “in-kind compensation” component of the settlement, noting that it was akin to coupons. While the
DHL shipping envelopes were not “identical
to coupons” because they represented an
“entire product, not just a discount on a proposed purchase,” they nevertheless shared
some characteristics of coupons because some
percentage of the prepaid envelopes would not
be used and thus would not constitute a cost
to the defendant. Like coupons, the envelopes
also forced class members to continue doing
business with the defendants. Given these
similarities, the court stated that, even if
CAFA was not theoretically applicable, the
“in-kind compensation” component of the
settlement was subject to higher scrutiny by
the trial court.24
In some circumstances, giving class members a complete, and free, product might
prove valuable and acceptable because it does
not create a continuing business relationship
between the class members and the defendant.
Yeagley v. Wells Fargo & Company illustrates the point.25 In Yeagley, the parties
reached a settlement agreement in which each
class member was eligible to receive two free
credit reports and a $50 discount on a new
mortgage. Noting the absence of a statutory
definition of “coupons” under CAFA, the
Northern District of California reasoned that
28 Los Angeles Lawyer February 2009
the settlement “arguably provided the class
with a ‘coupon’ for a free…credit report.”26
The court suggested that “a free credit report
is unlike a coupon in that it does not require
a class member to do business with Wells
Fargo, and it entitles the member to a whole
product…rather than merely a discount.” Even
if the credit report did not fall under CAFA’s
coupon provisions, the court concluded, CAFA
was nevertheless “instructive.”27
Then the court analyzed the value of the
settlement—to determine whether it was fair
and adequate, and to calculate the fee award.
It valued the settlement by multiplying the
number of redemptions (less than 1 percent)
by the price that Wells Fargo paid for each
report, rather than the actual cost of the
report to the public at large.28 The court reasoned that the second credit report presented
no value to the class because the likelihood
of redemption was negligible, and the $50 discount was merely a marketing opportunity for
Wells Fargo that provided no benefit to the
class. Despite these findings, the court nevertheless concluded the settlement was fair
and adequate because the plaintiffs’ prospects
for prevailing in the litigation were “so bleak
as to render this a ‘good value’ for a relatively
weak case.”29
Credit reports were also at issue in Acosta
v. Trans Union, LLC, in which the Central
District of California evaluated a settlement
that provided free credit reports to the class and
a cash component to certain class members.
Although the court did not characterize the
credit reports as coupons, it closely scrutinized the settlement and concluded that the
reports provided little or no value to the class
because consumers were already entitled to one
free credit report, which most consumers did
not redeem.30 The court also noted that few
class members would qualify for the cash component and found that class counsel had conducted very limited discovery and did not even
consult any experts until the settlement was
finalized. Therefore, the court rejected the settlement, noting in particular that “the economic value of the Settlement pales in comparison to [the] Plaintiffs’ potential recovery
through litigation.”31 The court was particularly critical in light of its finding that the proposed attorney’s fees of roughly $5.5 million
was “so grossly out of proportion to the class
members’ probable aggregate recovery as to
suggest a strong possibility of impropriety.”32
Coupons that create a continuing business
relationship may be approved, but their terms
must demonstrate value to the class. In
Figueroa v. Sharper Image, the settlement
provided class members with $19 coupons for
use at the defendant’s stores plus a guard to
protect against emissions of allegedly defective air purifiers.33 After the parties received
considerable objection to the original settle-
ment agreement, they retained a “nationwide expert on coupon settlements” to
improve the settlement and cure the objections.34 The third draft of the agreement
enlarged the redemption period, provided
for the transferability and aggregation of the
coupons, allowed their use against any product, and included a provision for cy-pres distribution to certain charities.35
Applying a “greater level of scrutiny,”
the Southern District of Florida rejected the
settlement, reasoning that it was not the
product of an informed, arm’s-length negotiation. The parties failed to provide the court
with sufficient information regarding the
potential value of the litigation and the range
of possible outcomes. Thus “the issue of
whether the $19 is sufficient [had] still not
been answered.”36 The court also rejected
the use restriction improvements suggested by
the parties’ expert, noting that “enhancements to what is nothing more than a coupon
settlement” did not make it “fair, adequate or
reasonable.”37
Other federal decisions show greater favor
for agreements that include variants of a
coupon settlement. In Fleury v. Richemont
North America, Inc., the Northern District
of California reasoned that “it is the settlement,
taken as a whole, rather than the individual
component parts, that must be examined for
overall fairness.”38 The Fleury court approved
a settlement of an antitrust class action brought
by two classes of watchmakers and consumers
alleging that the defendant’s illegal tying
arrangement precluded independent watchmakers from repairing Cartier watches.39 The
settlement called for the defendant to, inter alia,
expand its network of authorized repair workshops, pay certain watchmakers the costs for
Cartier-specific tooling, and issue $100 transferable credit vouchers to the consumer subclass. The court found that “the settlement
value, although not great, [was] not without
any worth” and was “appropriate in light of
the significant litigation risks attendant to [the]
Plaintiffs’ case.”40
In Young v. Polo Retail, LLC, the same
court approved a proposed class settlement
for $1 million in cash and $500,000 in gift
cards to class members.41 While noting that
“the primary downside of the proposed settlement is the use of product vouchers,” the
court reasoned that the vouchers did not
have product restrictions and were fully transferable.42 Presumably because the gift cards
did not constitute coupons, the court did not
decide the case under CAFA, and thus did not
limit attorney’s fees based on the number of
actual redemptions.43
Another Northern District decision offers
a way to distinguish settlements providing for
free goods from those providing only
coupons. The court in Browning v. Yahoo!
Inc. approved two class action settlements
providing class members with either a free
credit score or two months of free credit
monitoring.44 The court determined that “the
in-kind relief offered in this case is not a
‘coupon settlement’ because it does not
require class members to spend money in
order to realize the settlement benefit.”45 It
concluded that the settlement, “although
modest, is appropriate and valuable” and
recognized that “settlement, as a product of
compromise, typically offers less than a full
recovery.”46
California’s Presumption of Fairness
California state courts generally give coupon
settlements greater deference than their
federal counterparts.47 State courts are not
bound by CAFA and “have never adopted
Rule 23 as a procedural strait jacket.”48 To
the contrary, “trial courts [are] urged to exercise pragmatism and flexibility in dealing
with class actions”49 and must give “due
regard…to what is otherwise a private consensual agreement between the parties.”50
While state courts generally follow a similar analytical framework as federal courts in
assessing fairness,51 a state court settlement
is presumed fair if:
(1) the settlement is reached through
arm’s-length bargaining; (2) investigation and discovery are sufficient to
allow counsel and the court to act
intelligently; (3) counsel is experienced
in similar litigation; and (4) the percentage of objectors is small.52
This presumption applies with equal force to
coupon settlements, which are neither per se
improper nor subject to heightened scrutiny.53
Moreover, the California Court of Appeal
recently distinguished between “pure coupon
settlements” and “variant[s] of coupon settlements,” suggesting that the latter should
receive more deference.54
In Chavez v. Netflix, Inc., the court
approved a class action settlement that provided one month of free DVD rental services
or membership upgrades. One objector
appealed, claiming that CAFA regarded
coupon settlements as “highly suspicious”
and “inherently suspect” and therefore
required greater scrutiny under state law.55 The
objector further argued that the settlement
was an improper coupon settlement because
it provided a free service of nominal value
while giving the defendant a promotional
opportunity.56
The Chavez court upheld the judgment,
noting that the objector had failed to challenge
any of the factors establishing a presumption
of fairness. Moreover, the court concluded
that the settlement was not a “pure coupon
settlement,” explaining that:
In a pure coupon settlement, the class
members would receive a coupon,
voucher, or discount that would partly
defray the cost of making a new purchase of goods or services from the
defendant. In many cases, the coupon
might induce the member to make a
purchase he or she would not otherwise
have made, which may actually produce a net benefit for the defendant.57
In contrast, the DVD subscription at issue in
Chavez was “a variant of the coupon settlement” because class members were not necessarily required to make a purchase, and
the potential benefit to the defendant was
reduced, limited, or altogether absent.58
The court of appeal’s affirmance of the
trial court’s ruling was based squarely on the
factors establishing a presumption of fairness. It noted that the agreement resulted
from arm’s-length bargaining during mediation with a respected magistrate judge, the
parties had engaged in extensive discovery, the
attorneys possessed substantial experience
in class action litigation, and the percentage
of objectors to the settlement was small.59
Chavez follows a line of California cases
approving coupon settlements based on evidence establishing a presumption of fairness.
In Dunk v. Ford Motor Company, a 1996
pre-CAFA case, the court approved a settlement in which class members received
coupons for $400 off the price of a new vehicle.60 The court established and applied the
four-factor test and found the settlement presumptively fair, noting in particular that the
parties conducted extensive discovery, the
number of objectors was small, and the settlement coupons represented at least twothirds of the highest noted damages to class
members.61
More recently, in Wershba v. Apple Computer, Inc., the court of appeal approved a
class settlement that provided class members
with either a $35 reimbursement or $50
coupon toward any purchase over $99.62 The
court noted this settlement was “much more
attractive” than the deal in Dunk because
the coupons were transferable (although they
could not be aggregated), and some class
members were eligible for cash reimbursements. Furthermore, “[i]n the context of a settlement agreement, the test is not the maximum amount plaintiffs might have obtained
at trial on the complaint, but rather whether
the settlement is reasonable under all of the
circumstances.”63
The approach of California courts has
changed little since CAFA’s enactment. In In
re Microsoft I-V, the trial court approved a
settlement providing vouchers ranging from
$5 to $29.64 The settlement also included a
cy-pres remedy in which a portion of unclaimed vouchers was redistributed to
California schools to provide indirect com-
pensation to the class and ensure disgorgement by the defendant. The settlement thus
provided a “fair and reasonable residual distribution” that was “as near as possible” to
accomplishing the overarching purposes of the
litigation.65 In re Microsoft thus illustrates the
types of “enhancements” that provide increased value to the class, including the aggregation and transferability of the coupons,
long redemption periods, and a residual distribution plan.66
At least three unpublished, post-CAFA,
state court decisions have also upheld coupon
settlements based on evidence establishing a
presumption of fairness. For example, in
Intervention, Inc. v. Avanir Pharmaceuticals,67
the court approved a settlement that provided 50 million vouchers to class members
and $1 million in cold sore research grants.
The court observed that while class members received a nominal $3 discount, the
grant funds provided a significant benefit to
the entire class, particularly given the difficulty
in locating class members.68 In Vroegh v.
Eastman Kodak Company, the court approved a settlement providing a 5 percent
refund or 10 percent discount on future purchases of flash memory drives.69 In Campbell
v. Airtouch Cellular, the court approved a settlement providing two vouchers for a service credit, six months of text messaging, a
phone accessory, long distance minutes,
and/or a hands-free device.70
While giving coupon settlements more
deference, California state courts arguably
place less emphasis on an analysis of the
underlying action’s merits or the valuation of
the settlement. Thus “the merits of the underlying class claims are not a basis for upsetting
the settlement of a class action,” and “the proposed settlement is not to be judged against
a hypothetical or speculative measure of what
might have been achieved had [the] plaintiffs
prevailed at trial.”71 The trial court’s fairness analysis is ultimately “nothing more
than an amalgam of delicate balancing, gross
approximations and rough justice.”72 Thus,
coupon settlements under California state
law may not require the more nuanced economic analyses often used, and sometimes
required, under CAFA.
Structuring a Coupon Settlement
Whether a case is pending in state or federal
court, properly structuring a coupon settlement is crucial to obtaining final approval
from the trial court. Courts are more likely
to approve coupon settlements that impose no
use restrictions, or only very limited ones, on
the coupons. For example, coupons that are
freely transferable and do not have aggregation limits provide more value to the class
members, as do coupons that have longer
redemption periods and are not limited to parLos Angeles Lawyer February 2009 29
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ticular products or services. Coupon settlements that avoid restrictions on use and transferability or that include enhancements, inkind compensation, and/or cash components
are also less likely to draw opt-outs and
objectors. This will in turn facilitate the trial
court’s decision to approve the settlement. A
hybrid settlement that includes a cash component or a variant of the coupon settlement
that provides in-kind compensation is also
likely to receive greater deference.
To be successful, a motion for final approval of the settlement must also include
sufficient information to enable the trial court
to make an informed analysis of the fairness
factors under state or federal law. At a minimum, the motion must provide an appropriate level of detail regarding the discovery
efforts and settlement negotiations of the parties. If the settlement was reached through
mediation, the parties should inform the court
of the mediator’s endorsement of the settlement. Depending on the complexity of the
coupon settlement, the parties should also
consider retaining an expert to assess its value.
Litigants should remind the trial court of
the policies in state and federal court favoring the settlement of disputes. Those policies
are furthered by approving the settlement of
particularly weak—and particularly strong—
cases early. Thus, in order to put the settlement in proper perspective, the parties should
provide the trial court with a cogent analysis of the strengths and weaknesses of the
claims and defenses. Only in view of the facts
and law applicable to the case can the court
properly assess whether the settlement is fair,
adequate, and reasonable.
■
1 Kullar
v. Foot Locker Retail, Inc., 168 Cal. App. 4th
116, 129 (2008).
2 Acosta v. Trans Union, LLC, 243 F.R.D. 377, 386
(C.D. Cal. 2007).
3 Figueroa v. Sharper Image Corp., 517 F. Supp. 2d
1292, 1328 (S.D. Fla. 2007).
4 Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 53
(2008).
5 See Yeagley v. Wells Fargo & Co., 2008 U.S. Dist.
LEXIS 5040, at *24 (N.D. Cal. Jan. 18, 2008) (reasoning that even if credit report did not qualify as
“coupon,” CAFA was nevertheless instructive). See
generally Synfuel Techs., Inc. v. DHL Express, 463 F.
3d 646 (7th Cir. 2006) (prepaid shipping envelopes similar to coupons); Acosta, 243 F.R.D. at 377 (credit
reports compared to coupons); Young v. Polo Retail,
LLC, 2007 U.S. Dist. LEXIS 27269 (N.D. Cal. Mar.
28, 2007) (gift cards); In re Microsoft I-V, 135 Cal.
App. 4th 706 (2006) (vouchers); Chavez, 162 Cal.
App. 4th at 46 (DVD subscription).
6 See, e.g., Yeagley, 2008 U.S. Dist. LEXIS 5040, at *8.
7 Class Action Fairness Act of 2005 (CAFA), 28 U.S.C.
§1712(a), (b), (e).
8 See generally Chavez, 162 Cal. App. 4th at 424.
9 Federal courts now have original jurisdiction to hear
class actions in which: 1) the aggregated damages
claim exceeds $5 million, 2) there are at least 100
class members, and 3) at least one plaintiff and one
defendant are citizens of different states. See 28 U.S.C.
§1332(d)(2).
30 Los Angeles Lawyer February 2009
10 28
U.S.C. §1712.
U.S.C. §1712(d).
12 Acosta v. Trans Union, LLC, 243 F.R.D. 377, 386
(C.D. Cal. 2007); see also Young v. Polo Retail, LLC,
2007 U.S. Dist. LEXIS 27269, at *3 (N.D. Cal. Mar.
28, 2007).
13 FED. R. CIV. P. 23(e)(1)(c).
14 See Figueroa v. Sharper Image Corp., 517 F. Supp.
2d 1292, 1321 (S.D. Fla. 2007).
15 Id. Criticism of coupon settlements predates CAFA.
See, e.g., Buchet v. ITT Consumer Fin. Corp., 845 F.
Supp. 684, 696 (D. Minn. 1994), amended by 858 F.
Supp. 944 (proposed coupon settlement rejected after
court found that coupon redemption rates in similar
cases were so low that the certificates in this case
offered no real value to the class).
16 Id. at 1321.
17 Williams v. MGM-Pathe Commc’n Co., 129 F. 3d
1026, 1027 (9th Cir. 1997) (securities fraud class
action that settled for a $4.5 million common fund) (citing Boeing Co. v. Van Gemert, 444 U.S. 472, 480-81
(1980)).
18 Young v. Polo Retail, LLC, 2007 U.S. Dist. LEXIS
27269, at *5 (N.D. Cal. Mar. 28, 2007) (citing
Williams, 129 F. 3d at 1027).
19 28 U.S.C. §1712(a) (emphasis added).
20 28 U.S.C. §1712(d).
21 Synfuel Techs., Inc. v. DHL Express, 463 F. 3d 646,
648 (7th Cir. 2006).
22 Id. at 652-53 (citations omitted).
23 Id. at 654.
24 Id.
25 Yeagley v. Wells Fargo & Co., 2008 U.S. Dist.
LEXIS 5040, at *17 (N.D. Cal. Jan. 18, 2008).
26 Id. at *24.
27 Id.
28 Id. at *8.
11 28
29 Id.
49 Id.
30 Acosta
50 In re Microsoft I-V, 135 Cal. App. 4th 706, 723
(2006).
51 Id. at 723 & n.13.
52 Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794,
1802 (1996).
53 Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 54
(2008).
54 Id. at 52.
55 Id. at 54.
56 Id. at 52.
57 Id. at 53.
58 Id. at 54 (“[T]he potential for Netflix to actually benefit financially from the settlement is much reduced compared to a pure coupon discount program.”).
59 Id.
60 Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794,
1800 (1996).
61 Id. at 1802.
62 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th
224, 246 (2001).
63 Id. at 247.
64 In re Microsoft I-V, 135 Cal. App. 4th 706, 712
(2006).
65 Id. at 730.
66 Id. at 712.
67 Intervention, Inc. v. Avanir Pharms., 2007 Cal. App.
Unpub. LEXIS 2092 (Mar. 15, 2007) (unpublished).
68 Id. at *6.
69 Vroegh v. Eastman Kodak Co., 2007 Cal. App.
Unpub. LEXIS 9735 (Nov. 30, 2007) (unpublished).
70 Campbell v. Airtouch Cellular, 2006 Cal. App.
Unpub. LEXIS 2459 (Mar. 24, 2006) (unpublished).
71 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th
224, 246 (2001).
72 7-Eleven Owners for Fair Franchising v. Southland
Corp., 85 Cal. App. 4th 1135, 1145 (2000).
at *14.
v. Trans Union, LLC, 243 F.R.D. 377 (C.D.
Cal. 2007).
31 Id. at 393.
32 Id. at 393-94.
33 Figueroa v. Sharper Image Corp., 517 F. Supp. 2d
1292, 1321 (S.D. Fla. 2007).
34 The parties retained Christopher R. Leslie, a professor
at Chicago-Kent College of Law. See Christopher R.
Leslie, The Need to Study Coupon Settlements in Class
Action Litigation, 18 GEO. J. LEGAL ETHICS 1395,
1396-97 (2005). In his article, Leslie criticizes coupon
settlements on grounds that they 1) often do not “provide meaningful compensation to most class members,” 2) often “fail to disgorge ill-gotten gains from
the defendant,” and 3) may force class members “to do
future business with the defendant.”
35 Figueroa, 517 F. Supp. 2d at 1314-15.
36 Id. at 1327.
37 Id. at 1329.
38 Fleury v. Richemont N. Am., Inc., 2008 U.S. Dist.
LEXIS 64521 (N.D. Cal. July 3, 2008).
39 Id. at *51.
40 Id. at *73.
41 Young v. Polo Retail, LLC, 2007 U.S. Dist. LEXIS
27269, at *14 (N.D. Cal. Mar. 28, 2007).
42 Id. at *11.
43 Id. at *23 (citing Williams v. MGM-Pathe Commc’n
Co., 129 F. 3d 1026, 1027 (9th Cir. 1997)).
44 Browning v. Yahoo! Inc., 2007 U.S. Dist. LEXIS
86266 (N.D. Cal. Nov. 16, 2007).
45 Id. at *16.
46 Id. at *17.
47 Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 54
(2008).
48 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th
224, 240 (2001).
Los Angeles Lawyer February 2009 31
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Zimmer, CPI. National agency. Professional investigations with emphasis upon accuracy, detail, and
expedience. Asset/financial searches, background
investigation, DMV searches, domestic/marital
cases, due diligence, process service, surveillance/
photograph, witness location, and statements. LA
branch plus correspondents nationwide. Multilingual
agents. Fully insured.
HERMANN & HERMANN INVESTIGATION
AGENCY
P.O. Box 398, Tujunga, CA 91043, (818) 352-6274,
fax (818) 352-1273, e-mail: [email protected]
.net. Contact Mitch Hermann. We conduct professional and highly personalized investigations, in English and Spanish directly throughout Los Angeles and
southern California counties; service of process, jury
polls, relocate witnesses, obtain detailed statements,
conduct full background investigations, asset research, and public records research. When you need
it done fast and expertly call us.
JURY CONSULTANTS
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,
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Areas of specialization include commercial litigation,
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ConfidenceAtThe Courthouse.
Business litigation is increasingly complex. That is why we believe valuation
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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
34 Los Angeles Lawyer February 2009
VERDICT SUCCESS LLC
12100 Wilshire Boulevard, Suite 600, Los Angeles,
CA 90025, (310) 545-7914, fax (310) 545-7913,
e-mail: [email protected]. Web site:
www.verdictsuccess.com. Contact Cynthia R.
Cohen, Ph.D. Explore strategic solutions for jury trials in a focus group facility. Professionals in winning
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LITIGATION SUPPORT
CHARON SOLUTIONS, INC.
400 Continental Boulevard, 6th Floor, El Segundo,
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Segal, Esq. Law technology. We bridge the divide.
A holistic approach to your EDD/ESI requirements.
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ECON ONE RESEARCH, INC.
601 West Fifth Street, 5th Floor, Los Angeles,
CA 90071, (213) 624-9600, fax (213) 624-6994,
e-mail: [email protected]. Web site: www
.econone.com. Contact Lisa Skylar. Econ One
provides economic research, consulting and expert
testimony in many areas, including: antitrust, intellectual property and patent infringement, contract disputes, damages analysis/calculations, employment issues, and unfair competition. We offer in-house expertise in applied economic theory, econometrics, statistics and years of experience successfully dealing with
the specific demands of the litigation process. Econ
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HABEAS VIDEAS
Video Documentation for
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Video Litigation Support for 20 Years!
HABEAS VIDEAS
654 East Mariposa Street, Altadena, CA 91001,
(626) 797-8101, fax (626) 797-2384, e-mail:
[email protected]. Web site: www
.habeasvideas.com. Contact Pierre Dupuy. Company founder Pierre Dupuy has been a CLVS since
1987 and founded Habeas Videas in 1989. For 20
years Habeas Videas has provided reliable, professional and affordable legal video services. We have
experience recording all sorts of evidence and testimony as well as documentaries and inspections. We
do video/text synchronizing in house and have a 3D
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See display ad on this page.
• Office Actions and
Responses
POLYGRAPH
• Patent Publications
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
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Documents
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R. S. RUGGLES & CO. INC.
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fax (877) 210-1114, e-mail: [email protected].
Web site: www.rsruggles.com. Contact Chris. Manufacturer and distributor of specialty office products
including index tabs, exhibit labels, red rope file pockets and wallets, tyvek envelopes, brown kraft envelopes, color-coded labels and manila filing products. See display ad on page 32.
TRANSLATIONS
CHIZAI CORPORATION
P.O. Box 81815, Wellesley Hills, MA 02481-0010,
(781) 235-1353, fax (781) 431-2052, e-mail: info-usa
Your Gateway to the Asian IP World
SPECIALTIES
Specializing in Patent Translation
• Specifications for Filing
Chizai Corporation has been totally committed to
and specializing in patent translation for over 30
years since 1976. “Chizai” is a generic Japanese
term, which is an abbreviation of “Chiteki Zaisan”
and literally means “Intellectual Property.”
• Other Technical
Documents
TECHNICAL FIELDS
• Electrical & Electronic
Engineering
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Communications
Technologies
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Engineering
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Optoelectronics
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Materials
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Biotechnology
Offering Asia One-stop Patent Translation
Services
Chizai provides “Asia one-stop patent translation
services” between English and Asian languages,
including Japanese, Chinese and Korean, under
the name of “Asia Patent Translation Center.TM”
Asia Patent Translation CenterTM can help you
reduce the total cost of patent applications for
Asian countries by offering; high-quality patent
translation, a competitive pricing structure, and
discounts on one-stop patent translation services
into multiple Asian languages.
Operating Globally
As a leading specialist in the Asian IP world,
Chizai has its head office in Tokyo, Japan, an
affiliated company in Shanghai, China, and a
partnership with a Korean company. Chizai also
has branch offices in the UK, Europe, and in
Massachusetts, USA. Chizai carries out its
business globally and is active in the largest IPoriented areas in the world. Chizai believes that it
is fully prepared to meet the demands of the
forthcoming Global Patent era.
CHIZAI CORPORATION US BRANCH OFFICE
P. O. Box 81815, Wellesley Hills, MA 02481-0010, USA
Tel: +1-781-235-1353 • Fax: +1-781-431-2052
E-mail: [email protected] • www.chizai-usa.com
Los Angeles Lawyer February 2009 35
@chizai.jp. Web site: www.chizai-usa.com. Contact
Takashi Hiratsuka. Chizai Corporation has been
committed to and specializing in patent translation
for over 30 years since 1976. Chizai translates patent
specifications for filing, office actions and responses,
published patents, and patent-related legal documents including those relating to litigation cases.
Chizai provides “Asia one-stop patent translation services” between English and Asian languages, including Japanese, Chinese, and Korean. Chizai can help
you reduce the total cost of patent applications for
Asian countries by offering high-quality patent translation and competitive pricing structure. See display
ad on page 35.
TRIAL CONSULTANTS
MOLLY MURPHY TRIAL CONSULTANT/MEDIATOR
1541 Ocean Avenue, 2nd Floor, Santa Monica, CA
90401, (310) 458-7720, fax (310) 458-7298, e-mail:
[email protected]. Web site: www.jury
-trialconsultant.com. Contact Molly M. Murphy.
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 posttrial jury interviews.
ON TRIAL, LLC
420 Exchange, Suite 270, Irvine, CA 92602, (714)
505-5655, fax (714) 505-3070, e-mail: gbrown
@on-trial.net. Web site: www.on-trial.net. Contact
Gregory G. Brown, Esq. When results count, count
on On Trial, LLC for all your trial presentation and
support needs. Our vast experience (500+ days in
trial), using the latest trial presentation technology
and other tools, makes us the clear choice when the
chips are down. As AV Rated trial lawyers, we know
what is required to win. In fact, California Litigation
asked us to author Technology in the Courtroom,
New York 212.430.5959 • Los Angeles 310.342.7170 • San Francisco 415.835.5958
www.on-trial.net/technology.pdf. As part of your trial
team, we provide turnkey trial support (trial consulting, technicians, presentation equipment/software,
video presentation, creation and editing, mobile
technology packages, in-court scanning and graphics). We provide powerful presentations that are persuasive, succinct, and visually appealing. We work
with your theme and lawyers to create digital presentations of evidence, photos, video, or 3D animations
to illustrate clearly the key issues in your case. Our
mission is simple: help you win your next trial! See
display ad on page 37.
TRIAL SUPPORT SERVICES
ON THE RECORD, INC.
5777 West Century Boulevard, Suite 1415, Los
Angeles, CA 90045, (310) 342-7170, fax (310) 3427172, e-mail: [email protected]. 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 this page.
SARNOFF COURT REPORTERS AND LEGAL
TECHNOLOGIES
707 Wilshire Boulevard, Suite 4750, Los Angeles, CA
90017, (877) 955-3855, fax (213) 228-1193, e-mail:
[email protected]. Web site: www
.sarnoffcourtreporters.com. Contact Peter Riley.
Sarnoff Court Reporters and Legal Technologies has
been providing quality services to the legal profession since 1948 and offers a single source for court
reporting, legal video, trial presentation support and
related services worldwide. We provide complete deposition services including real time, Internet streaming, legal video, professional conference facilities, online deposition scheduling and access to calendar,
transcript and billing information, exhibit imaging,
physical and online transcript and document repositories, case management services, videoconferencing and related technology as well as trial presentation support services. All delivered wherever your
case may require you to be.
VIDEOTAPING
HABEAS VIDEAS
654 East Mariposa Street, Altadena, CA 91001,
(626) 797-8101, fax (626) 797-2384, e-mail:
[email protected]. Web site: www
.habeasvideas.com. Contact Pierre Dupuy. Company founder Pierre Dupuy has been a CLVS since
1987 and founded Habeas Videas in 1989. For 20
years Habeas Videas has provided reliable, professional and affordable legal video services. We have
experience recording all sorts of evidence and testimony as well as documentaries and inspections. We
do video/text synchronizing in house and have a 3D
animator on staff. Our reputation speaks for itself.
See display ad onpage 35.
We know economic damages analysis. From antitrust to contract breach to oil & gas royalty
payments to wrongful termination, our damages analysis draws directly from our economic
expertise. We posit a world where things would be different--an exercise that draws from
economic principles (what should it look like?) and the actual (what did happen?). We use
state-of-the-art economic, statistical and econometric tools to gather and analyze the data.
And, as always, our findings are clearly communicated. After all, it’s our job to make sure
we’re not the only ones in the room who understand economic damages. econone.com
Antitrust • Intellectual Property • Damages Analysis • Employment Issues
36 Los Angeles Lawyer February 2009
VISUAL EQUIPMENT FOR TRIALS
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%
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 spe-
cialists 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) 3427172, e-mail: [email protected]. 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 36.
ON TRIAL, LLC
420 Exchange, Suite 270, Irvine, CA 92602, (714)
505-5655, fax (714) 505-3070, e-mail: gbrown
@on-trial.net. Web site: www.on-trial.net. Contact
Gregory G. Brown, Esq. When results count, count
on On Trial, LLC for all your trial presentation and
support needs. Our vast experience (500+ days in
trial), using the latest trial presentation technology
and other tools, makes us the clear choice when the
chips are down. We provide straight equipment
rentals or the support to operate. We carry virtually
every type of technology needed in the modern trial
and use it ourselves! Projectors, screens, ELMO,
scanning, digital photography, video projectors and
editing, monitors, all necessary cabling and support.
Whether you need one computer monitor or 10, we
can set it up. As part of your trial team, we regularly
create graphics, blowups or video clips during witness examination. We provide powerful presentations that are persuasive, succinct, and visually appealing. We work with your theme and lawyers to
create winning presentations, to illustrate clearly the
key issues in your case. Our mission is simple: help
you win your trial! See display ad on this page.
SOUTHLAND LEGAL VIDEO
95 North Meridith Avenue, Suite 1, Pasadena, CA
91106, (626) 893-7944, fax (213) 683-0340, e-mail:
[email protected]. Web site: www
.southlandlegal.com. Southland Legal Video has
been serving the Southern California legal community
since 2001, providing top-quality video services to
the nation’s top law firms. We offer personalized service, competitive prices, and service to all of southern California. Services: video depositions, site
inspections, transcript-to-video synchronization,
documentaries, video editing, trial presentation solutions, and more. Downtown L.A. conference rooms
also available. Call to schedule your next video deposition.
WITNESS PREPARATION
ACT OF COMMUNICATION®
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(310) 391-9661, fax (310) 390-9499, e-mail: info
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.ACTofCommunication.com. Contact founders
Alan Blumenfeld & Katherine James. Who do
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hearing, arbitration, testifying before Congress. Efficient, effective, our system “sticks.” See display ad
on page 34
Los Angeles Lawyer February 2009 37
computer counselor
BY DAVID SCHNIDER
What Lawyers Need to Know about Text Messaging with Clients
IN OUR NATION of about 300 million people, there are over 233 mil- to a client’s cell phone, and is likely to draw immediate attention (quite
lion cell phones in circulation, the majority of which are capable of possibly with a cute buzz or tone sure to annoy anyone the client may
sending text messages.1 In June 2006, there were over 12.5 billion text be meeting with). But texting is not without its pitfalls. As attorneymessages sent worldwide, up 71 percent from the year before.2 By client communication, the privacy of texting is a significant conDecember 2007, that number was up to over 48 billion.3 By the end cern. Permanence is also an issue. Unlike most industries that are free
of 2008, it is expected that more than 80 billion text messages will be to rush into the digital age, the legal community still must be concerned
sent every month.4 E-mail use among teens in the United States is drop- about documenting communications. The flip side of such docuping, with 46 percent of them saying they prefer text messaging.5 This mentation, again largely unique to the legal community, is the potenhas prompted at least one analyst to ask whether e-mail is facing extinc- tial creation of an evidentiary trail. Finally, there are practical issues
tion.6 Those who do not yet send text messages may rest assured that of costs and available plans.
the predictions of the demise of e-mail are premature. But the statistics do not lie. Text messaging is rapidly gaining popularity and, espePredictions of the demise of e-mail are premature. But the
cially among younger users, it is replacing e-mail
as the favored means of communication.
For those not familiar with text messaging,
statistics do not lie. Text messaging is rapidly gaining
or texting: It is the act of sending a “short electronically transmitted written message, esp.
those sent to a handheld device such as a pager,
popularity and, especially among younger users, it is
PDA, cell phone.”7 The technical term for it is
SMS, which stands for short messaging service.8 Because text messages are generally typed
replacing e-mail as the favored means of communication.
on small devices, often with limited keyboards,
they tend to be very short and often include
abridged phrases or acronyms whose meaning
In some ways, texting is a relatively private form of communicais generally understood by those who use this form of communication.
It is the rise of text messaging that is responsible for the recent wave tion. Unlike e-mail, text messages are not stored on servers. An e-mail
of advertising featuring such enigmatic phrases as “OMG,” which in sent to a client may be saved on backup media for years. By contrast,
texting code stands for “Oh, my god.” There was even a recent stir text messages never pass through either. Most text messaging services
over print advertising for the television show Gossip Girl that featured do go through a central hub controlled by the service provider, but
most service providers do not save copies of those messages for any
the more explicit “OMFG.”9
The increasing popularity of texting likely is a result of its speed. extended period (though there are some exceptions, such as SkyTel).12
E-mail is generally sent from a computer over the Internet. Even if it Because most people carry their cell phones with them, there is not
is sent from a wireless device, for example a Blackberry, e-mail is still much risk of a communication falling into a third party’s hands or
going through computer servers. E-mail often moves very quickly, but being retrieved from a dumpster. However, clients may leave their cell
it can be subject to delays ranging from a few seconds to many min- phones lying around or allow others to read messages on their
utes. If servers go down, the mail can be lost. By contrast, text mes- phones. Before sending confidential information by text, consider the
sages are generally sent over a cellular network. The sending device recipients and make sure they are aware that they need to protect the
feeds the message to a hub on the cell network that will then hold it attorney-client privilege.
until the receiving phone is located and the message sent.10 As a result,
Attorneys who are concerned for their personal privacy should know
text messages can often be exchanged in near real time, alleviating that text messages automatically include the cell phone number from
the delay of the minute or two that users may suffer with their which they are sent. Attorneys who generally do not give their cell phone
archaic e-mail systems. Text messages are also limited to 160 char- numbers to clients should take note. Some service providers, however,
acters each (although many services now simply break up longer mes- allow users to send text messages from a Web site so that the user’s
sages and send them one after another).11 For those American youth cell phone number is not included. There are also Web sites that
with short attention spans and their imitators, texting gains a con- allow texting without a cell phone, including www.hooya.com or
versational rhythm, often filled with shorthand acronyms and text- www.quios.com. But these more anonymous methods largely defeat
based expressions like the all-too-ubiquitous sideways happy face.
For lawyers constantly looking for new ways to improve client com- David Schnider is general counsel for Leg Avenue, Inc., a leading
munication, texting can be a valuable tool. It is quick, goes straight distributor of costumes and apparel.
38 Los Angeles Lawyer February 2009
the purpose of being able to communicate
quickly.
Another consideration when communicating with clients by texting is that there is
no printed record of the communication.
When an attorney sends or receives an email, it can be printed and filed. Even if the
attorney forgets to do that, there is at least a
copy on a server that can be retrieved. Because
text messages are sent by wireless devices
and do not go through firm computers, there
is no convenient means to print them. On
some devices it may be possible to forward
messages to yourself as an e-mail, which may
be printed. But otherwise, text messages are
lost in the ether. So if a client is late to court,
texting may be a good way to find out when
he or she expects to arrive. But to alert a
client that a statute of limitation is running,
it is more prudent to use e-mail or regular
mail, both of which leave a paper trail.
The flip side of messages that leave a
record is that they also create evidence. Most
lawyers, at some time, come across an occasion when they would prefer to have a discussion with a client that is entirely off the
record. When dealing with such sensitive
issues, it is generally best to speak with a
client by phone or in person. While a text message is less likely to leave a discoverable
record, it is not entirely secure. The service
provider keeps a copy for some amount of
time, and there is no way to know how long
that may be. Some services may keep messages
longer, and it is possible for employers to
have data maintained even for text messages.
At least one court dealing with the issue has
found that employees have an expectation of
privacy in their text messages,13 but as they
become more prevalent employers are more
likely to specify that text messages are not private, and courts may be more inclined to
subject them to disclosure. Further, a text
message is a written communication, and
there is no way to prevent a client from forwarding it as an e-mail and printing it, thereby
creating a written record. Text messaging is
more discreet than e-mail, but its ephemeral
quality should not mislead users into thinking that it is entirely secure and confidential.
Nearly all current generation cell phones
are capable of sending text messages, and
most service providers offer plans. However,
these cute missives come at a price. If texting
is not included in a plan, service providers will
generally charge a fee per message, usually in
the range of 10 to 20 cents. That does not
sound like much, but imagine being charged
that amount every time something is said in
a conversation. It adds up quickly. Attorneys
who are going to send text messages at all
should sign up on a plan. The offerings vary.
Verizon’s nationwide business plans all include
unlimited texting.14 Most of its individual
plans also include unlimited texting, but the
most basic plan charges 20 cents per message.15 AT&T’s wireless plans generally do
not include texting, but it can be added for
an additional charge.16 Boost Mobile offers
a plan with unlimited texting for one dollar
a day.17 These plans change regularly, however. Usually, texting plans are included with
a service or are a relatively inexpensive addon, so it is worth contacting a service provider.
There are some additional features to consider. Most but not all plans will include
media messaging service (MMS), which is
basically texting for pictures. This service
can come in very handy. For example, an
attorney with MMS inspects the scene where
a client had a car accident. A question about
where the client was driving arises, and rather
than try to describe it, the attorney can take
a picture and message it to the client, who can
see what the attorney is seeing and answer
based on the picture rather than memory. It
also comes in handy if you want to ask your
spouse which brand of mustard you should
be picking up at the market.
As a practical matter, text messaging
remains more a plaything for young adults
than a powerful asset in the legal arsenal.
But its popularity is undeniably spreading
quickly, and more and more clients will come
to appreciate an attorney’s ability to use this
form of communication. Used appropriately,
with a clear understanding of its benefits and
limitations, text messaging can be a valuable
tool for communicating with clients.
■
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
1 http://www.messagebuzz.com/resources/statistics.asp.
2 Id.
3 http://www.ctia.org/advocacy/research/index.cfm
/AID/10323.
4 http://www.cellsigns.com/industry.shtml.
5 http://money.cnn.com/2006/07/26/technology
/thirdscreen0726.biz2/index.htm.
6 Chris Marriot, Is email facing extinction? (July 9,
2007), available at http://www.imediaconnection
.com/content/15637.asp.
7 WEBSTER’S NEW MILLENNIUM DICTIONARY OF ENGLISH,
PREVIEW EDITION (Lexico).
8 Jennifer Hord, How SMS Works, available at
http://communication.howstuffworks.com/sms.htm.
9 Lauren Beckham Falcone, Critics pan provocative ad
campaign for Gossip Girl, THE BOSTON HERALD (Sept.
1, 2008).
10 http://communication.howstuffworks.com/sms.htm.
11 Id.
12 Mike Wendland, Most Text Messages Just Vanish,
DETROIT FREE PRESS (Jan. 25, 2008), available at http://
www.freep.com/apps/pbcs.dll/article?AID=/20080125
/COL11/801250422/0/NEWS01.
13 Quon v. Arch Wireless, 529 F. 3d 892 (9th Cir.
2008).
14 See
http://b2b.vzw.com/productsservices
/businesscallingplans/voiceplans.html.
15 See http://www.verizonwireless.com/b2c/splash
/splash.jsp?v=1.
16 See http://www.wireless.att.com/cell-phone-service
/services/services-list.jsp?catId=cat1470003&LOSGId
=&catName=Messaging+and+MEdia(TM)+Bundles.
17 See http://plans.boostmobile.com/chat.aspx.
Los Angeles Lawyer February 2009 39
by the book
REVIEWED BY JEFFREY D. WOLF
The Buffalo Creek Disaster
One early Saturday morning in
February 1972, 130 million gallons of black water and waste
overflowed a massive dam in
West Virginia and descended
upon the valley below. Although
reminiscent of the flooding that
befell New Orleans and the Gulf
Coast several years ago, the devastating tidal wave in 1972 that
engulfed Buffalo Creek Valley
sprung from a coal company’s
refuse pile. Nevertheless, the
Pittston Coal Company, owner of
the refuse pile, quickly proclaimed that “the break in the
dam was caused by flooding—an
Act of God.”
The Pittston statement was
intended as an argument to
The Buffalo Creek Disaster
escape liability for the devastaBy Gerald M. Stern
tion, but it also succeeded in
Vintage, 2008
emboldening the survivors—reli$11.95, 304 pages
gious individuals outraged at the
accusation that God had brought this upon them. Rather than accept
the small settlements proposed by Pittston, many survivors hired
counsel and instituted a lawsuit against the company. In The Buffalo
Creek Disaster: How the Survivors of One of the Worst Disasters in
Coal-Mining History Brought Suit against the Coal Company—and
Won, author Gerald Stern writes about the legal battle the survivors
waged, with him as their attorney, against Pittston.
Although the book focuses on the lawsuit that followed the devastation, Stern’s accounts of the victim’s stories are poignant. The black
sludge reached a speed of 30 miles per hour as it swept into the 16
coal mining towns in the valley. The sludge engulfed the townspeople before they recognized what had happened. Parents struggled to
hold onto children and husbands grasped for their wives as they
searched for something to hold. One such husband, whose wife, in
parting moments, told him to take care of their baby, survived the flood
but explained later, “Somewhere along there I lost that boy of mine.
I don’t know where.” Ultimately, 125 people died, thousands others
were injured, and numerous homes were destroyed.
Unsurprisingly, the survivors of this tragedy suffered severe psychological effects. Experts diagnosed the survivors with a then cutting-edge diagnosis of “psychic impairment,” which later would
become known as post traumatic stress disorder. PTSD is now a recognized psychiatric diagnosis, but at the time of the flood in Buffalo
Creek, the condition was not well understood, and Pittston attorneys
wrote off the claims of psychic impairment as “mere puff and blow.”
In The Buffalo Creek Disaster, Stern moves beyond the tragedy
40 Los Angeles Lawyer February 2009
and focuses on the legal process. The reader learns that Pittston filed
a motion to dismiss the weakest psychic impairment claims, those
brought by individuals who suffered loss but were not themselves present at the time of the flood. Stern’s concern at the time was that following a ruling on the absentee plaintiff’s motion, Pittston would then
file a motion to dismiss claims brought by those who were present
for the flood but did not suffer physical injury. In this way, Pittston
would attempt to “slice up our case bit by bit.” Pittston’s counsel personally served the motion to limit the amount of time for an opposition, but the judge granted the plaintiffs’ request for an extension.
This extension gave the plaintiffs sufficient time to provide a thoughtful opposition and prevented Pittston’s efforts at a piecemeal attack
on the psychic impairment claims.
Stern also delves into the realities and practicalities of litigation.
Stern and his colleagues decided to postpone the psychological examinations of their clients due to the excessive cost of the testing.
Ultimately, however, the testing had to be conducted, because the court
set a date for an exchange of the medical reports. The plaintiffs
brought in teams of psychiatrists to conduct the testing, who found
that a vast majority of the victims were suffering from severe psychological effects of the disaster.
Pittston also had the plaintiffs examined by a doctor of its own
choosing. The Pittston doctor confirmed the victims’ suffering but characterized it as a transient disturbance. However, many of the plaintiffs were still suffering from symptoms well over a year after the flood.
The Pittston doctor concocted an explanation: The individuals who
continued to suffer from psychological effects from the trauma must
have suffered from a preexisting vulnerability.
In addition to describing the positions taken by both sides during
the litigation, Stern also recounts the strategic considerations underlying many of the actions that the parties took. Strategy decisions had
to be made from the initial filing of suit in federal court to the settlement discussions, which finally resolved the matter. Concerned that
his Washington-based firm would have difficulty with local state
judges in Logan County, Stern filed suit in federal court and overcame
Pittston’s unsuccessful challenge to diversity jurisdiction. Nevertheless,
the hometown prejudice raised its head in an unexpected fashion. The
local bar committee decided to investigate Stern’s firm for ambulance
chasing.
Strategy, too, was critical to the settlement discussions between the
townspeople and Pittston. As with most litigation, the most productive
settlement talks only occurred after the court set a firm trial date. Stern
and his cocounsel had to convey to Pittston that they had faith in their
case but were still flexible. The posturing even included bringing
defense counsel through Stern’s law offices to show the extent to which
they were preparing for trial.
Jeffrey D. Wolf is a trial attorney and a partner at Pocrass, Heimanson &
Wolf, representing individuals injured in severe personal injury, product
liability, aviation, and medical malpractice cases.
Stern describes the practical hurdles he
encountered during the settlement discussions. He represented numerous plaintiffs,
and he knew that Pittston’s counsel would
insist that he have authority to negotiate a settlement on behalf of all of his clients.
Although the townspeople gave him authority to settle, ethical considerations precluded
him from entering into a binding settlement
on behalf of multiple plaintiffs without first
telling them how much each plaintiff would
receive. Stern resolved the problem by obtaining permission to conduct the discussions
and provide recommendations for a split.
With such close attention to detail about
the legal process, it is not surprising that
often the book has been required reading
for law students. However, The Buffalo Creek
Disaster goes well beyond providing some
valuable lessons about the litigation process.
The book shows how our court system can
be a great equalizer, placing large multimillion-dollar corporations on even footing with
people who have no economic or political
clout.
Through the litigation and more specifically the discovery process, Pittston became
answerable to the people of the town. Depositions of key Pittston personnel revealed that
Pittston knew that it was exposing the people to significant risk of the flood. With the
revelation of this information, Pittston faced
true exposure to punitive damages and, consequently, power shifted to the townspeople.
Thereafter, Pittston settled the claims and
finally compensated the victims for their loss.
Beyond that, the settlement served as a check
on Pittston, deterring it from constructing
another faulty dam. The threat of this type
of litigation forces large corporations like
Pittston to rethink business decisions that
place the public in harm’s way.
Yet, even after we read The Buffalo Creek
Disaster and celebrate the triumph of the
townspeople in the wake of the flood that
destroyed their town over 35 years ago, we
are faced with news of another, similar failure. In December 2008, the Tennessee Valley
Authority’s Kingston Fossil Plant in Harriman, Tennessee, experienced a failure of a
dike wall. The broken earthen wall released
approximately 1 billion gallons of slurried ash
from a coal-ash containment pond.
Fortunately, no one was killed, but the spill
destroyed homes and continues to pose environmental threats as the result of the release
of barium, lead, manganese, and arsenic
compounds. Cenospheres, which are spherical particles of silica, polluted the local lake.
The Tennessee Valley Authority has reported
that the cenospheres can cause watering of the
eyes, sneezing, or coughing but do not pose
a health threat. At least it has not yet attributed the spill to an act of God.
■
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Los Angeles Lawyer February 2009 41
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42 Los Angeles Lawyer February 2009
Accident Reconstruction Specialists, p. 31
Tel. 562-743-7230 www.FieldAndTestEngineering.com
Jack Trimarco & Associates Polygraph, Inc., p. 33
Tel. 310-247-2637 www.jacktrimarco.com
ACT of Communication, p. 34
Tel. 310-391-9661 www.actofcommunication.com
Kantor & Kantor, LLP, p. 39
Tel. 877-783-8686 www.kantorlaw.net
Ahern Insurance Brokerage, Inside Front Cover
Tel. 800-282-9786 x101, [email protected]
Law Offices of Rock O. Kendall, p. 12
Tel. 949-388-0524 www.dmv-law.com
Arizona State University, p. 12
Tel. 480-965-6181 www.law.asu.edu
Lawyers’ Mutual Insurance Co., p. 7
Tel. 800-252-2045 www.lawyersmutual.com
Lee Jay Berman, p. 8
Tel. 213-383-0438 www.leejayberman.com
Lexis Publishing, p. 1, 11
www.lexis.com
Case in Point Consulting, Inc., p. 33
Tel. 714-292-7498 e-mail: [email protected]
Linzer & Associates, P. C., p. 41
Tel. 310-826-2627 e-mail: [email protected]
Charon Solutions, Inc., p. 34
Tel. 310-606-2664 www.thecharonshield.com
MCLE4LAWYERS.COM, p. 8
Tel. 310-552-5382 www.MCLEforlawyers.com
Cheong, Denove, Rowell & Bennett, p. 13
Tel. 310-277-4857 www.cdrb-law.com
Mitchell & Mitchell, p. 8
Tel. 800-247-1403 www.mitchellandmitchell.com
Chizai Corporation, p. 35
Tel. 781-235-1353 www.chizai-usa.com e-mail: [email protected]
On The Record, Inc., p. 36
Tel. 310-342-7170 www.ontherecord.com
Cohen Miskei & Mowrey, p. 41
Tel. 818-986-5070 e-mail: [email protected]
Coldwell Banker, p. 6
Tel. 310-442-1398 www.mickeykessler.com
Commerce Escrow Company, p. 30
Tel. 213-484-0855 www.comescrow.com
Cook Construction, p. 17
Tel. 818-438-4535 e-mail: [email protected]
Lawrence W. Crispo, p. 4
Tel. 213-926-6665 e-mail: [email protected]
DepoSums Deposition Summaries, p. 33
Tel. 800-789-DEPO (800-789-3376) www.deposums.biz
Dixon Q. Dern, P.C., p. 17
Tel. 310-557-2244 e-mail: [email protected]
Econ One Research, Inc., p. 36
Tel. 213-624-9600 e-mail: [email protected]
E. L. Evans & Associates, p. 41
Tel. 310-559-4005
Steven L. Gleitman, Esq., p. 6
Tel. 310-553-5080
Guaranteed Subpoena, Inside Back Cover
Tel. 800-PROCESS (800-776-2377) e-mail: [email protected]
Habeas Videas, p. 35
Tel. 626-797-8101 www.habeasvideas.com
Higgins, Marcus & Lovett, Inc., p. 34
Tel. 213-617-7775 www.hmlinc.com
The Holmes Law Firm, p. 20
Tel. 626-432-7222 www.theholmeslawfirm.com
On Trial LLC., p. 37
Tel. 714-505-5655 www.on-trial.com
Pacific Health & Safety Consulting, Inc., p. 39
Tel. 949-253-4065 www.phsc-web.com
Pro/Consul, Inc., p. 2
Tel. 800-392-1119 www.expertinfo.com
RGL-Forensic Accountants & Consultants, p. 37
Tel. 213-996-0900 www.rgl.com
R. S. Ruggles & Co., Inc., p. 32
Tel. 800-526-0863 www.rsruggles.com
Steven R. Sauer APC, p. 4
Tel. 323-933-6833 e-mail: [email protected]
Bruce Schwartz, p. 6
Tel. 310-277-2323 e-mail: [email protected]
Anita Rae Shapiro, p. 12
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Stonefield Josephson, Inc., p. 5
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White, Zuckerman, Warsavsky, Luna, Wolf & Hunt, p. 19
Tel. 818-981-4226 www.wzwlw.com
Justice Howard B. Wiener, p. 17
Tel. 619-338-6561 e-mail: [email protected]
Witkin & Eisinger, LLC, p. 17
Tel. 818-845-4000
Wolfsdorf Immigration Law Group, p. 30
Tel. 310-570-4088 www.wolfsdorf.com
Senior Lawyers Division and Barristers Round Table
ON TUESDAY, FEBRUARY 24, the Senior Lawyers Division and the Barristers
Section will host an interactive round table mentoring session. Those who
participate will have the chance to select preferred table topics and interact
with Hugh I. Biele, Judge Richard P. Byrne, Ernestine Fields, Harry L.
Hathaway, Charles E. Michaels, David J. Pasternak, Patricia Phillips, Jill
Switzer, and William L. Tan. This event is an opportunity to share best
practices, new ideas, and expert advice. Each table will have a judge or
senior lawyer as the moderator who will briefly introduce the topic and lead
a discussion. This new event will take place at the LACBA Conference
Center, 281 South Figueroa Street, Downtown. Figueroa Courtyard reduced
parking with LACBA validation costs $10. On-site registration will begin at 5
P.M., with the program continuing from 5:30 to 7:30 and dinner from 6:20 to
6:50. The registration code number is 010270. The prices below include the
meal.
$35—CLE+PLUS members
$45—LACBA members
$80—all others
1 CLE hour
Structuring
International Transactions
ON TUESDAY, FEBRUARY 24, the
International Law Section,
the Corporate Law Department Section,
and the Business and Corporate Law
Section will host a seminar designed for
lawyers, other professionals, and
businesspeople who are interested in
international transactions. Speakers
James D. Cigler, Jeffery J. Daar, Mark T.
Hiraide, Ann M. Longmore, Roger D.
Loomis Jr, and Michael R. Newman will
lead a discussion on how the increasing
globalization of industry and finance
results in the need for lawyers, other
professionals, and businesspeople to
know the basics of structuring an
international transaction. Those who
attend will learn the relevant issues
involved in representing a party or being a
participant in an international trans-
Investigations and Winning Trials
action. The seminar will take place at the
ON THURSDAY, FEBRUARY 19, the Los Angeles County Bar Association and the
Small and Solo Division will host a program on the wise use of investigators.
Good investigators are the secret weapon of any successful lawyer. Speaker
Mohamad Khatibloo will discuss how to work with investigators to obtain
admissible facts and vet witnesses in order to win in an adversarial setting. In
this program, attorneys will learn about what to do before sending an
investigator out in the field. The seminar will take place at the LACBA
Conference Center, 281 South Figueroa Street, Downtown. Figueroa Courtyard
reduced parking with LACBA validation costs $10. On-site registration and the
meal will begin at 4:30 P.M., with the program continuing from 5 to 8:30 P.M.
The registration code number is 010121. The prices below include the meal.
$165—CLE+PLUS members
$215—Small and Solo Division members
$235—LACBA members
$295—all others
3.25 CLE hours
LACBA Conference Center, 281 South
Figueroa Street, Downtown. Figueroa
Courtyard reduced parking with LACBA
validation costs $10. On-site registration
will begin at 11:30 A.M. and lunch at noon,
with the program continuing from 12:30 to
2:30 P.M. The registration code number is
010305. The prices below include the
meal.
$35—CLE+Plus members
$65—hosting section members
$70—LACBA members
$80—all others
$90—all at-the-door registrants
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 2009 43
closing argument
BY KENNETH W. KOSSOFF
The New Pet Trust Statute Is Certain to Dog the Judiciary
Subdivision (f) is even more startling when one considers that there
A NEW PET TRUST STATUTE, which took effect on January 1, 2009,
replaces former Probate Code Section 15212 and makes it clear that are no similar private (or public) inspection or enforcement mechapet trusts are now enforceable in California. That is welcome relief nisms to ensure that guardians of minor children are doing their job
to those clients who care a lot more about taking care of their pets properly.
Subdivision (e) of the statute provides animal care organizations,
after their incapacity or death than they do their ungrateful children.
However, the California Legislature is quite possibly the only legislative among others, with the right to obtain the trust accountings required
body in the nation that could take a simple concept embodied in the under Probate Code Section 16062. While accountings are waived for
Uniform Probate Code—that a pet trust should be enforceable—and pet trusts that have assets worth less than $40,000, it will not be out
turn it into quagmire designed to promote such organizations as the of the ordinary to find pet trusts that have millions of dollars of assets.
special interest that sponsored it (the San Francisco Society for the If a horse owner wants his or her horses to live out their lives on the
Prevention of Cruelty to Animals). The result
is certain to further clog already overburdened
probate courts with litigation.
If a caretaker has to let strangers from an animal care
While there are myriad problems with the
new statute, two stand out. First, among those
authorized to enforce a pet trust in new Probate
organization—or 50 animal care organizations—inspect every
Code Section 15212(c) is “any person interested in the welfare of the animal or any nonprofit charitable organization that has as its
nook and cranny of his or her house, who is going to agree to
principal activity the care of animals.” Section
15212(f) gives a trust’s named enforcer and
these nonprofit charitable animal care corpocare for a deceased friend’s animals?
rations the right to “inspect the animal, the
premises where the animal is maintained, or the
books and records of the trust.”
The rights of an animal care corporation to inspect not only the family ranch, or a dog owner wants the pet to live out its life in the
animal but also the premises on which it is maintained are seemingly Beverly Hills house that is the only home the dog has ever known,
unlimited. For example, there is no statutory basis to limit the right far more than $40,000 is going to be required.
To prevent an animal care organization from getting an accountof inspection to particular areas that specifically are maintained to
house the animal. Instead, the inspection right seems to extend to a ing of the trust that owns or maintains property housing the animal,
caretaker’s entire home. Does that mean that “enforcers” can inspect the pet trust could be designed as a stand-alone trust—something that
bedrooms, whether or not the pet spends most of its time in a back- estate planners should consider as an alternative to a pet subtrust of
yard? Can enforcers inspect closets? A safe room? Can they ask if the a living trust. Even then, the organization could initiate litigation to
caretaker maintains rat poison or firearms on the premises? Do they demand that the trust improve the living conditions of the animals
need to give reasonable notice before they come to inspect? If the care- and may be able to intrude into the finances of related trusts through
taker does not like what the enforcers do when they inspect a prop- such litigation. (Of course, if the trustee offers to donate a tidy sum
like $100,000 to the animal care organization, maybe it will drop the
erty, can they be sued?
What if the animal bites the inspector from the animal care orga- whole thing.)
It is little comfort that the road to hell may be paved with good
nization? Is it proper for the pet trust to pay for an increased premium
on the caregiver’s homeowner’s policy? Can the trust defend and intentions. It still takes you where you do not want to go. Hopefully,
indemnify a caretaker if his or her carrier refuses to cover the pet? Or the probate bar or judiciary can work with the legislature to fix the
was the inspector assuming the risk? Nor does it appear that an enter- problems with the new pet trust law before the problems get out of
prising contingent beneficiary who wants to get his or her hands on hand. Until then, estate planners can give their clients the good news
the inheritance would be prevented from using an animal care orga- that pet trusts are now enforceable in California—and enterprising
nization to exercise its rights under the statute to harass the caretaker attorneys will work with animal care organizations to leverage set■
of the pet to the point that the caretaker refuses to keep the pet. In tlements from those trusts.
short, if a caretaker has to let strangers from an animal care organization—or 50 animal care organizations—inspect every nook and Kenneth W. Kossoff is a Certified State Bar of California Specialist in estate
cranny of his or her house, who is going to agree to care for a planning and probate and trust law and a member of Panitz & Kossoff, LLP,
in Westlake Village, California.
deceased friend’s animals?
44 Los Angeles Lawyer February 2009
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