There's lots to post about today.
But it's 80 degrees in San Francisco and summer (which usually arrives in the bay area in late September) is here . So to heck with it. Showing my age, here's the late Mike Bloomfield and the great Al Kooper for your Friday afternoon.
Marc Alexander and Mike Hensley have a good post in yesterday's California Attorney's Fees on our Code of Civil Procedure section 998, the California equivalent of FRCP 68. The statute, and the cases interpreting it, make for a fairly complex set of rules, but as they point out, attorneys who master this statute can have a big and favorable impact on their clients' exposure to attorneys' fees.
There is a significant potential for fee-shifting under section 998 when there is otherwise be a right to fees under contract, statute, etc. Essentially, the scenario is this: at the onset of the litigation (or early on, in any event) where the successful plaintiff will have a right to fees, defendant offers the amount in controversy to the plaintiff, plus fees and costs to be determined by the court. Since it's early on in the litigation, the fees and costs presumably don't amount to much at that point. Plaintiff rejects the offer. In the trial of the non-fees part of the case, the plaintiff gets a judgment in his favor, but only for the amount the defendant offered him way back when. To get to that point, the plaintiff ran up $400K or $500K in fees, perhaps more than the underlying damages. The rule in this scenario is, no post-offer fees to the plaintiff. And if it's a scenario (tort, statute, contract, whatever) where the prevailing defendant can recover fees, then the defendant gets post-offer fees. That's the decision in Scott Co. of California v. Blount, Inc. (1999) 20 Cal. 4th 1103, and more recently, Duale v. Mercedes-Benz USA, LLC (2007) 148 Cal.App.4th 718.
Week before last, the Recorder (San Francisco's ALM affiliate) had a small article buried in the back about a Seattle firm suing the owner of Applebee's for misstating the nutritional content of the food on its Weight Watcher's menu. So I went over to
ALM's Law.com, and found this story:
Nationwide restaurant chains Applebee's, Chili's Grill & Bar, On the Border Mexican Grill & Cantina, and Romano's Macaroni Grill face two new class action lawsuits over allegedly printing false nutrition information on their menus.
The named plaintiff for both suits, a Washington resident who sued the restaurants and their parent companies, claimed in the cases that she dined at Applebee's because it offered a Weight Watchers menu with low-calorie and low-fat food items and the other three restaurants because their menus contained "low-fat, health conscious" items.
The post went on to explain that the plaintiff, one Ann Paskett, had filed suit in Federal Court for the Central District of California (that's the distric t in Los Angeles) with theories based on our old friends the Consumer Legal Remedies Act and the Unfair Competition Law. Intrigued, I went over to the web site for the plaintiff law firm, Breskin, Johnson, Townsend, PLLC where I found another link to the ALM story. And on the site and elsewhere in the blogosphere, I found this press release, clearly the basis for the story, including the following choice quotes from Ms. Paskett, the the clearly victimized plaintiff and her lawyer:
When asked about the lawsuit, Paskett responded "It's not fair for Applebee's to sell consumers dishes with inaccurate and unreliable nutritional information. Applebee's is capitalizing on consumers' desire to eat healthy, but not taking the steps necessary to provide consumers with reliably healthy food."
and
Paskett's attorney, David Breskin, stated "Consumers want and deserve truthful information in making choices about the food they eat. We hope to bring redress to those customers who were deceived in seeking healthier dining options, and to ensure that restaurants offer truthful information about the food that they serve."
At this point, I was even more intrigued, so off I went to PACER to see what was happening in the case. There, I found this Complaint, filed June 3, 2008. And I found this dismissal of the case, filed three days later. Curiously, I didn't find anything on the Breskin web site indicating the suit had been dismissed. Then I went and took the weekend off.
This morning, back to the Breskin web site. The press release is gone. The Paskett Complaint in the Central District is gone from the site (although her Complaint in Federal Court in Texas against Brinker International, which owns Chili's, Romano's Macaroni and On the Border is still there -- apparently Ms. Paskett likes to sample the Weight Watcher's menus all around the country).
But wait! Here's a new Complaint, this one filed by one Maria Jones in Alameda Superior state court, also against DineEquity, the owner of Applebee's, and otherwise identical to Ms. Paskett's complaint. What in the world is going on here? Might someone be forum shopping? Might we not have liked our Federal Court judge assignment? Anybody have any ideas?
I don't usually post about unpublished Court of Appeal decisions; in fact, I don't usually read them. Under California Rules of Court, Rule 8.1115(a), they aren't citeable and aren't authority for anything.
But Wednesday's unpublished decision in Manhattan Banker Corporation v. Retamco Operating, Inc., B189546, is enough of an object lesson or cautionary tale that it's worth mentioning. Long story short: defendant sends seven requests for admissions to plaintiff, which, if admitted, would establish plaintiff has no case. Plaintiff denies them all. Case goes to trial, and -- guess what? -- they were all true, and plaintiff has no case.
Defendant moves for all of its attorneys' fees under Code of Civil Procedure, section 2033.420, subdivision (a), all $138,000 or thereabouts, and the trial court awards them all. Why? because if the plaintiff had given proper responses to the requests for admissions, there would have been no trial, and no fees. The Code makes it mandatory to award costs of proof of that which should have been admitted in response to requests for admissions. And the fees were the costs of proof.
The Court of Appeal affirmed. Moral of the story hardly needs stating.
Hat tip to the new, and very good, California Attorney's Fees.
The original mission of this blawg was to provide guidance to out-of-state businesses and others whose involvement in California litigation was infrequent, but potentially painful. So a decision last Friday from the Court of Appeal in Sacramento is useful for understanding the appellate courts' view on the obligations of parties at court-ordered settlement conferences and mediations. And given the Court of Appeals' prospective announcement about how it is going to approach this issue in the future, this is probably valuable for just about anybody.
The case is Campagnone v. Enjoyable Pools & Spas Service & Repairs (May 30, 2008) ___ Cal.App.4th___ (Third District, No. C055050). More after the jump.
Continue reading "Sanctions for Failure to Attend Court-Ordered Mediation" »
Generally speaking, the enforceability of a liquidated damages provision in a contract is governed by Civil Code section 1671, with the relevant part reading:
(b) Except as provided in subdivision (c), a provision in a
contract liquidating the damages for the breach of the contract is
valid unless the party seeking to invalidate the provision
establishes that the provision was unreasonable under the
circumstances existing at the time the contract was made.
On the other hand, according to the Cal Supremes:
A liquidated damages clause will generally be considered unreasonable, and hence unenforceable under section 1671(b), if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach. The amount set as liquidated damages "must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained." [ Citation omitted]. Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 977.
This brings us to this month's Court of Appeal decision in Greentree Financial Group, Inc. v. Execute Sports, Inc. (May 6, 2008, Ordered published May 28, 2008) ___ Cal.App.4th___ (Fourth Dist. No. G039326). Greentree provided financial advisory services to Execute, which allegedly failed to pay the $45,000 bill. The parties settled, and memorialized the settlement in a stipulated judgment. The stipulation provided that Execute would pay a total of $20,000 in two installments, but that if it missed either payment, the judgment could then be entered for the entire $45,000, plus interest, attorneys' fees and costs.
Execute defaulted on the first payment (that's why there's a case, right?) and Greentree proceeded to get a judgment entered for $61,232.50. Better luck next time, said the Court of Appeal. First of all, while Greentree argued that the amount set forth in the stipulation was reasonably related to its damages from the breach of the underlying contract, "...the breach we are analyzing is the breach of the stipulation, not the breach of the underlying contract."
Furthermore, "Greentree and [Execute] did not attempt to anticipate the damages that might flow from a breach of the stipulation. Rather, they simply selected the amount Greentree had claimed as damages in the underlying lawsuit, plus prejudgment interest, attorney fees and costs." So the Court ordered the trial court to correct the judgment by reducing it to $20,000, the amount in the stipulation that Execute had failed to pay.
Now, here's one from real life, and I've been on both sides of it: the parties enter into a settlement for installment payments, say, $500,000 in thirty days and $550,000 in ninety days, but with a discount of $50,000 if the second installment is paid in sixty days rather than ninety. In other words, if the settling defendant pays everything within sixty days, it costs him a million bucks, but if he takes longer to pay, it costs an extra $50K. Is that a liquidated damages provision, or simply a bargained-for discount? I think that it's a lawful discount, but I don't have any cases that say so. Anybody else have experience with this?
This morning's San Francisco Chronicle reports on a $10 million Proposition 65
judgment against T-A Creations for selling 100,000 lead-tainted children's lunch boxes to the California Department of Public Health Services (maybe if you're going to sell toxic lunch-boxes, the Department of Public Health isn't such a good choice as a customer).
Hmm, thought I, that's a mighty big judgment even in these modern times, I wonder what the trial was like and what the decision says. Well, it turns out there wasn't a trial, and there wasn't a decision -- this was a default judgment, the kind the plaintiff gets when the defendant doesn't get around to filing an answer to the complaint. Here's the judgment.
California's Unfair Trade Practices Act, Business & Professions Code sections 17000 and following, makes it unlawful to engage in the "production, manufacture, distribution or sale" (section 17040) of an article or product with the intent to destroy competition. Section 17043 makes it unlawful for a person in business to sell a product at less than cost or to give away an article or product, for the purpose of injuring competitors or destroying competition. Section 17044 makes loss leaders (defined in section 17030) illegal.
This brings us to The San Francisco Bay Guardian and the SF Express. Almost every major city has one or more of these progressive, free, tabloid weeklies. The most venerable one in San Francisco is the Bay Guardian, founded in 1966 with the stated plan to "Print the news and raise hell." In its early years, the BG and its founder, Bruce Brugman engaged in a lengthy, and ultimately unsuccessful, anti-trust action against San Francisco's two more traditional dailies, the Chronicle and the Examiner.
Enter the SF Weekly, an upstart, hip tabloid owned by Village Voice Media. According to the Bay Guardian, the Weekly tried to muscle its way into the market, and muscle BG out, with predatory, loss-leader advertising policies. In March, a San Francisco jury agreed, awarding BG $6.3 million in damages.
Now, the trial judge has trebled the damages under section 17082 (or at least trebled most of them -- I haven't quite figured out how the math worked) and issued an injunction preventing the Weekly from doing this any more (required by section 17078). Story here in The Chronicle.
It's 86 degrees at 3:30 p.m. in San Francisco. Martha Reeves and the Vandellas time.
That is, the jury ran away from the plaintiff as fast as they could. Dish Network sues News Corp.'s NDS Unit for over a billion bucks, contending an NDS employee hacked into its network, stole code, posted the code on the internets so everybody could watch satellite tv for free. Jury finds for plaintiff. Awards $1,500 dollars.
Hat tip to California Punitive Damages.
