Latest News - Hawxhurst LLP

1/3/2024 California’s Expansive Right to Repair Act

California’s SB 244 is set to become effective July 1, 2024. It requires every “manufacturer” of an electronic or appliance product sold in California to make available to California consumers and repair facilities the means to diagnose, maintain and repair such products. A “manufacturer” is any business that manufactures, assembles or produces consumer goods. “Manufacturers” must provide consumers and repair facilities access to repair materials, including replacement parts, software and sufficient service documentation. The requirement extends for three years from the date of sale for products with a wholesale price between $50 and $99.99, and seven years for products selling for $100 or more.

California’s Song-Beverly Consumer Warranty Act already provides a similar requirement where the manufacturer makes an express warranty, but the Right to Repair Act is more expansive and applies regardless of any warranty being made. SB 244 will apply retroactively to products manufactured for the first time, and first sold or used in California, on or after July 1, 2021.

If you have any questions regarding our Consumer Products & Services practice you can contact Kyle Foltyn-Smith or Jerry Hawxhurst to discuss.

12/12/2023 Firm Obtains Federal Court Stay of Trade Secrets Claim

On December 12, 2023, in a matter of first impression, the Firm obtained a federal court order staying discovery on a trade secrets misappropriation claim. According to state courts’ interpretation of Florida’s Uniform Trade Secret Act (FUTSA), a trade secret plaintiff must identify with “reasonable particularity” the trade secrets allegedly misappropriated before it can pursue discovery concerning the trade secrets at issue. The Firm argued that the disclosure requirement is self-executing and that it applies to FUTSA claims asserted in federal court. Plaintiffs argued that the disclosure rule does not apply in federal court and that if it does, the disclosure requirement is not self-executing—that instead the defendant must first serve formal discovery requesting identification of the trade secrets at issue.

Despite the district court’s initial skepticism, following two rounds of briefing and oral argument, the district court sided with the Firm and issued a protective order staying trade secret discovery until the plaintiffs identified with particularity each purported trade secret claimed to have been misappropriated.

Neither the Eleventh Circuit nor Florida’s state courts had previously decided whether the disclosure requirement applies to a FUTSA claim alleged in federal court. If you have any questions regarding our intellectual property or litigation practices you can contact Kyle Foltyn-Smith or Jerry Hawxhurst to discuss.

12/1/2023 New California Employment Laws Worth Knowing

Below is an update to our October 2023 newsletter’s coverage of the California Legislature’s 2023 session as it concerns state employment law.

The Governor signed SB699, which amends Business and Professions Code section 16600.5, to make employee non-compete agreements unenforceable under California law regardless of when or where the agreement was signed. This law is intended to bolster existing law and void even the narrowest non-competes with limited exception.

The Governor also signed AB1228, which amends Division 2 of the Labor Code, part 4.5.5 (commencing with Section 1474), to set a minimum wage of $20 per hour for fast-food workers beginning April 1, 2024. The Fast Food Council within the Department of Industrial Relations now has authority to increase this wage annually. Back in 2022, the Governor signed the FAST Act which also purported to create a council to set minimum wages and employment standards for the industry. However, fast-food companies gathered enough signatures to suspend the FAST Act and put it to a ballot referendum. AB1228 is the result of a compromise agreement reached between fast-food companies and employee unions.

The Governor signed SB497 (amending several Labor Code sections) which mandates the Labor Commissioner’s office and California courts presume that certain disciplinary actions against employees are illegal retaliation where in the preceding 90 days the employee made a wage claim or complaint about unequal payment.

The Governor signed SB848 (adding section 12945.6 to the Government Code). It requires that employers provide up to five days of unpaid leave for “reproductive loss,” such as miscarriage, unsuccessful assisted reproduction, failed adoption or surrogacy.

The Governor vetoed AB524 and SB403, which would have added “family caregivers” and “caste” as protected classes of employees under FEHA. If you have any questions about the Firm’s employment practice, you can contact Patrick Nichols or Jerry Hawxhurst to discuss.

8/25/23 The Firm Obtains Complete Dismissal of Two Bankruptcy Actions Related to Judgement Collection Action

August 25, 2023, the Firm obtained dismissal with prejudice of two bankruptcy actions that debtor companies filed in an attempt to obstruct collection of a huge money judgment against them. Late last year, the Firm prevailed in an arbitration against two companies that alleged our client misappropriated their trade secrets and confidential information in connection with an international business opportunity. After their claims for tens of millions of dollars were dismissed, the arbitrators granted our motion for attorneys’ fees and costs. Shortly after the award issued, the companies filed a bankruptcy petition, which the Firm contested.

Following accelerated discovery, including deposition of the debtors, the Firm sought dismissal of the bankruptcies on various grounds, including fraudulent conveyance of millions of dollars in intellectual property rights. At deposition, the Firm obtained crucial admissions that just prior to filing for bankruptcy, the companies voluntarily relinquished certain exclusive IP rights to a shareholder who in turn licensed them to a third party for millions of dollars in present and future expected royalties. A federal district court action seeking to execute on the award is proceeding. If you have any questions regarding our litigation and arbitration practices you can contact Jerry Hawxhurst or Kyle Foltyn-Smith to discuss.

7/21/23 Ninth Circuit Revives Antitrust Claims Based on Conduct at Trade Association Meetings

On July 21, 2023, a Ninth Circuit panel reversed the dismissal of an alleged conspiracy against several inductor producers for price fixing violations. In dismissing the case, the district court had required allegations that “tended to exclude the possibility that defendants acted independently.” The panel explained that this standard applies to summary judgment rather than at the dismissal stage and held that the correct standard merely requires that plaintiff “plausibly allege an agreement that is unreasonable ‘per se’ or under the rule of reason.” The panel then reviewed the allegations and determined they met this lower plausibility standard. In weighing the plus factors, the panel was particularly persuaded by allegations that defendants exchanged firm-specific and forward-looking information at trade association events. The panel also focused on allegations that identified specific instances where defendants cautioned fellow association members not to reduce prices and acknowledged that their conduct could be anticompetitive.

The opinion is Flextronics Int’l USA, Inc. v. Panasonic Holdings Corp., and it illustrates the hazards companies can face when participating in trade associations, especially where competitively sensitive business information or firm-specific data is being shared or discussed. If you are interested in learning more about our firm’s antitrust counseling and litigation practice you can contact Jerry Hawxhurst or Kyle Foltyn-Smith to discuss.

10/4/23 California Gets Several New Employment Laws

The California Legislature’s 2023 session has ended and the Governor is considering or has signed several new bills that impact employers in the state.

The Governor already signed SB699, which will make employee non-compete agreements unenforceable under California law regardless of when or where the agreement was signed. This is intended to bolster existing law and void even the narrowest non-competes with limited exception.

The Governor also signed AB1228, which sets a minimum wage of $20 per hour for fast-food workers beginning April 1, 2024. The Fast Food Council within the Department of Industrial Relations will have authority to increase this wage annually.

If signed, SB497 will mandate that the Labor Commissioner’s office and courts presume that certain disciplinary actions against employees are illegal retaliation where in the preceding 90 days the employee made a wage claim or complaint about unequal payment.

AB524 and SB403 would add “family caregivers” and “caste” as protected classes of employees under FEHA.

SB848 would require that employers provide up to 5 days of unpaid leave for “reproductive loss,” such as miscarriage, unsuccessful assisted reproduction, failed adoption or surrogacy.

If you have any questions about the Firm’s employment practice, you can contact Jerry Hawxhurst or Patrick Nichols to discuss.

3/14/23 The Firm Wins Summary Judgment on All Claims in Texas Real Estate Defense

On March 14, 2023, the Firm obtained a complete summary judgment victory against the plaintiff in a contentious real estate dispute. The plaintiff sought to gain title to our client’s property in the Houston area by claiming that the parties entered into an oral agreement and formed a partnership over a decade ago with the intent of purchasing the property as an investment. The plaintiff asserted several claims including breach of contract and fraud. After the close of discovery, the Firm brought a traditional and no evidence summary judgment motion on the grounds that the plaintiff’s claims were not supported by the evidence and were barred by the statute of frauds and applicable statute of limitations. The court granted the Firm’s motion in full and is entering final judgment against the plaintiff. If you have any questions regarding our Texas practice you can contact Jerry Hawxhurst or Kyle Foltyn-Smith to discuss.

2/28/23 The Firm Obtains Complete Victory for Client in Multi-Million Dollar Arbitration

On February 28, 2023, the Firm obtained another victory in a long-running contract dispute for our client against an analytics company in the beverage industry. After our client secured them a multi-year contract worth millions of dollars with the largest supplier in the industry, the analytics company refused to honor their agreement to pay our client its share of the incoming revenue. The analytics company went so far as cancelling the multi-year contract while secretly entering a nearly identical one with the same supplier in an attempt to avoid paying our client.

After the Firm successfully compelled the dispute to arbitration and litigated it through a final hearing, the arbitrator issued a reasoned decision and award in favor of our client on every significant issue in the contract dispute. The analytics company then sought to have the award reduced, but the Firm opposed and the arbitrator denied their request. If you have any questions regarding our arbitration practice you can contact Jerry Hawxhurst or Kyle Foltyn-Smith to discuss.

2/15/2023 Ninth Circuit Changes Course, Blocks California’s Ban on Mandatory Employment Arbitration

As an update to our continuing coverage of California’s AB 51, on February 15, 2023, the Ninth Circuit affirmed a district court’s grant of a preliminary injunction on the bill which was enacted to prohibit employers from imposing arbitration agreements as a condition of employment. In Chamber of Commerce v. Bonta, a Ninth Circuit panel previously ruled in favor of the State and found that the Federal Arbitration Act (FAA) did not preempt AB 51 to the extent it applies to regulating employers’ conduct before an arbitration agreement is signed. However, the panel withdrew its opinion late last year and issued a new decision explicitly finding that the FAA preempts AB 51 because the bill discriminates against the formation of arbitration agreements by prohibiting or discouraging their formation. Specifically, “AB 51’s penalty-based scheme to inhibit arbitration agreements before formation violated the ‘equal-treatment principle’ inherent in the FAA and it the type of device or formula evincing hostility towards arbitration the FAA was enacted to overcome.”

This new Bonta decision should be welcome news for employers and for now brings the Ninth Circuit into alignment with sister circuits across the nation that have similarly found the FAA preempts similar state rules. The State will likely seek rehearing en banc or review by the U.S. Supreme Court. If you have any questions regarding our arbitration practice you can contact Jerry Hawxhurst or Kyle Foltyn-Smith to discuss.

1/30/2023 Like Most Fast Food, the FAST Act is Frozen

The law that would have established a “Fast Food Council” and potentially caused a minimum wage increase to $22 an hour for certain restaurants in California was enjoined by a Superior Court judge in Sacramento. If implemented, the Fast Food Accountability and Standards Recovery Act (“FAST”) would have applied to “restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services,” and enforced uniform standards for minimum wages, working hours, and working conditions. However, opponents of the legislation gathered enough signatures to force the FAST Act to be put to the voters for approval in the November 2024 election. For now, the implementation of the FAST Act stayed. We will continue to monitor the FAST Act and related challenges and keep you posted. If you have any questions regarding our employment practice you can call Jerry Hawxhurst or Patrick Nichols to discuss.

1/1/2023 PROFESSOR HAWXHURST AT THE UNIVERSITY OF TEXAS SCHOOL OF LAW

The Firm is pleased to share that starting in 2023, Jerry Hawxhurst will be returning to his alma mater as an adjunct professor, where he will be teaching “Advanced Litigation: Problems and Strategies.”

1/1/2023 NEW LAWS FOR CALIFORNIA IN 2023

The California legislature had another busy year passing new laws and updating other laws that affect in-state businesses’ relationships with their employees and customers. Below are some the highlights.

Right to Bereavement Leave (AB 1949)

Beginning in 2023, employers with five or more employees will be required to provide five days of unpaid bereavement leave to employees within three months of the date of death of a family member. For employers with existing bereavement leave policies, the bill requires that leave be taken pursuant to such policy. However, if the policy provides less than five days of leave, a total of five days will need to be offered. Additionally, the new law prohibits discrimination or retaliation against employees who exercise the new rights.

New Category of Family Member for Leaves of Absence (AB 1041)

As of January 1, 2023, California employees will be entitled to family leave under the California Family Rights Act and paid sick leave law to care for a “designated person” who is related by blood to the employee or who the employee has the equivalent of a family relationship with. Under the new law, the employee may identify the “designated person” at the time the employee requests the leave, but an employer may limit an employee to one designated person per 12-month period.

Leave for Emergency Conditions (SB 1044)

In addition to bereavement leave and leave to care for a “designated person,” employees will also have the right to refuse to come to or return to work in the event the employee has a reasonable belief that the workplace is unsafe due to an “emergency condition.” An emergency condition covers disasters caused by nature or crime and orders to evacuate work, home or the school of a worker’s child but specifically excludes a health pandemic.

Minimum Wage

Beginning on January 1, 2023, the minimum wage will rise to $15.50 per hour for all California employers regardless of size. But keep in mind, the statewide hike is still lower than many local minimum wages in cities like Berkeley, Los Angeles, San Francisco, Santa Monica and West Hollywood.

Fast Food Accountability and Standards Recovery Act (AB 257)

The Fast Food Accountability and Standards Recovery Act (“FAST Act”) would establish a “Fast Food Sector Council” to set industry-wide standards for “restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services,” including uniform standards for minimum wages, working hours, and working conditions. The FAST Act, which would cover approximately 750,000 workers at 15,000 restaurants in the state, could raise the minimum wage for employees of affected businesses to $22 an hour. The FAST Act is set to take effect January 1, 2023; however, we note that an industry trade organization recently filed a lawsuit seeking to enjoin enforcement of the FAST Act, pending a voter referendum to be placed on the California November 2023 election ballot. If successful, the suit would delay implementation until at least 2024. We are monitoring the FAST Act and related challenges and will keep you posted.

Privacy Rights

The California Privacy Rights Act (“CPRA”) eliminates carve outs for employee data under the California Consumer Privacy Act. The CPRA also creates a sanctions regime, including potential fines of $2,500 per violation and $7,500 per intentional violation. While the law does not take effect until January 1, 2023, employee information going back to January 1, 2022 will be subject to the new rules.

Wage Transparency in Recruitment (SB 1162)

Also starting January 1, 2023, businesses that employ 15 or more people will have to include salary ranges in all job postings and provide such ranges to existing employees upon request. The law also creates a rebuttable presumption in favor of a complaining employee if an employer fails to keep records related to the job posting and salary requirements. Fines for violating the law will range from $100 to $10,000 per violation.

Off-Duty Cannabis Use (AB 2188)

Starting on January 1, 2024, this new law makes it unlawful to discriminate against employees because of their use of cannabis off the job and away from the workplace. The bill does not, however, allow employees to possess, be impaired by, use or distribute cannabis on the job.

Expanded Investigatory Powers for Violations of Unfair Competition Laws (AB 2766)

Beginning in the new year, city and county attorneys, in addition to district attorneys, will be granted power to investigate instances of unlawful, unfair, or fraudulent business acts or practices, and deceptive advertising.

Please contact Jerry Hawxhurst, Patrick Nichols, or Kyle Foltyn-Smith if you would like to learn more about these new laws or our Firm’s employment practice.

12/21/2022 $24.7 BILLION DEFENSE ANTITRUST VICTORY

The Firm recently secured a complete victory in Federal District Court for the Southern District of California in hard-fought, consolidated antitrust cases against the leading national plaintiffs’ class action firms. Proposed classes of direct and indirect gasoline purchasers sued the Firm’s client—a national leader in refining petroleum products—alleging that it conspired with other refiners to fix gasoline and diesel fuel prices. Plaintiffs sought $24.7 billion in overcharge damages, which would automatically be trebled under the Clayton and Cartwright Acts.

Upon considering hundreds of pages of briefing, testimony and documentary evidence, and argument by counsel, the Honorable Jinsook Ohta issued a reasoned 103-page order granting summary judgment in defendants’ favor. The district court also excluded significant parts of plaintiffs’ experts’ opinion testimony.

The order was so thoroughly correct that plaintiffs decided to not pursue an appeal and walked away from the cases. The cases are Persian Gulf v. BP West Coast Products LLC, et al. (Case No. 3:15-cv-01749) and Bartlett, et al. v. BP West Coast Products LLC, et al. (Case No. 3:18-cv-01374, consolidated with Case No. 3:18-cv-01377). To review the district court’s summary judgment order, click here. Please contact Jerry Hawxhurst or Kyle Foltyn-Smith if you would like to learn more about these cases or the Firm’s antitrust and energy practices.

8/25/2022 The Firm is pleased to announce that Patrick Nichols and Kyle Foltyn-Smith have been promoted to partner.

Patrick’s practice focuses on complex litigation involving a variety of industries, including technology, energy and construction. Patrick recently secured a complete summary judgment victory in the Middle District of Florida and prevailed in the California Court of Appeal, which held that claims against the Firm’s client were preempted by the Airline Deregulation Act. Patrick also advises clients on a variety of legal issues, including employment, wage and hour and California’s rapidly changing privacy laws. Pat is a graduate of the Pepperdine Caruso School of Law. He was selected as a Southern California Super Lawyers Rising Star® in 2022; he is admitted to practice in California and Colorado state, appellate, and federal courts, as well as the Ninth Circuit Court of Appeals.

Kyle’s litigation practice focuses on class actions, antitrust and business disputes. He has had numerous successes at trial and on appeal. Recently, he prevailed in an arbitration where the petitioners sought over $20 million based on their breach of contract, fraud, copyright infringement and trade secret misappropriation claims. Kyle has been selected as a Southern California Super Lawyers Rising Star® every year since 2020; he is admitted to practice in California and Texas. Kyle earned his J.D. from the University of Southern California Gould School of Law.

Patrick’s email address is pat@hawxhurstllp.com and his direct dial is (310) 893-5157. Kyle’s email address is kyle@hawxhurstllp.com and his direct dial is (310) 893-5152.

4/26/2022 Victory in the Central District of Florida: Hawxhurst LLP Wins Summary Judgment, Defeating Bid to Force Client into Arbitration.

The Firm obtained a summary judgment victory for our Liechtenstein client, Intamin Amusement Rides Int. Corp., Est.—the global leader in designing and manufacturing high-performance thrill rides—in a hard-fought battle against a national law firm and its clients (US Thrill Rides, LLC and Polercoaster, LLC), which sought to force our client into an arbitration that our client never agreed to. In stark terms, the other side is seeking tens of millions of dollars from Intamin Amusement Rides, while trying to deprive it of its right to a court of law and the protections that come with it. They failed.

The case is pending in the U.S. District Court for the Central District of Florida. The arbitration issue had to be resolved on summary judgment (or trial) because the district court earlier found that the Eleventh Circuit does not authorize injunctions preventing arbitration because, according to the district court’s interpretation of precedent, erroneously forcing a party to arbitrate does not constitute “irreparable injury.” Consequently, last year the district court set the case for trial this July. Thereafter, the parties conducted discovery in Texas, New York, Florida and Switzerland. We moved last fall for summary judgment, while continuing to prepare for the July trial. On April 26, 2022, the district court granted our motion, finding that Intamin Amusement Rides is not bound by any agreement to arbitrate. In a 20-page order, the district court sided with the Firm on every single issue. The order can be read here.

4/19/2022 HAWXHURST LLP FAVORABLY SETTLES REAL ESTATE FRAUD CASE ON THE EVE OF TRIAL

The Firm’s client brought suit after a real estate investor reneged on an oral promise to sell undeveloped land in a resort community near Austin, Texas. The parties entered their agreement shortly before the real estate market’s recent runaway price increases, and once that started the investor refused to transfer the property unless our client paid at least double the agreed-to purchase price. The Firm filed suit and recorded a lis pendens, which effectively locked the investor into the property and ensured it could not be sold to a third party while the case was pending. The Firm deposed the investor and relied on his admissions to defeat summary judgment against our claim for fraud in a real estate transaction. Armed with the threat of punitive damages and with a jury trial approaching, we mediated the matter and settled it for less than our fees would have been at trial. The settlement secures for our client full ownership of the property, which is now worth several times the original purchase price. Once again, the Firm’s focus on a strategy that best serves our client’s goals paid off.

3/11/2022 On March 11, 2022, the Firm obtained a complete victory in the California Court of Appeal for our client, a national airline. The Firm’s client was sued in state court for various contract and non-contract claims relating to the provision of in-flight entertainment. In the trial court, the Firm’s client first won summary adjudication on the non-contract claims because they were preempted by the Airline Deregulation Act (ADA). It then obtained a take-nothing jury verdict against the plaintiff on the remaining claims. The plaintiff appealed everything and the Firm successfully defeated the appeal. The California Court of Appeal for the Second Appellate District affirmed the trial court’s summary judgment order and the jury’s take-nothing verdict. You can read the Court’s opinion here.

4/28/2021 Federal Court Denies Wholesaler Plaintiffs’ Motions for New Trial and Permanent Injunction, Upholding Antitrust Jury Verdict In Favor of the Firm’s Client

To read both orders click here

3/23/2021 HAWXHURST HARRIS FLIPS THE SCRIPT: CREATIVE LAWYERING WINS CLASS DECERTIFCATION AND NUISANCE SETTLEMENT

The Firm was retained after a proposed California statewide damages class was certified and the case was headed for trial. The consumer plaintiffs alleged that our client, one of the world’s premier petroleum refiners, had authorized signage by branded gasoline stations that was misleading to consumers, and therefore liable for tens of millions in damages and attorneys’ fees. After taking over the case, we immediately changed the litigation strategy to focus on developing a record to support motions for decertification and summary judgment. We convinced the court to decertify the class, and through summary judgment defeated plaintiff’s attempt to certify an injunctive relief class. We also got plaintiff’s claims for statutory and punitive damages dismissed on summary judgment. These victories paved the way for a favorable class-wide settlement that involved no monetary damages. The class settlement was approved and entered by the district court (and with no objectors and a single opt-out). This victory extends the Firm’s impressive track record for class action defense.

1/25/21 APPROPRIATELY AGGRESSIVE LAWYERING DRIVES ANOTHER CASE TO FAVORABLE SETTLEMENT

The Firm obtained a favorable settlement in a series of related cases for our client, a national auto collision repair center, in connection with pandemic-related policy changes. The plaintiff employees filed suit over COVID-19 policies that temporarily impacted their compensation. They alleged that the announced policy changes violated a multitude of state employment laws and threatened to bring multiple actions unless they were paid hundreds of thousands of dollars in purported damages, plus more in attorneys’ fees. The Firm responded with a plenary motion to dismiss that showed why each of the purported claims failed. While that motion was pending, plaintiffs agreed to settle their claims for less than nuisance value, allowing our client to focus 100 percent on helping its customers.

1/6/2021 A QUICK AND CLEAN EXIT: HAWXHURST HARRIS OBTAINS COMPLETE DISMISSAL IN PRODUCTS LIABILITY CASE

The Firm obtained a complete dismissal of claims for indemnity for millions in alleged property damage against our client, a chemical compound manufacturer, supposedly caused by faulty test equipment. Following our thorough investigation of the facts and law, we presented to plaintiffs the reasons why their complaint was unfounded and should be dismissed. They agreed. Once again, the Firm’s focus on a strategy of a quick resolution paid off for our client.

8/12/2020 HAWXHURST HARRIS SECURES COMPLETE DISMISSAL OF SUIT PURSUANT TO TEXAS ANTI-SLAPP STATUTE

The Firm has a 100 percent success rate in defending claims under various state anti-SLAPP laws designed to protect litigants’ access to courts and their First Amendment rights. The Firm recently obtained a complete reversal in the Court of Appeals for the Thirteenth District of Texas, successfully defending the First Amendment rights of the firm’s client, a commercial equipment leasing and finance company. After the trial court denied our motion to dismiss the plaintiff’s unfair collection claims pursuant to the Texas Citizens Participation Act (TCPA), the firm obtained immediate appellate review. The Court of Appeals sided with our position on every point in reversing the trial court, while also granting our request to direct the trial court to award our client the attorneys’ fees and costs incurred in filing the TCPA motion and the appeal. The Court of Appeals specifically found that certain activities to enforce a judgment debt are protected First Amendment activity encompassed within the Texas constitution’s right to petition. This is the third time in four years that the firm has made new law under the Texas Citizens Participation Act. The Court of Appeal’s opinion is available here.

6/26/2020 ANOTHER NINTH CIRCUIT VICTORY

The firm won another appeal before the Ninth Circuit, this time in a case involving the interpretation of an asset purchase agreement and its allocation of asbestos-related liabilities. Following a bench trial, the trial court interpreted the agreement to mean that our client was liable for all asbestos-related claims that arose after the client sold its business. On appeal, the firm successfully argued that this interpretation was incorrect as a matter of law, leading the Ninth Circuit to reverse the trial court and assign liability for asbestos-related wrongful death and loss of consortium claims to the other side. On June 26, the Ninth Circuit denied our adversary’s petition for rehearing. The Ninth Circuit’s initial opinion reversing the trial court is available here.

1/28/2020 HAWXHURST HARRIS TURNS THE TABLE ON ADVERSARY: FIRM OBTAINS SUMMARY DISMISSAL OF MULTIMILLION DOLLAR CLAIMS AGAINST OUR CLIENT AND WILL PROCEED TO TRIAL OF CLIENT’S COUNTERCLAIMS ONLY

On January 28, 2020, the Firm obtained a complete defense victory in a case it took over from a major “Big Law” firm because its billing rates were making a proper defense economically unfeasible for our client.

Plaintiff alleged that the Firm’s client (an international petroleum service company) had engaged in fraud, negligent misrepresentation, and breach of contract in connection with a potential acquisition of plaintiff’s pipeline service business. Plaintiff sought more than $12 million in damages. After taking over the case, the Firm successfully moved to dismiss part of the complaint and simultaneously filed a counter suit on behalf of our client, which the Court consolidated with the pending action. The Firm conducted focused discovery of one witness and an expert (we obtained informal discovery from other witnesses for use at trial).

The deposition testimony formed the basis of our summary judgment motion, which the Honorable David Hittner of the Southern District of Texas granted against each of plaintiff’s causes of action. All that remains in the case are the client’s counterclaims that are scheduled to be tried later this year. At bottom, the Firm turned our client from a naked defendant without counterclaims into the plaintiff—a great position to be in.

10/21/2019 HAWXHURST HARRIS OBTAINS UNANIMOUS DEFENSE VERDICT IN FEDERAL ANTITRUST TRIAL

After a nearly three-week antitrust trial in the Central District of California, the Firm secured a unanimous jury verdict for our client, the country’s leading energy shot manufacturer. The plaintiff wholesalers alleged that our client engaged in price discrimination by selling products and offering promotional services to Costco and other club stores at favorable terms in violation of the Robinson-Patman Act, California Unfair Practices Act and California Unfair Competition Law. Plaintiffs sought tens of millions of dollars in treble damages plus millions in attorneys’ fees, expert fees and costs. (The Firm previously defeated a proposed class action asserting the same claims for different plaintiffs filed in the Northern District of California.)

1/9/2019 The U.S. Supreme Court Rules That Agreements For The Arbitrator To Determine Arbitrability Are Enforceable

The U.S. Supreme Court on January 8, 2019, held unanimously that a court may not override a contract provision that delegates the question of the arbitrability of a particular dispute to an arbitrator, even if it thinks that the arguments for arbitrating the dispute at hand are wholly groundless. The Court’s decision in Henry Schein, Inc. v. Archer & White Sales, Inc. reaffirms that, under the Federal Arbitration Act, arbitration is a matter of contract and courts must enforce such agreements according to their terms. Parties may agree to have an arbitrator decide not only the merits of a particular dispute, but also “gateway” questions of “arbitrability.” To view the Court’s opinion, click here.

1/2/2019 CALIFORNIA WELCOMES 2019 WITH MORE THAN 1,000 NEW LAWS

This past year California Governor Brown signed more than 1,000 bills into law—a staggering number by any measure. Many of these new laws go into effect in 2019 and will impact nearly every entity doing business in California. These laws cover a broad range of issues, including employee compensation (minimum wage and overtime), sexual harassment training, civil settlements and releases, passive liability, the composition of corporate boards, drinking straws, health insurance, and even what parents can feed their children.

To no one’s surprise, some of these laws have been and will be challenged in the courts. Many are intended to and will change the way business is done and how people in and outside California conduct their lives and businesses. In no particular order, below is a summary of the most significant changes anyone doing business in California should be aware of:

Corporate Boards.
Any publicly held corporation with executive offices located in California (according to 10-K forms) must have at least one female on its board of directors by the end of 2019. By the end of 2021, the minimum number increases to two females if the corporation has five directors and three females if the corporation has six or more directors. The bill defines “female” as “an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth.” A corporation may increase the number of directors on its board to comply with this section.

Employee Training Requirements.
Employers with at least 50 employees are already required to provide two hours of sexual harassment training to supervisors and managers every two years. This requirement is being expanded to include all employers with at least five employees and will apply to supervisory and non-supervisory employees. Employers have until the end of 2019 to provide supervisors with two hours of sexual harassment training and non-supervisory employees with one hour of sexual harassment training. These requirements will have to be met every two years thereafter. Furthermore, temporary or seasonal employees must receive the required sexual harassment training within 30 days of being hired or within their first 100 hours worked.

Ban on Confidential Settlements.
Settlement agreements involving sexual harassment or discrimination that prevent the disclosure of certain factual information relating to civil or administrative claims are unenforceable. While settlement agreements can still protect the identity of the claimant (at his or her request) and the amount of the settlement agreement, the identity of the purported wrongdoer cannot be shielded.

Ban on Liability Releases.
Employers cannot require employees to enter into a release of a claim or right under FEHA (e.g., sexual harassment claims) as a condition of their continued employment or in exchange for a raise or bonus.

Liability for Nonemployee’s Activity.
Employers can already be held liable for the acts of nonemployees who sexually assault employees if the employers knew or should have known of the harassment and failed to take immediate corrective action. Now, employers can also be held accountable in the same way for other types of harassment by nonemployees that are barred by FEHA (e.g., race, religion, color, national origin, etc.).

Ban on Waivers of Right to Testify.
A provision in a contract or settlement agreement is unenforceable if it requires an employee to waive his or her right to testify in a proceeding concerning criminal conduct or sexual harassment on the part of the employer or its employees/agents, where the employee has been required or requested to attend the proceeding by court order, subpoena or written request from an administrative agency or the legislature.

Increasing Employer’s Summary Judgment Burden in Workplace Cases.
The state took express positions this year regarding several court decisions that will make it more difficult for employers to win summary judgment in workplace harassment cases:

Affirming the court’s observation in Nazir v. United Airlines, Inc., 178 Cal. App. 4th 243 (2009), that work environment or harassment cases are “rarely appropriate for disposition on summary judgment.”
Rejecting Brooks v. City of San Mateo, 229 F.3d 917 (9th Cir. 2000), and expressly providing that “a single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment if the harassing conduct has unreasonably interfered with the [employee]’s work performance or created an intimidating, hostile, or offensive working environment.”
Affirming the court’s decision in Reid v. Google, Inc., 50 Cal. 4th 512 (2010), rejecting the “stray remarks doctrine” and expressly providing that “the existence of a hostile work environment depends upon the totality of the circumstances and a discriminatory remark, even if not made directly in the context of an employment decision or uttered by a non-decision maker, may be relevant, circumstantial evidence of discrimination.”
Affirming the decision in Harris v. Forklift Systems, 510 U.S. 17 (1993), that an employee “need not prove that his or her tangible productivity has declined as a result of the harassment. It suffices to prove that a reasonable person subjected to the discriminatory conduct would find, as the plaintiff did, that the harassment so altered working conditions as to make it more difficult to do the job.”
Disapproving of Kelley v. Conco Companies, 196 Cal. App. 4th 191 (2011), to the extent that it conflicts with the legislature’s position that “the legal standard for sexual harassment should not vary by type of workplace. It is irrelevant that a particular occupation may have been characterized by a greater frequency of sexually related commentary or conduct in the past. In determining whether or not a hostile environment existed, courts should only consider the nature of the workplace when engaging in or witnessing prurient conduct and commentary is integral to the performance of the job duties.”

Minimum Wage.
On January 1, 2019, the statewide minimum wage will increase to $12 for businesses with 26 or more employees and $11 for those with fewer employees. For businesses in the city of Los Angeles with 26 or more employees, the minimum wage is increasing to $14.25 on July 1, 2019. It is important for California employers to also comply with city and county local rules for minimum wage and other labor laws.

Health Insurance.
Employers are now prohibited from joining together to form association health plans that would be exempt from many of the ACA’s remaining coverage requirements.

Breastfeeding and Pumping in the Workplace.
Employers are already required to make reasonable accommodations for mothers to pump breast milk at work. With few exceptions, employers are now required to make available a private room or location (that is not a bathroom) for lactation purposes.

Employee Records.
It was already the law that, upon request, employers must permit current and former employees to review their payroll records. The amended law provides that they also have a right to receive a copy of the records.

Cal/OSHA Reporting Requirements.
Cal/OSHA was previously unable to issue a citation more than six months after the “occurrence” of a record keeping violation. The term is expanded so that an “occurrence” will now continue indefinitely until (1) it is corrected, (2) Cal/OSHA discovers the violation, or (3) the duty to comply with the violated requirement ceases to exist.

Protected Employer Communications.
Employers are already protected from a lawsuit for defamation when they inform a prospective employer whether they would rehire an employee. This protection is now extended to include additional types of employer communications regarding sexual harassment: (1) employees who report sexual harassment, based on credible evidence and without malice, (2) communications between an employer and interested persons (e.g., victims or witnesses) regarding alleged sexual harassment that are made without malice, and (3) employers may state in a job reference whether an employee would not be eligible for rehire due to sexual harassment issues.

Personal Liability for Sexual Harassment.
Personal liability for sexual harassment in the course of a business, service or professional relationship is expanded from doctors, lawyers and bankers to now also expressly include elected officials, lobbyists, investors, directors and producers.

Conviction History Update.
Last year, a new law went into effect prohibiting employers from requesting information or basing a hiring decision on a person’s criminal record (with limited exceptions). The law is being revised to clarify that employers obligated by law to consider criminal convictions may inquire into an applicant’s criminal history under certain circumstances. Employers not required by law to consider an applicant’s criminal convictions must still refrain from requesting criminal history information until a conditional offer of employment has been made.

State Net Neutrality.
A bill regarding “net neutrality” was set to take effect January 1, 2019 but its implementation was blocked pending the outcome of a federal lawsuit.

Salary History Update.
A law went into effect last year barring employers from requesting an applicant’s pay history and requiring employers to provide the pay scale for a position to applicants upon request. The law is being revised to clarify that an employer may ask about an applicant’s pay expectations and that external applicants are entitled see the position’s pay scale only after passing an initial interview. Internal applicants applying for a position are not entitled to see the position’s pay scale and an employer may consider the internal applicant’s current salary where justified by non-discriminatory factors (e.g., seniority or merit).

Port Drayage Motor Carrier Blacklist.
Businesses with 26 or more employees who hire trucking companies will now be liable for wage and hour claims when they hire a port drayage motor carrier (“PDMC”) on the Division of Labor Standards Enforcement’s (DLSE’s) “Blacklist.” The “Blacklist” will be published on the DLSE’s website and will include bad actor PDMC’s (e.g., those with unsatisfied final judgment for taxes, wage and hour violations, independent contractor misclassification, etc.).

Required Sex Traffic Training.
Hotel and motel employers must provide at least 20 minutes of human trafficking awareness training to employees who are likely to interact with victims of human trafficking (e.g., front desk workers, housekeepers, bellhops, drivers, etc.). The training must be completed by the end of 2019 and every two years thereafter.

Plastic Straw Ban at Sit-Down Restaurants.
Full-service restaurants are prohibited from providing plastic straws unless the customer specifically requests one. The law defines a “full-service restaurant” as an establishment where food may be consumed on the premises and employees (1) escort customers to their table; (2) take food and beverage orders once seated; (3) deliver the food and beverage orders directly to the table; (4) deliver additional requested items to the table; and (5) deliver the check at the table. Accordingly, this new law does not affect fast food or takeout restaurants, and it does not affect non-plastic straws (e.g., straws made from paper, pasta, sugarcane, wood, bamboo, etc.).

Ban on Sodas with Kid’s Meals.
Restaurants may not include by default a soda with any “kid’s meal.” Restaurants may make the default kid’s meal beverage water, sparkling water, flavored water, unflavored milk or a nondairy milk alternative. A soda may be provided upon request.

Note: The foregoing are summaries of just some of the significant changes to California laws. Be sure to check the full text of the law and local ordinances for other changes that may apply. Human resource departments should ensure that compliant procedures, job application forms and workplace postings are in place for the new year.
1/1/2019 A New Name in 2019: Hawxhurst Harris LLP

The Firm is pleased to announce that effective January 1, 2019, its name is changing to Hawxhurst Harris LLP. As many of you know, Daryl Crone retired from the practice of law in December 2017.

Since then, the Firm has continued to grow and thrive as a go-to alternative to top-tier large firms—living up to its Law360 designation as one of ten litigation boutiques in the U.S. “giving BigLaw a run for its money.”

2018 was another good year, with the Firm winning major cases for its clients in state and federal courts. Most recently, the Firm was successful in getting a $40 million damages class action decertified after being hired to replace a firm that had lost the earlier certification battle. Hawxhurst Harris next defeated plaintiffs’ attempt to certify an injunctive relief class, and got their claims for statutory and punitive damages dismissed on summary judgment.

To reflect the Firm’s continued growth, David Harris has been added to the Firm name. David is responsible for securing major victories for many of the Firm’s clients. David earned his undergraduate degree from the University of California, Berkeley and his J.D. from Yale Law School. David and his partner Kiyomi live in Los Angeles with their two children. David is a resident partner in the Los Angeles office.

PLEASE NOTE: Our new web address is https://www.hawxhurstllp.com and our new email domain is [first name]@hawxhurstllp.com.
11/4/2018 NON-SOLICITATION PROVISION STRUCK DOWN AS UNLAWFUL RESTRAINT OF TRADE

In the recent case of AMN Healthcare, Inc. v. AYA Healthcare Services, Inc, Case No. D071924, Plaintiff, a medical staffing firm, required employees to sign a contract stating that they would “not directly or indirectly solicit or induce, or cause others to solicit or induce” other employees to leave. Plaintiff sued several former employees and a competitor for soliciting medical staff it had placed on temporary assignments because it considered placed medical staff to qualify as employees under the non-solicitation provision. Defendants cross-claimed that the provision was an improper restraint under Bus. & Prof. § 16600. The court agreed with Defendants, finding the provision barred them from practicing their chosen profession—recruiting and placing medical staff on a temporary basis. Although the court recognized that this situation was “factually distinguishable” from the classic scenario where a former executive “raids” a former employer to get key employees, it questioned the continuing viability of a “reasonableness standard” in analyzing non-solicitation clauses.

The court justified the injunction on the grounds that Plaintiff had repeatedly sought to enforce the provision against other former employees and competitors. The court also awarded Defendants attorneys’ fees under CCP § 1021.5, finding that they were successful parties and that the action conferred a significant benefit on a large class of persons involving an important issue affecting the public interest (e.g., competitors who wanted to hire former employees but were concerned about the non-solicitation provision).

Following AMN Healthcare, businesses (especially staffing firms) will want to review their employment agreements for potentially vulnerable non-solicitation provisions. Click here to see the opinion. Please contact Jerry Hawxhurst or Kyle Foltyn-Smith if you would like to discuss this opinion.
8/23/2018 On August 23, 2018, the Firm successfully obtained summary adjudication of all damages claims against our client. Plaintiff, a former company executive, alleged wrongful termination, labor code violations and unfair competition. Plaintiff had demanded millions of dollars in a settlement conference the week before the hearing on our motion. After hearing argument, the Honorable Layne H. Melzer of the Orange County Superior Court granted summary adjudication in favor of the Firm’s client on all of the causes of action that could support a money judgment or a prevailing party fee award. Plaintiff is left with a declaratory judgment claim and a claim for rescission of his confidentiality and non-solicitation agreement, which expired over a year ago. The Firm expects to dispose of these remaining claims with a supplemental filing that the Court invited at the summary judgment hearing.

6/29/2018 California Hastily Enacts Broad Electronic Privacy Protection Laws

On June 28, 2018, California’s governor Jerry Brown approved the California Consumer Privacy Act of 2018, which will impose entirely new obligations on businesses that no other state requires. California law already requires businesses to notify any California resident whose unencrypted personal information was acquired by an unauthorized disclosure. This new privacy law—scheduled to become effective in 2020—was hastily enacted by the legislature and signed by Governor Brown in order to moot a ballot initiative scheduled for the November elections.

This law goes much further than existing California law, affecting major tech companies like Google and Facebook, as well as brick-and-mortar retailers with customer loyalty programs, and most businesses that collect any information about their customers. Due to the quickness California’s politicians rushed the bill through, the text contains numerous drafting errors and ambiguities that will hopefully be fixed before the law goes into effect.

Beginning January 1, 2020, the new privacy law will grant California residents a right to request a business to disclose what “personal information” in the last 12 months the business has collected about the consumer, where it gets that information from, the business’s commercial purpose for collecting such information, and to whom the information has been sold or shared. The law details an extensive list of what constitutes “personal information,” including purchasing history, email addresses, internet search history and geolocation data. Businesses will generally need to provide the information within 45 days of the consumer’s request.

California residents will also have the right to request that businesses delete their “personal information” and the right to opt out of the sale of their “personal information” to third parties. Persons who opt out cannot be charged more for services, provided different levels of service, or otherwise be discriminated against for exercising this right, unless “that difference is reasonably related to the value provided to the consumer by the consumer’s data.” Exactly what value is provided to a consumer by her own data is unclear. This ambiguity may be one of the drafting errors contained in the bill—that is, the legislators may have intended that a consumer who opts out can be charged more if the difference is reasonably related to the value provided to the business by the consumer’s data. We shall see.

In addition to enforcement actions brought by the California Attorney General, the new privacy law creates a private right of action for any consumer (on an individual or class-wide basis) whose “personal information” is subject to unauthorized access, theft, or disclosure as a result of the business’s “violation of the duty to implement and maintain reasonable security procedures and practices.” The statutory damages for the private right of action are between $100 and $750 per consumer per incident or actual damages, whichever is greater.

There have long been proposed class action lawsuits for data breaches. For example, in 2017, Anthem, Inc. agreed to settle a lawsuit for $115 million after a data breach affecting 80 million people. In the data breach context, the consumer’s actual monetary damages have often been minimal because such damages are usually out-of-pocket expenses relating to reimbursement for resolving resulting identity theft.

The new privacy law’s addition of statutory damages will undoubtedly be another weapon that consumer attorneys will use in data breach cases. The text of Assembly Bill 375 is available here. Please contact Kyle Foltyn-Smith or Jerry Hawxhurst if you would like to discuss AB 375.

6/11/2018 The U.S. Supreme Court on June 11, 2018 resolved a circuit split over whether American Pipe tolling applied to plaintiffs who filed successive class actions. In a detailed opinion by Justice Ginsburg, the majority in China Agritech, Inc. v. Resh, Case No. 17-432, 584 U.S. ___ (2018), held that the tolling provisions established in American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974), do not extend to individual class members wanting to file a new proposed class action on behalf of others after the statutory limitations deadline has passed. The Supreme Court rejected arguments that its holding would force plaintiffs to file protective class actions within the applicable limitations period in order to preserve their rights, rather than rely on similar, pending class actions of which they would be a member if certified. The Court noted that its announced rule had been previously adopted by the Second and Fifth Circuits (which the Court noted were no strangers to class actions) and that there had not been a noticeable increase in protective class actions filed in those jurisdictions. Justice Sotomayor wrote a concurrence agreeing with the result, but arguing that the announced rule should be limited to federal securities class actions because of the unique federal rules that apply to them. Click here to see the opinion.

5/1/2018 California Supreme Court Overhauls Decades of Precedent, Establishes New Employee-
Friendly Classification Test

On April 30, 2018, the California Supreme Court created a new standard to determine whether workers are considered independent contractors or employees, shedding light on the status of workers in the growing “gig economy.” In Dynamex Operations West, Inc. v. Super. Ct., Case No. S222732, a delivery driver for a nation-wide courier service sought certification of a class of drivers claiming that the service had misclassified them as indepenent contractors. The driver urged the court to adopt a more rigid, worker-friendly test for classifying workers over the former, looser standard, which focused on whether the employer could control the way in which the worker performed the work.

The California Supreme Court agreed with the driver and held that there is a presumption that individuals are employees for the purposes of wage orders adopted by the California Industrial Welfare Commission. The court further held that it is the employer’s burden to prove that the worker is an independent contractor and that wage orders imposing obligations such as minimum wage, maximum hours, and other work place conditions do not apply.

The court followed a New Jersey Supreme Court decision in adopting a three-factor test for employers to meet this new burden known as the “ABC test.” Under that test, an employer must show all three factors to establish that the worker is an independent contractor: (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Dynamex will force California employers who rely on independent contractors to evaluate their process for worker classification. Following the decision, employers will want to review their relationships with such workers and apply the “ABC test” to determine whether those relationships need to be reclassified. To view the court’s opinion in Dynamex, click here.

4/11/2018 Ninth Circuit Finds Employers Cannot Use Prior Salary History to Determine Wages

On April 9, 2018, the Ninth Circuit issued a decision in Rizo v. Yovino, — F.3d — (9th Cir. 2018), which overturned longstanding case law that permitted employers to use a job applicant’s prior salary to determine his or her wages. In the case, a math consultant for the Fresno County Office of Education alleged that the County had violated the Equal Pay Act (“EPA”) by relying on her prior salary to justify paying her a lower wage than her male counterparts.

Pointing to the court’s prior case law, the County argued that its policy of using an employee’s salary history to set his or her wages was lawful under the EPA because it was based on the catchall exception to the statute: “a factor other than sex.” A three-judge panel of the Ninth Circuit, relying on precedent in Kouba v. Allstate Insurance Co., 691 F.2d 873 (9th Cir. 1982), sided with the County, finding that salary history alone could constitute a “factor other than sex.” But the Ninth Circuit, in an en banc review, disagreed. It held that an employee’s prior salary does not constitute a “factor other than sex” because women’s prior salaries are a product of a historically discriminatory job market that tended to pay them less. The court concluded that a legitimate “factor other than sex” under the EPA must be job-related and that prior salary cannot justify paying one gender less if equal work is performed.

The Ninth Circuit’s decision in Rizo is reminiscent of a recent change to the California Labor Code, which now bars employers from seeking any salary history information, including compensation and benefits, from job applicants. To view the court’s Rizo opinion, click here.

3/26/2018 Crone Hawxhurst Secures Important Texas Citizens Participation Act Victory

The Firm recently obtained a significant victory in the Texas Court of Appeals, Third District, on the scope of the Texas Citizens Participation Act (TCPA), also known as an Anti-SLAPP statute. The case, Hawxhurst v. Austin’s Boat Tours, et al., No. 03-17-00288-CV, concerned a breach of contract and tort case brought against Austin’s Boat Tours, the largest party boat tour operator in Central Texas. The issue before the court was the scope and application of the TCPA.

After the Firm announced ready for trial, Austin’s Boat Tours filed an amended answer and counterclaim seeking sanctions under Chapter 9 of the Texas Civil Practices and Remedies Code, alleging that the claims against it were “frivolous.” The counterclaim sought sanctions and attorneys’ fees against the Firm and its client.

In response, the Firm filed a TCPA motion, seeking to have the counterclaim dismissed because it was “based on” and “in response to” our client’s “exercise of the right to petition” and therefore barred by the TCPA. The trial court denied the TCPA motion, finding that the TCPA did not apply to the counterclaim because the counterclaim, supposedly, was essentially a mislabeled motion for sanctions, which the trial court held was not subject to TCPA motions to dismiss. Orders denying TCPA motions are appealable, and that’s what the Firm did.

In a 21-page decision, the Texas Court of Appeals, Third District, reversed the trial court, siding with the Firm on every major appellate point. The court of appeals first held that even if the counterclaim was a mislabeled motion for sanctions, the TCPA applied. The court of appeals also held that Austin’s Boat Tours could not moot the TCPA motion or appeal by amending its counterclaim, and further found that the Firm had demonstrated the claims against Austin’s Boat Tours were not frivolous and Austin’s Boat Tours had no evidence showing otherwise.

The court of appeals remanded the case with instructions for the trial court to determine the amount of attorneys’ fees and costs to be awarded to the Firm’s client, emphasizing that a fee and cost award are mandatory.

The decision has a detailed explanation of the scope of the TCPA and how its burden-shifting rules are to be applied when determining TCPA motions. The opinion has already been the subject of several CLE seminars in Texas. To read the opinion, please click here.

2/1/2018 Plaintiffs (Still) Cannot Reach Appeal of Their Motion for Class Certification by Dismissing Claims On February 1, 2018, the Ninth Circuit held—consistent with the Supreme Court’s recent ruling in Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017)—that federal law does not permit an appeal of claims where the plaintiffs stipulate to dismissal with prejudice in order to obtain “final judgment.” Following the district court’s denial of class certification, the plaintiffs in Bobbitt v. Milberg LLP, No. 13-15812, stipulated to dismiss their claims with prejudice solely so they could appeal the denial of class certification. In light of the Supreme Court’s decision in Microsoft, the Ninth Circuit ruled that it lacked jurisdiction over the case because it was not a final judgment under 28 U.S.C. § 1291. The court distinguished its very recent decision in Brown v. Cinemark USA, Inc., 876 F.3d 1199 (9th Cir. 2017)—where it allowed plaintiffs to pursue an appeal of the denial of class certification following a stipulated dismissal—because the plaintiffs there had litigated their claims to summary judgment and entered into a settlement that expressly reserved the right to appeal. In other words, the plaintiffs’ case in Brown did not implicate the same concerns of gamesmanship to reach an appeal as they did in Microsoft. The Ninth Circuit’s Bobbitt decision offers guidance on the procedure for parties to appeal a denial of class certification where some claims are still at issue. To view the court’s opinion in Bobbitt, click here. To view the court’s opinion in Brown, click here.

1/5/2018 Crone Hawxhurst Secures Ninth Circuit’s Affirmation of Class Action Defeat

The Ninth Circuit on December 22, 2017 affirmed the denial of class certification in favor of the Firm’s client in a years-long proposed class action. Plaintiffs sued the Firm’s client for allegedly misrepresenting the benefits of its product. Crone Hawxhurst attorneys put together a plan to discredit Plaintiffs’ theory by showing that Plaintiffs could not prove the alleged deception was important to all class members. Ultimately, the Firm convinced the district court that Plaintiffs’ class action claims were meritless. In a set of well-reasoned opinions, the court denied Plaintiffs’ motion for class certification and their subsequent motion for reconsideration. Plaintiffs did everything in their power to obtain class certification, including filing an interlocutory appeal with the Ninth Circuit. Without hearing any oral argument, the Ninth Circuit denied Plaintiffs’ appeal. The decision is the latest in a series of victories for the Firm’s client in the case.

7/10/2017 Crone Hawxhurst Scores Another Ninth Circuit Victory

The Ninth Circuit, in a case of first impression, agreed with the Firm’s argument that when determining a motion for forum non conveniens, the district court should compare the alternative foreign forum with plaintiff’s specific chosen forum in the United States, and not with the entire United States as a whole. Crone Hawxhurst obtained dismissal of the case in the Central District of California based on forum non conveniens, in favor of a court in Mexico. Plaintiff, a Florida company, appealed. The Ninth Circuit rejected the appeal and affirmed the district court’s dismissal, siding with Crone Hawxhurst on every issue. Click here to read the opinion

5/18/16 U.S. SUPREME COURT AND OVERTIME UPDATE: The U.S. Department of Labor Increases Minimum Salary Requirement for Employees Exempt from Overtime

The U.S. Department of Labor has issued the final version of a much anticipated overtime exemption rule that focuses primarily on updating the salary and compensation levels needed for workers to be “exempt” from the overtime rules. An “exempt” employee must generally meet the minimum salary requirement, which the employer pays the employee regardless of the quality or quantity of work, and the employee’s primary duties must meet certain criteria. Effective December 1, 2016, the minimum salary requirement to qualify for the executive, administrative or professional exemptions from overtime rises from $23,660 to $47,476 per year, and the total annual compensation requirement for the highly compensated employee exemption (employees whose primary duties include performing office or non-manual work and who customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee) rises from $100,000 to $134,004 per year. The final overtime rule also establishes a mechanism for automatically updating the salary and compensation levels every three years, starting on January 1, 2020. Additionally, the final overtime rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new minimum salary requirement. According to the DOL, this rule will affect over 4 million workers within the first year of implementation.

While employers may raise employee salaries in order to comply with this new overtime rule, many exempt workers will be reclassified to hourly employees and their hours will be cut to avoid overtime. Employers will need to monitor overtime closely to reduce the risk of being targeted in what will inevitably be a slew of new wage and hour lawsuits. Among other things, many more employees will have to track their hourly time worked, which, again, will expose employers to additional civil liability.

If you would like to discuss the new overtime regulations or your employees’ classifications, please contact info@cronehawxhurst.com.

5/18/16 The U.S. Supreme Court Rules Federal Securities Laws Don’t Limit Certain State Suits

The U.S. Supreme Court on May 16, 2016, held unanimously that federal securities laws don’t preempt certain claims from being brought in state court. The Court’s decision in Merrill Lynch Pierce Fenner & Smith, Inc. v. Manning, No. 14-1132, 578 U. S. ___ (2016), allows a shareholder suit against a Merrill Lynch unit and other Wall Street firms to proceed in New Jersey state court based on state-law claims seeking to establish liability based, in part, on duties established by the Securities Exchange Act. In a unanimous opinion, the justices held that the Securities Exchange Act does not block shareholders in Escala Group Inc. from bringing their claims in a New Jersey court where the claims sought relief under state law and none necessarily raised a federal issue. Specifically, the Supreme Court held that the jurisdictional test established by section 27 of the Securities Exchange Act is the same as the one used to decide if a case “arises under” a federal law pursuant to 28 U.S.C. section 1331. The justices explained that section 27 confers federal jurisdiction when an action is commenced in order to give effect to an Exchange Act requirement. The language of section 27 stops short of embracing any complaint that happens to mention a duty established by the Exchange Act. Merrill Lynch did not dispute that Manning’s claims were “brought under state law” and none “necessarily raised” a federal issue under 28 U.S.C. section 1331. Accordingly, based on the above rule, federal court was not the exclusive forum under section 27 of the Act. To view the Court’s opinion, click here

5/18/16 Credit Reporting Companies Dodge Bullet (For Now)

The U.S. Supreme Court on May 16, 2016, in a highly anticipated ruling, reversed the Ninth Circuit’s decision finding that the named class plaintiff had standing to pursue a so-called “no injury” class action. The case is Spokeo Inc. v. Robins, No. 13-1339, 578 U. S. ___ (2016). The decision is a narrow—if temporary—win for Spokeo and other companies facing “no-injury” class actions.

Spokeo concerned a proposed class action filed by the named plaintiff, Robins, who alleged that Spokeo, an online search engine, had willfully violated the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) by publishing false information about him on its website; viz., that he was in his 50s, wealthy and had a post-graduate degree. Robins, who was unemployed at the time, alleged that Spokeo’s false information prevented him from obtaining employment. The district court dismissed Robins’ lawsuit for lack of Article III standing; the Ninth Circuit disagreed, and reversed. The Supreme Court granted certiorari.

Writing for the majority, Justice Alito emphasized that the Court had “made it clear time and time again that an injury in fact must be both concrete and particularized,” before going on to find that the Ninth Circuit had failed to analyze whether Robins had suffered “concrete” harm. Justice Alito explained that “concrete” injury must be a real harm that actually exists, and that “Robins cannot satisfy the demands of Article III by alleging a bare procedural violation.” After giving an example of a non-injury (an erroneous zip code), the Court returned the matter to the Ninth Circuit for further analysis. The majority expressly avoided deciding whether Robins had alleged “concrete injury”; in her dissent, Justice Ginsburg stated that Robins’ allegation that he had lost job opportunities sufficed to show a concrete injury.

The Spokeo decision leaves open the issue of what injury is required to show Article III standing in FCRA actions in particular, and in “no injury” class actions generally. To view the Court’s opinion, click here.

10/14/15 Firm Obtains Complete Victory in Long-Running Malicious Prosecution Case

Three weeks before trial, three attorney-defendants surrendered and agreed to judgment against them for malicious prosecution. The Firm’s client in 2012 sued four so-called consumer protection lawyers for malicious prosecution arising from a proposed class action the attorneys filed against the Firm’s client the prior year. In the malicious prosecution action, the Firm established (as it had in the prior action) that the named plaintiff’s testimony disavowed almost every material allegation of the class action complaint and contradicted the discovery responses that her prior lawyers wrote for her. The defendants in the malicious prosecution action did everything in their power to delay trial, including an application to the California Supreme Court. Furthermore, the lawyers’ former client and another of their associates asserted their Fifth Amendment rights against self-incrimination rather than respond to substantive questions about their conduct in the prior action. The case, styled Innovation Ventures LLC v. Rubinstein, et al., has been the subject of several news articles.

09/14/15 Crone Hawxhurst LLP Obtains Another Major Ninth Circuit Victory

The Firm recently secured its third significant Ninth Circuit victory in as many years. The Firm’s client, Intamin, Ltd., is the market leader in the design and construction of high-performance “mega-coasters” and other cutting edge amusement park rides. Plaintiff-appellant Magnetar Technologies had sought reversal of the district court’s order granting Intamin’s motion for summary judgment on all of Magnetar’s claims (the Firm also represented Intamin in the trial court). Magnetar sought nearly twenty million dollars in damages based on allegations that Intamin was an illegal monopolist that had unlawfully obtained and enforced a patent for a magnetic braking system, and had engaged in malicious prosecution in pursuing a prior suit against Magnetar.

In 2010, Intamin hired the Firm to replace its prior counsel after Intamin suffered major losses in the district court, including an order determining that Intamin had engaged in improper conduct when obtaining assignment of the magnetic brake patent that it attempted to enforce against Magnetar. The Firm’s attorneys executed a strategy aimed at developing an accurate, complete factual record of the amusement ride industry, and Magnetar’s and Intamin’s businesses. The strategy worked. The evidence the Firm presented to the district court demonstrated that Magnetar’s alleged antitrust market was ill-defined, that Intamin was not a monopolist, and that Magnetar’s supposed lost sales were fictional or otherwise caused by its own poor business acumen. The Firm’s summary judgment presentation also demonstrated that the prior action had not been maliciously prosecuted as a matter of law.

The Ninth Circuit’s unanimous opinion finally puts to rest this longstanding but meritless case. The case is Magnetar Technologies Corp. v. Intamin, Ltd., Case Nos. 13-56119, 13-56333 (9th Cir. Sept. 14, 2015). To view the opinion, click here.

07/21/15 The Department of Labor Issues “Clarification” and Concludes that Most Workers are Employees

On July 15, 2015, the Department of Labor (“DOL”) issued new guidance “clarifying” the standards used to determine whether a worker is an employee or independent contractor. The guidance follows several recent high-profile employee misclassification lawsuits and court decisions. The DOL issued the guidance out of concern that workers wrongly classified as contractors “may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation” provided to employees. The DOL asserts that “some employees may be intentionally misclassified as a means to cut costs and avoid compliance with labor laws.” Administrator’s Interpretation No. 2015-1 clarifies that companies and courts must evaluate all the economic realities factors when determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”). Classification “must not be evaluated based on the control factor alone.” Thus, a worker who is “economically dependent” on the employer should be treated as an employee. By contrast, a worker must “really” be in business for himself or herself (i.e., operate a business on his or her own) to be an independent contractor. In light of the “clarified” standards, the DOL concludes that given the “very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the Act’s intended expansive coverage for workers,” “most workers are employees under the FLSA’s broad definitions.” Employers should reassess their classification decisions as to all contract employees. To review the entire text of Interpretation No. 2015-1, click here.

07/21/15 Ninth Circuit Holds that All Class Members Must See Alleged Misrepresentation to Satisfy Predominance Factor in a Proposed False Advertising Class Action

In a short, unpublished opinion, the Ninth Circuit’s recently held in Cabral v. Supple LLC, No. 13-55943 (9th Cir. June 23, 2015) (opinion here ) that, when seeking class certification in cases “based upon alleged misrepresentations in advertising and the like, it is critical that the misrepresentation in question be made to all of the class members.” Id. At 3. The district court granted certification of claims based on the allegation that the defendant had misrepresented that its products were “clinically proven in treating joint pain.” Id. at 2-3. The Ninth Circuit reversed because the plaintiffs failed to show that a common issue predominated; namely, that all class members had not seen the alleged misrepresentation. The Ninth Circuit noted that “[w]hile some deviations from precise wording in the language of advertisements or representations might not be fatal to class certification,” advertisements that are “a far cry” from the alleged misrepresentations at issue cannot be the basis for certifying a class. Id. at 4. While unpublished, this opinion is another example of the increased scrutiny applied to certification motions.

07/21/15 The Department of Labor Issues “Clarification” and Concludes that Most Workers are Employees

07/08/15 Firm Giving Big Law A Run for Its Money

Law360 lists Crone Hawxhurst LLP as one of ten “top boutiques” nationwide that “continue to encroach on big firms’ territory by blending the same high level of skill and expertise with a lower rate structure and greater client accessibility.” Law360 concludes that Crone Hawxhurst (and the nine other firms) are “capable of competing with – and beating – the best big firms at the highest level” and “have established brands on par with the biggest firms.” The full article can be found here.