In This Issue

President’s Message

Bottom Line

Member NewsCERCLA Article

Acosta v. Glenfed Development Corp.

Ethics in Mediation

Employment Law

Insurance LawHot Cases

Discovery is a Pain

Preparing For Your First Trial

SDDL Annual Golf Benefit

Elder Abuse ArticleSDDL Officers

22

3

5

6

89

10

12

14

1516

18

19

The

Sa

n

Di

eg

o

De

fe

ns

e

La

wy

er

s

UpdateSummer 2005 - Volume 8, Issue 6

Summer 20052

An organiza-tion, to remaineffective andrelevant to itsmembers, mustbe dynamic andfluid, responsiveto both the needsand interests of its

members. In recent years, with the ideain mind that providing continuing legaleducation is a primary mission ofSDDL, we have developed and imple-mented the monthly “brown bag”seminar program. To enhance commu-nications and the sharing of practice-related information between members,we have established a confidential e-mail link through our website. But it isthe sense of the current Board ofDirectors that there is more to be doneto keep SDDL current and relevant toexisting and prospective members. It isin this spirit that we have turned to you,the membership of SDDL, for directinput.

This process began with the “OneMinute Survey” you received by e-maila few weeks ago. For those whomissed the opportunity to respond tothat survey (or for those of you whomay be “technologically challenged”)we have included the same survey inwritten form as an insert in this editionof the Update.

We are pleased to have received asignificant response to the initial e-mailsurvey. The comments received areboth constructive and thought provok-ing. One of the themes which emergesfrom the responses is that the seminars,including the monthly “brown bags” andquarterly seminars, are consideredvaluable and of benefit to the members,but they can be improved upon by

making them more practical/nuts-and-bolts in orientation, occasionally involv-ing presentations by plaintiff practitio-ners, and other similar ideas. Anothertheme involves enhancement of socialinteractions among members in new andvarying settings and possibly involvingclientele from time to time. Yet anothertheme related to suggested improve-ments to the annual Installation Dinnerto make it more entertaining and moreinvolving to its younger members.

If you did not respond to the e-mailsurvey, please take a moment tocomplete and return the enclosedwritten survey. Further, any issues youfeel are not addressed by the surveycan be e-mailed to us care of ourSDDL administrator, Sandee Rugg. Or,you can simply pick up the phone andcall me or any board member and tellus what you think or would like to see.Your opinions on these issues areextremely important to us. Our com-mitment, in return, is to carefully con-sider those opinions and ideas and,within our ability to do so, respond bymoving SDDL in the direction that you,its members, would like to see it move.

Plaintiff litigators uniformly speakwith pride when discussing the value oftheir membership in San Diego Con-sumer Attorneys. It is our vision thatyou feel the same about your member-ship in SDDL.

John Farmer

President’s Message

John Farmer

The Bottom Line

Case Title: Douglas J. Keppner v. KellyPittlekow

Case No: GIC 817168

Judge: Honorable Patricia Y. Cowatt

Plaintiff’s Counsel: William Berman,Berman & Seidel

Defendant’s Counsel: John T. Farmer,Farmer & Case

Type of Incident/Causes of Action: Autocollision at entrance to Hyatt Aventinein La Jolla

Settlement Demand: $25,000, CCP 998,increased to $99,999 during trial

Settlement Offer: $15,001, CCP 998Trial Type: Jury

Trial Length: 4 days

Verdict: $15,000 ($12,000 economic,$3000 non-economic

Case Title: Smith vs City of Irvine

Case No.: 03CC05991Judge: Honorable Geoffrey Glass

Counsel for Plaintiffs: Dar ren Aitken, Aitken,Aitken and Cohn

Counsel for Defendant TMI: ElizabethSkane, Law Offices of Elizabeth Skane,APC

Type of Incident: Plaintiff, an Orange Countyattorney, was riding his bicycle through aconstruction zone. The City of Irvinecontracted with KEC Construction for aroad widening project on Shady CanyonRoad in the City of Irvine. DefendantTraffic Management Inc. (TMI) wasresponsible for traffic engineering andwarning signs during construction. Plaintifffell when he impacted a lip created betweenthe base pave and the original roadwayduring repaving of a portion of theroadway. Plaintiff claimed defendant failedto provide adequate warning. Plaintiff suedfor negligent failure to warn. Plaintiffsuffered a non union fractured hip with hipreplacement. Plaintiff was bedridden 6months, and claimed medical specials,future medical specials, past and future lostearnings, and general damages. Plaintiff’sspouse, claimed loss of consortiumdamages.

Settlement Offer/Demand: Last settlementdemand was $250,000. Last settlementoffer: $127,500.

Trial Type: Jury

Trial Length: 12 daysVerdict: Defense: Jury Deliberations lasted 20

minutes.

Summer 2005 3

Member NewsBalestreri, Pendleton &

Potocki is pleased to announcethat Karen A. Holmes hasbecome a shareholder of the firm.Karen Holmes focuses her prac-tice in the areas of professionalliability and complex construction

law, with particular emphasis on design and engineer-ing of products and premises, home builders’ riskmanagement and general civil liability of businessowners. Prior to joining us in 2001, Ms. Holmes wasa partner in Jaroszek, Roth & Kennedy and manag-ing partner of Edwards, Sooy & Byron. An AVrated lawyer with more than 20 years’ experience,she serves as Secretary of the San Diego CountyBar Association Board of Directors.

Balestreri, Pendleton &Potocki is also pleased to an-nounce that Sean T. Cahill hasbecome a shareholder of the firm.Sean Cahill’s practice emphasizesa broad range of commercial civillitigation areas, including sports and

corporate trademark protection, real estate sales andconstruction, business, transportation and high-riskoperation claims. He will continue in the counsel ofour clients on issues of property rights and transac-tional opportunities. Mr. Cahill is an AV ratedattorney with more than 15 years’ litigation experi-ence having begun his career in 1990 with Shifflet,Sharp & Walters.

Fredrickson, Mazeika &Grant, LLP, is pleased to an-nounce that Elliot H. Heller hasbecome a partner of the firm. Mr.Heller’s primary area of practicecontinues to be construction andconstruction defect matters.

The Law Offices of KennethN. Greenfield have added as anassociates Ernest L. Bell andJulie L. Dupré. Ernest graduatedfrom the University of San DiegoSchool of Law in 1996. Immedi-ately after, Ernest became a high

school English teacher, a profession he greatlyenjoyed for several years. Since his return to the law,Ernest has developed broad experience in a civillitigation. Ernest will specialize in bad faith defense.Julie graduated from the University of California, LosAngeles with a B.A. in English in 1992 and attendedCalifornia Western School of Law. Since passing theBar in 1995, Julie’s practice has included personalinjury, family law and most recently, insurancedefense, with a focus on bad faith.

Grace Hollis Lowe Hanson & Schaeffer LLPchanged its name from Grace Brandon Hollis. Thename change reflects the elevation to named partnerfor three of the firm’s attorneys — Coleen Lowe,Kirk Hanson and James Schaeffer. Lowe joinedGrace Hollis in February 1995 and became a partnerin January 2001. She received her J.D. from theUniversity of San Diego School of Law and focusesher practice in Construction Liability and Business,Construction and Real Estate disputes. Hanson,another USD Law School graduate, joined the firm inOctober 1995 and became a partner in April 2002.He concentrates his practice on employment law,construction defect defense, personal injury claims,business litigation and appellate law. Schaefferdefends physicians and health care professionals. Healso represents businesses and individuals in contractdisputes over the growing and handling of agriculturalproducts. Schaeffer became a partner in July 2003and heads the firm’s Ventura County office.Continued on page 5

Summer 20054

Danielle H. MooreKoeller, Nebeker, Carlson & Haluck, LLP

On December13th, 2004, the U.S.Supreme Courtruled that a privateparty cannot sueanother for cleanupcosts from acontaminated siteunder CERCLA

without first being involved in a civilaction or settlement with a State or theEnvironmental Protection Agency.

In Cooper Industries, Inc. v. AviallServices, Inc. (2004) 125 S. Ct. 577,Aviall Services, an airplane parts manu-facturer, purchased aircraft enginemaintenance facilities located in Texas,from Cooper Industries. In the courseof Cooper’s operations, various hazard-ous substances contaminated thegroundwater. The pollution continuedduring Aviall’s early ownership of theproperty. Aviall soon after discoveredthe contamination and alerted the stateand the Texas Natural Resource Con-servation Commission. While neither theState or the Federal Governmentattempted to induce clean up, the TexasNatural Resource Conservation Com-mission threatened to pursue an enforce-ment action against Aviall if it did notclean up the site. Aviall thereafterconducted a decade-long, multimillion-dollar remediation effort under theState’s supervision, and subsequentlyfiled an action against Copper to recover$5 million in cleanup costs.

Aviall sought reimbursement under§113(f)(1) of CERCLA, which providesthat any person “may” seek contributionfrom any other person liable or poten-tially liable under CERCLA § 107(a)“during or following any civil action”under CERCLA §§ 106 or 107(a). §106authorizes the federal government tocompel responsible parties to clean upcontaminated areas, while §107(a)empowers the government to recover itsresponse costs from potentially respon-sible parties.

Aviall argued that the word “may” in §113(f)(1) should be read permissivelyand that “during or following a civilaction” is not the exclusive point atwhich a person may seek contributionunder the section. Cooper however,asserted that because Aviall had neverbeen the subject of a civil action tocompel remediation or to obtainremediation costs, its contribution claimwas statutorily precluded. The districtcourt agreed with Cooper and held thatcontribution under § 113(f)(1) wasunavailable because Aviall had not beensued under § 106 or § 107. The FifthCircuit ultimately reversed the districtcourt, reasoning in part that “may” in §113(f)(1)’s enabling clause did not mean“may only” and that a private party cansue for contribution without being partyto a civil action.

The United States Supreme Courtreversed.1 The Supreme Court heldthat Aviall could not maintain a contribu-tion action against Cooper. In an opinionwritten by Justice Thomas, the Courtheld to a strict construction ofCERCLA’s “clear meaning,” ruling thata party performing a cleanup may seekCERCLA §113(f)(1) contribution only ifit was a defendant in a CERCLA §§ 106or 107(a) “civil action,” or if it hadpreviously resolved its liability to federalor state regulators in “an administrativeor judicially approved settlement.”

The question as to whether a privateparty can recover under §107(a) how-ever, was left open. Noting the absenceof briefing and decisions by the courtsbelow, the Court declined to addresswhether Aviall could recover costs under§ 107(a)(4)(B) even though it was apotentially responsible party. The courtfurther declined to address whetherAviall had an implied right of contributionunder §107(a). §107(a) provides that apotentially responsible party “shall beliable for … any other necessary costsof response incurred by any personconsistent with the national contingencyplan.” In Key Tronic Corp. v. UnitedStates, 511 U.S. 809 (1994), the Su-

Recent Supreme Court Decision May DeterParties From Voluntarily Cleaning UpContaminated Sites

The Bottom Line

Case Title: George Cullins and Helen Cullinsv. Lee Wood, D.C.

Case No: GIN 033694

Judge: Honorable Jacqueline Stern

Plaintiff’s Counsel: Thomas Massey, Esq.Defendant’s Counsel: Robert W. Har rison of

Neil, Dymott, Frank, Harrison & McFall

Type of Incident/Causes of Action: Chiro-practic manipulation allegedly causingpelvic fracture.

Settlement Demand: NoneSettlement Offer: Waiver of Costs in

exchange for dismissal with prejudiceby Dr. Wood.

Trial Type: Jury

Trial Length: 1 day

Verdict: Defense

Case Title: Sayed Habibullah, individuallyand as personal representative of the estateof Nancy Habibullah v. NeighborhoodHealthcare

Case No: GIC 805552

Judge: Honorable Richard E. L. StraussPlaintiff ’s Counsel: Ter esa Trucchi, Esq.,

Suppa, Trucchi & Henein, LLP.

Defendant’s Counsel: Daniel S. Belsky, Esq.,Belsky & Associates

Type of Incident/Causes of Action: MedicalMalpractice: wrongful death

Settlement Demand/Offer: NeighborhoodHealthcare served plaintiff with a CCP §998offer for zero dollars and a waiver of costs.Plaintiff rejected this offer and servedNeighborhood Healthcare with a CCP §998offer for $399,999. Plaintiff’s of fer wasrejected by the defense. There were nosubsequent settlement discussions.

Trial Type: Jury

Trial Length: 7 days

Verdict: Defense

Summer 2005 5

Member News

EPA or the State. It appears that thedecision will make cost-recoverylitigation more expensive and morecomplicated. In light of the CooperIndustries decision it is thereforeadvisable to amend existing pleadings, orwrite new pleadings, to assert CERCLAclaims under Section 107, and notSection 113. Further, if a remediatingparty intends to recover contributioncosts from other parties, it is advisable toenter into an administrative settlementwith the State or the EPA beforeengaging in cleanup. Without a settle-ment or order by a State or the EPA, aprivate party now risks being unable torecover remediation costs at all.

preme Court previously stated that“§107 unquestionably provides a causeof action for private parties to seekrecovery of cleanup costs….” The courtin Cooper however, refused to rely onthe dictum in Key Tronic Corp. anddeclined to address the issue in any way.

Prior to the Cooper Industriesdecision, the legal community generallyunderstood §113(f)(1) to mean that aprivate party which, had voluntarilyincurred remediation costs, could bring aprivate action for contribution againstanother potential responsible party. Thedecision therefore radically alters thecurrent understanding of how CERCLAapplies to private cost recovery actions.Specifically, the opinion can significantlydeter potentially responsible parties fromvoluntarily cleaning up contaminatedsites.

Practically, in states that have theirown statutes allowing contributionactions after voluntary cleanup, partieslike Aviall can still obtain contribution.California has a such a “Superfund” law,§25363 of the California Health &Safety Code. However, in States that donot have comparable provisions, partieswill be deterred from voluntarily cleaningup a contaminated site. The EPA willbe forced to bring federal claims toachieve these cleanups resulting inadditional costs to the EPA.

Additionally, businesses, states andsome industry groups are dismayed bythe decision. Specifically, friend-of-the-court briefs supporting Aviall’s position inthe case were filed by twenty-threestates, the commonwealth of PuertoRico, the Lockheed Martin Corp., theAmerican Chemistry Council and someenvironmental groups. The groupsargued that the statutory construction ofCERCLA encouraged voluntary cleanupof contaminated sites. The Courthowever, in holding that the languagewas clear, did not address the purposesor legislative history of CERCLA.

Ultimately, the decision will greatlyimpact how environmental cost-recoveryactions are handled. Private parties willneed to be much more careful in consid-ering how to proceed with investigations,clean ups, and cost recovery proceed-ings, especially in cases not involving the

Continued from page 3

Farmer & Case is pleased to announce that John P. Pearson andSusan J. Skelley have joined the firm as associates in its San Diegooffice.

SDDL Members Thomas W. Byron and Lili Mostofi have joinedwith Michael M. Edwards to establish Byron Edwards Mostofi APClocated at 402 W. Broadway, Suite 1900. Associates of the firm areJoyce R. Dondanville, Robert J. (“R.J.”) McCarthy, III, Scott B.Hilberg, Craig A. Weeber and Krishnan W. Coughran.

Robert G. Bernstein has joined Shewry & VanDyke and will continue practicing in the areas ofconstruction defect and personal injury defenselitigation. Mr. Bernstein is a graduate of UCLA andthe USD School of Law. He is a former researchattorney with the San Diego Superior Court andformer editor of SDDL’s quarterly publication THEUPDATE.

Kristina M. Pfeifer joined Koeller, Nebeker,Carlson & Haluck, LLP’s San Diego office inMarch 2005. Kristina will focus on the defense ofdevelopers in construction defect matters. Herundergraduate degree is from San Diego StateUniversity (with Honors) and her J.D. is from theUniversity of San Diego School of Law. She wasadmitted in December 2004. Kristina is active withVolunteers in Parole.

(Footnotes)

1 Justice Ginsburg,joined by Justice Stevens

dissented. Justice Ginsburgarticulated that the Fifth Circuithad already determined thatpotentially responsible partiescould recover under § 107 theirproportionate share of costs in

actions for contributionagainst other parties.

Summer 20056

Acosta v. Glenfed Development Corp.:A New Development in Construction Defect LitigationBy: Robert M. Augst of Koeller Nebeker Carlson & Haluck LLP

Background:California Code of

Civil Procedure§337.15 was enactedin 1971 by the Legisla-ture to provide a “firmand final” outside ten-year limitation period

for construction suits involving claims forlatent defects. However, C.C.P.§337.15(f) contains an exception to the10-year limitation period for “actionsbased on willful misconduct or fraudulentconcealment.” A recently decided case,Acosta v. Glenfed Development Corp.(2005) 128 Cal.App.4th 1278, may havecreated new possibilities for plaintiffs tocircumvent this ten-year limitationperiod.

Prior to Acosta, there was little caseauthority discussing the C.C.P.§337.15(f) exception for willful miscon-duct or fraudulent concealment. Onecase, Felburg v. Don Wilson Builders(1983) 142 Cal.App.3d 383, addressedwhat constitutes willful misconduct forpurposes of applying C.C.P. §337.15;however, no previous case specificallyaddressed whether a developer orgeneral contractor can be held liableafter 10 years for the willful misconductof others involved in the project.

On April 29, 2005, the California Courtof Appeals for the Second AppellateDistrict decided Acosta v. GlenfedDevelopment Corp. The Court inAcosta held that developers/contractors“may not successfully assert the 10-yearlimitations period set out in CaliforniaCode of Civil Procedure §337.15 as adefense, if the trier of fact determinesthat: (1) there was willful misconductinvolved in the construction of theplaintiffs’ homes, (2) such willful miscon-duct resulted in the alleged latentconstruction defects and (3) such willfulmisconduct was committed by thedefendants or the facts and circum-stances are such that the willful miscon-

duct of others is appropriately charge-able to them.”

In Acosta, the homeowner Plaintiffsbrought a complaint alleging causes ofaction for strict liability, breach ofexpress and implied warranties, negli-gence, and negligence per se. Thedefendants had acted as both thedeveloper and the general contractor.Importantly, 47 of the 59 named plaintiffsin Acosta were brought into the suitmore than 10 years after the limitationperiod had commenced running as totheir homes. On that basis, the defen-dants moved for summary judgment, asto those 47 plaintiffs.

In opposition to the defendant’s motionfor summary judgment, the plaintiffsargued that pursuant to C.C.P.§337.15(f), the defendants were notentitled to assert the 10-year statute oflimitations defense. Plaintiffs introduceddeclarations from two experts, statingthat they believed that the defects werenot negligently caused. Rather, theexperts opined that the defects were theresult of willful misconduct by defen-dants in that the defects were “soserious and prevalent that they wereeither the result of a deliberate decisionto cut corners for cost saving or theresult of a near total, virtually recklessfailure by the developer to adequatelysupervise subcontractors.” The trialcourt granted the defendant’s motion forsummary judgment, and rejected plain-tiffs’ claim that the willful misconductexception set out in CCP §337.15(f)precluded defendants’ reliance on the10-year limitation period. The trial courtheld that plaintiffs had failed to provideevidence that the alleged acts of willfulmisconduct had been committed directlyby the defendants or under their supervi-sion.

In reviewing the trial court’s decision,the Court of Appeal in Acosta addressedseveral issues, including: I) who has the

The Bottom Line

Case Title: : Marc Paskin, Michael Paskinand Michelle Paskin v. Marc Kramer, M.D.

Case No: GIC 816506

Judge: Honorable William C. Pate

Plaintiff’s Counsel: Cynthia Chihak, Esq.Defendant’s Counsel: Robert W. Har rison of

Neil, Dymott, Frank, Harrison & McFall

Type of Incident/Causes of Action: Deathresulting from infection developedsubsequent to ablation procedure of the softpalate to reduce snoring. Plaintiffs allegedthat defendant Marc Kramer, M.D.negligently performed a coblationprocedure on Marsha Paskin for hersnoring. Specifically, it was asserted thatdefendant used the “wrong” coblation wandwhich was designed for turbinate proce-dures and perforated the soft palate into theretropharyngeal space so as to cause theinfection. It was also claimed the standardof care required the patient to receive aprophylactic antibiotic prior to theprocedure. Plaintiffs also alleged that MarcKramer, M.D. negligently failed todiagnose decedent Marsha Paskin andproperly treat a post procedure infection,which allegedly caused her death.

Settlement Demand: $240,000

Settlement Offer: $29,999.00Trial Type: Jury

Trial Length: 8 days

Verdict: Defense

Summer 2005 7

burden of production regarding the issueof willful misconduct, II) what consti-tutes willful misconduct for purposes ofapplying C.C.P. §337.15(f), and III) cana developer or general contractor beheld liable beyond the ten-year limita-tions period for the willful misconduct ofothers involved in the project.

Issue I: Who has the burden ofproduction respecting the issue ofwillful misconduct?

Generally, a defendant moving forsummary judgment based on an affirma-tive defense must present evidence thatsupports each element of its affirmativedefense. Here, defendants’ affirmativedefense was CCP §337.15’s 10-yearstatute of limitations for latent construc-tion defects, which defendants’ separatestatement of undisputed material factssought to address by setting forth thedates of the Notices of Completion, andthe dates those homeowners werenamed as plaintiffs. The Acosta courtheld that once defendants met thisburden of production on their statute oflimitations affirmative defense, theburden of production shifted to plaintiffsto raise a triable issue of material fact onthe matter of willful misconduct.

Issue II: What constitutes “willfulmisconduct” for purposes ofapplying CCP §337.15(f)?

In discussing the nature of “willfulmisconduct” the court noted that “will-fulness generally is marked by threecharacteristics: (1) actual or constructiveknowledge of the peril to be appre-hended; (2) actual or constructiveknowledge that injury is a probable, asopposed to possible, result of the danger;and (3) conscious failure to act to avoidthe peril. As the foregoing suggests,willful misconduct does not invariablyentail a subjective intent to injure. It issufficient that a reasonable person underthe same or similar circumstances wouldbe aware of the highly dangerouscharacter of his or her conduct.” TheCourt concluded “a contractor ordeveloper cannot avoid application ofsection 337.15, subdivision (f), by a claimof ignorance of the existence of aserious latent defect where the evidencepermits the reasonable inference that heknew or should have known otherwise.”

Issue III: Can a Developer orGeneral Contractor be held liablebeyond the ten-year limitationsperiod for the willful misconductof others involved in the project?

The Court of Appeals in Acosta heldthat “a defendant, acting as the devel-oper and general contractor, can be heldliable after 10 years for the willfulmisconduct of others involved in theproject.” The Court set forth numerous

reasons in support of its holding, includ-ing: 1) CCP §337.15(f) does not specifi-cally exclude a general contractor ordeveloper from the exception, 2) therules regarding vicarious liability ofprincipals are an overlay on this action,3) case and statutory law includesupervisory requirements for developersand contractors, 4) public policy consid-erations fully support such a conclusion,and 5) subdivision (f), by its terms,applies to an “action”, it is not limited tothe conduct of the specific defendantseeking to assert a limitations defense.

ConclusionIt will be important for all defense

attorneys practicing in constructionlitigation to become familiar with theAcosta decision. This decision opens upnew possibilities for Plaintiffs. Plaintiffsmay now be able to avoid the outsideten-year limitation period established inC.C.P. §337.15. The decision has thepotential to greatly increase the numberof claims brought against developers andgeneral contractors. The Acostadecision is currently on appeal at theCalifornia Supreme Court, SupremeCourt Case # S134171. Practitioners inconstruction litigation should continue tofollow the Supreme Court’s ruling inAcosta for further developments in thisarea of law.

3,100 square foot law office space. Seven (7) private outsideoffices and five (5) workstations, conference room, multiple storagespaces and large file room, kitchen, two bathrooms, single elevatoraccess directly to suite, two reserved parking spots in building, withadditional spaces available across the street at Five Star Lot #7 onFourth and Fir, CAT V throughout, Toshiba phone system withvoicemail available for sale or lease. Lease rate $1.90 per square foot.

Call: Michelle Clark (619)840-0637

FOR LEASE1901 Fourth Avenue, Suite 300

Summer 20058

In addition, to the above consider-ations, there is an overarching consider-ation: lawyers go through the mediationprocess on a regular basis, their clientsare often not as sophisticated. Thus,while the above-situations may not beanything of concern to the lawyer(s), theinformation may be critical to the client.The mediator needs to be sensitive to theclients’ perspective when evaluatingwhether to disclose and how much todisclose.

At the mediation itself, it is importantthat the parties are informed about themediation process (which should bevoluntary to be as effective as possible),and the mediator’s role (impartiality).Mediator’s are not arbiters or judges orany finder of fact. A mediator is afacilitator, but the settlements areachieved by the parties. Last, it isimportant the mediator ensures theparties understand the terms of settle-ment. Confidentiality in the process andthe results are important to all partici-pants.

ingful mediation? First, financial ar-rangements, including the fees paid andthe settlements reached, do not neces-sarily need to be disclosed. The media-tor has already disclosed the twoprevious mediations with the Plaintiff’sattorney, the fees paid to the mediatorare of little relevance. Similarly, settle-ment amounts are not relevant. There isa further issue related to the settlementamounts, as well. Settlements are oftenconfidential. For the mediator to dis-close such information would violate hisethical obligations to those other partiesand the mediation process.

Oral, although not necessarily written,disclosure may be proper where themediator and the Plaintiff’s counselhave, for example, played golf orotherwise socialized together, or wherethe mediator has been a guest of thePlaintiff’s counsel at the Plaintiff’s golftournament. This helps to avoid defenseparty and counsel from, at the very least,the appearance of being “hometowned”.While this could occur where all partyand counsel are located in the sameplace, but the defense counsel hasabsolutely no relationship whatsoeverwith the mediator, this often occurswhere counsel and client are from out-of-town. Other relationships which mayrequire disclosure include where themediator and one of the counsel servedtogether years ago at the same firm orgovernmental agency and the mediatorwas fired. Disclosure is dictated byfactors which include whether counseland mediator were employed a the sametime. Even in that circumstance,however, there is no need to go intodetails beyond the disclosure of theemployment.

What about the situation where theDefendant is insured by an insurancecompany which has paid significantsums in mediation fees when thatinsurance company was represented byother counsel? The insurancecompany’s identity is often not disclosed.Practically speaking, the information isnot generally tracked in the mediator’srecords. Disclosure in this situation isnot warranted.

ETHICS IN MEDIATIONBy: Shari I. Weintraub,Fredrickson Mazeika & Grant

The Honorable Herbert B. Hoffman(Ret.) and the Honorable Richard Haden(Ret.) spoke at the June 2005 San DiegoDefense Lawyers Brown Bag lunch.Speaking on the topic of “Ethics inMediation” through a series of examplesof various conduct, the seminar coveredthe relationship of the mediator to theparties before the mediation, and themediator’s own ethical obligations inconducting mediation sessions.

Generally, a mediator will send a letterconfirming the mediation dates, feeschedule, and briefing dates. In addition,there are statutory requirements whichthe mediator must comply with. In themediator’s letter used in thehypotheticals, the mediator disclosed thefollowing:

I know of no reason which woulddisqualify me to mediate this case onany grounds set forth in Code of CivilProcedure section 170.1 as requiredby Code of Civil procedure section1282.

Pursuant to Code of Civil Proceduresection 1281.9, I have conducted twoprior mediations involving [aPlaintiff’s attorney) which were bothsettled.

Finally, I have no past or presentrelationship with any party to themediation. I have participated as ajudge in civil trials and numeroussettlement conferences involving both[counsel for the Defendant and thePlaintiff.

What else, if anything, should bedisclosed by the mediator to the partiesin order to insure an ethical and mean-

Thank YouSan Diego

Defense Lawyerswould like to thankBrenda Peterson

ofPeterson & Associates

for sponsoringour Brown Bag

Luncheon programs

held in her offices at:

530 “B” Street · Suite 350 ·San Diego · CA · 92101

Summer 2005 9

EMPLOYMENT LAWKirk Hanson, Esq.,Grace Hollis LoweHanson & SchaefferLLP

Employers: Resistthe IndependentContractor Urge

As an employer,you may be tempted to classify a workeras an independent contractor rather thanan employee in order to avoid the costand headaches associated with compli-cated leave laws, overtime, and Work-ers’ Compensation. Resist the urge. Anemployer seeking to avoid these issuesby labeling workers as independentcontractors has the burden of provingthat such workers are, in fact, indepen-dent contractors and not employees. Inother words, there is a presumption ofemployment. Lab.C. § 3357.

Misclassification can have seriousconsequences in the workers’ compen-sation context. For example, employerswill not secure workers’ compensationcoverage for employees they havemisclassified as independent contractors.Of course, it is illegal to employ workerswithout providing workers’ compensationcoverage. Furthermore, insurancecompanies will typically audit payrollrecords to ensure proper classification ofworkers and, in the process, oftendetermine that workers have beenmisclassified as independent contractors.When this is the case, the insurancecompany will seek the back-owedworkers’ compensation premiums forthose employees who have beenmisclassified as independent contractors.In certain industries, there has been ahistory of misclassification of employeesas independent contractors in order toavoid paying steep workers’ compensa-tion premiums. If misclassification hasoccurred on a large or even a limitedscale, it can quickly force an employerout of business who cannot afford to paythe back-owed workers’ compensationpremiums, which premiums can bemassive.

The misclassification of an employeeas an independent contractor can alsohave serious consequences for anemployer under the Labor Code. Afailure to pay an employee minimumwage, overtime, vacation pay or thefailure to give rest breaks and mealbreaks because the employer hasmisclassified the employee as an inde-pendent contractor will give rise toclaims under California’s Labor CodePrivate Attorneys General Act(“PAGA”). Under PAGA, also knownas the “Sue Your Boss Law,” employeescan sue their employers directly in theSuperior Court on behalf of themselvesand all other current and former employ-ees for almost any violation of the LaborCode, including the violations set forthabove resulting from employeemisclassification. If successful, theemployee recovers his or her wages,attorneys’ fees and 25% of the penaltiesthat previously went exclusively to theState.

If an employer is questioning whetherit has properly classified a worker as anindependent contractor, a misclassifi-cation may have occurred. If theemployer’s reason for designating aworker as an independent contractor isto avoid paying overtime and worker’scompensation, then a misclassificationhas likely occurred. Although there is nobright-line test for independent contrac-tor status, the California Supreme Courtin S.G. Borello & Sons, Inc. v. Dept. ofIndustrial Relations (1989) 48 Cal.3d 341set out the following factors to considerwhen evaluating whether a worker is anemployee or an independent contractor:

• Is the worker performing services in anoccupation distinct from that of theemployer?

• Is the work part of the employer’s regularbusiness?

• Does the worker supply his own specializedtools?

• Does the worker have specialized skills?

• Does the worker’s opportunity for profit orloss depend upon his managerial skill? In

other words, does the worker use his bestjudgment and discretion to bid the job andmake a profit or loss irrespective of theprofit or loss of the employer.

• The length of time in which the service isperformed? Short one-time jobs are oftenindicative of an independent contractorrelationship as compared with longer,permanent relationships which indicateemployer/employee status.

• The method of payment - by the hour, bythe job? Payment by the hour is indicativeof employee status, whereas payment bythe job indicates an independent contrac-tor status.

These factors can be applied in asimple example where a restaurant hiresa plumber to install a dishwashingsystem. The plumber’s occupation isdistinct from that of the restaurant andthe work performed by the plumber isdifferent from the work normallyperformed in the restaurant of foodpreparation and service. The plumbersupplies his own specialized tools anduses his specialized skill to perform thework. The plumber relies on his ownjudgment to bid the job for profit andmakes a profit (or loss) irrespective ofthe restaurant’s profits or losses. Finally,the installation of the dishwashingsystem is a short, one-time job. Basedupon these factors, the plumber in thisexample is clearly an independentcontractor.

It is helpful to evaluate independentcontractor status keeping in mind thesimple examples given above concerningthe plumber. However, independentcontractor situations are usually not sosimple. Because the presumption inCalifornia is that of employee status,employers must carefully evaluate eachcase where a worker is classified as anindependent contractor. If it does notfeel right, it probably is not. If there isany question, employers should seek theadvice of an attorney who specializes inemployment law.

Summer 200510

INSURANCE LAWJames M. Roth,The Roth Law Firm

With summer justaround the corner,the Courts areslowing down thedecisions related toinsurance. I believe

that this is occurring because we want tobe outside to enjoy the nice weather. Bethat as it may, below is a picnic of newlycreated case law.

Announcements to customers andemployees of a decision to start anew company and a request forcontinued patronage were not“advertising” activities within themeaning of a general liability policy’s“advertising injury” coverage. InRombe Corp. v. Allied Ins. Co. (2005)128 Cal.App.4th 482, the CaliforniaCourt of Appeal for the Fourth AppellateDistrict held that general businessannouncements to customers andemployees of a decision to start a newcompany and a request for continuedpatronage were not “advertising”activities within the meaning of a generalliability policy’s “advertising injury”coverage. Rombee was a franchisee ofTRC Staffing Services, a nationwidetemporary employment agency. Rombeinvited customers and employees of itsfranchise to a breakfast meeting at ahotel and announced that it would nolonger be affiliated with TRC andsolicited those in attendance to becomecustomers and employees of the newagency. The breakfast meeting and planswere later reported in an internetnewsletter. TRC sued Rombe allegingbreach of contract, misappropriation oftrade secrets, and unfair competition.AMCO insured Rombe under a PremierBusinessowners Policy which providedcoverage for “advertising injuries”including slander or libel; violation of theright to privacy; copyright, title or sloganinfringement; misappropriation ofadvertising ideas or style of doingbusiness. The policy defined “advertise-ment” as “a notice that is broadcast orpublished to the general public orspecific market segments about your

writer for defendant United NationalInsurance Company. The applicationincluded several misrepresentations. Abusiness associate of Mitchell, CarlRobinson, set fire to the building andMitchell submitted a claim to UNIC,which denied the claim, citing Mitchell’snumerous misrepresentations on theinsurance application. Mitchell suedalleging that the misrepresentations wereimmaterial and solely the fault of hisbrokers. Darn. UNIC filed a motion forsummary judgment based on CaliforniaInsurance Code §§ 331 and 359. Section331 states: “Concealment, whetherintentional or unintentional, entitles theinjured party to rescind insurance.”Section 359 provides: “If a representa-tion is false in a material point, whetheraffirmative or promissory, the injuredparty is entitled to rescind the contractfrom the time the representation be-comes false.” The trial court grantedUnited’s motion for summary judgmentand the appellate court affirmed relyingon Messina’s declaration stating that hadshe known the truth, she would haveunderwritten the policy differently, orrejected the application altogether.Mitchell argued that Insurance Code§§ 2070 and 2071 controlled over§§ 331 and 359. Section 2070 requiresall fire insurance policies to be on thestandard form set forth in section 2071which states that rescission of a policybased on the insured’s misrepresentationrequires that the statement “have beenknowingly and willfully made with theintent (express or implied) of deceivingthe insurer.” The court of appeal re-jected Mitchell’s argument, finding thatnothing in §§ 2070 and 2071 preventsthe application of §§ 331 and 359 to fireinsurance policies, noting that suchpolicies usually insure more than justfire. This, of course, brings to mind theaxiom: Don’t play with matches or youwill get burnt.

Court Issues Confusing DiscoveryRuling Which Makes Sense afterYou Think about it for a While. InCatholic Mutual Relief Society v.Superior Court (2005) 128 Cal.App.4th879, the California Court of Appeal forthe Second Appellate District issued aperemptory writ of mandate directing the

goods, products or services for thepurpose of attracting customers orsupporters.” AMCO denied Rombe’stender of the TRC suit. Rombe suedAMCO and cross-motions for summaryjudgment were filed. The trial court ruledin favor of AMCO and the appellatecourt affirmed. Rombe argued thebreakfast it hosted, and the later internetreport of the breakfast and Rombe’splans constituted the “‘use of another’sadvertising idea in your ‘advertisement’”within the meaning of the AMCO policy.Rombe contended that the breakfastwas arguably a form of advertisement to“specific market segments.” The courtof appeal disagreed. It reasoned that theterm “specific market segments” doesnot relieve an insured of the burden ofdemonstrating that it was engaged inrelatively wide dissemination of itsadvertisements even if the distributionwas focused on recipients with particularcharacteristics or interests. With respectto the breakfast, the court found that itdid not involve the broad disseminationof information required by the AMCOpolicy. As for the internet report, thecourt found that while it might have beenbroadly disseminated, nothing in therecord indicated it involved any covered“advertising injury” offense. Perhapsthere would have been coverage if theballroom doors were left open so that thesolicited would have reached a largeraudience. Think about that the next timeyou solicit a client.

Insurer has the right to rescind aninsurance policy based on an insur-ance applicant’s unintentionalmisrepresentations. In Mitchell v.United Natl. Ins. Co. (2005) 127Cal.App.4th 457, the California Court ofAppeal for the Second Appellate Districtaffirmed the trial court’s order grantingthe insurer’s motion for summaryjudgment, holding that an insurer has theright to rescind an insurance policybased on an insurance applicant’sunintentional misrepresentations basedupon Insurance Code §§ 331 and 359.James Mitchell, individually and onbehalf of the Mitchell Family Trust,submitted an insurance application forfire insurance on a commercial buildingto Debra Messina, an authorized under-

Summer 2005 11

found that the weather conditions causeviolated Insurance Code Section 530,which codified the efficient proximatecause doctrine. The California SupremeCourt granted review to resolve thedispute over the validity of the weatherconditions clause. The efficient proxi-mate cause doctrine holds that when aloss is caused by a combination ofcovered and specifically excluded risks,the loss is covered if the covered riskwas the efficient proximate cause of theloss, but the loss is not covered if thecovered risk was only a remote cause ofthe loss, or the excluded risk was theefficient proximate cause. An insurercannot contract around the efficientproximate cause doctrine with anexclusion. Plaintiffs argued that Hart-ford attempted to avoid the efficientproximate cause doctrine because rain, acovered risk, was the efficient proximatecause of their loss. The Court dis-agreed. It found that the weatherconditions clause specifically excludeddamage caused by a rain-inducedlandslide which was within the risksexcluded by the weather conditionsclause (weather in combination withanother excluded risk).

The Supremes: On May 11, 2005,the California Supreme Court grantedreview and removed from publicationEssex Ins. Co. v. Five Star Dye House,Inc. (2004) 125 Cal.App.4th 1569, adecision in which the Second DistrictCourt of Appeal held that an insuredmay assign its right to recover asdamages attorney fees incurred inobtaining the benefits of an insurancepolicy that were denied as a result of theinsurers bad faith. I discussed this casein the April 2005 edition of The Ad-juster .

trial court to vacate an order denying anon-party insurer’s motion to quashdeposition subpoenas aimed at obtainingdocuments concerning the insurer’sfinancial condition, including its reserveand reinsurance information. Theplaintiffs sought this information in orderto determine whether the insurer couldmeet its coverage obligations to theinsured-defendant which, plaintiffsargued, would facilitate settlementdiscussions. The appellate court deter-mined that the information was notrelevant, admissible, or likely to lead tothe discovery of admissible evidenceunder California Code of Civil ProcedureSection 2017(a) and was not related tothe “existence and contents” of thedefendant’s insurance which is discover-able under Section 2017(b). This is fromLA. What do you expect?

A Weather Conditions ClauseSpecifically Excluded DamageCaused by a Rain-induced LandslideWhich Was Within the Risks Ex-cluded by the Weather ConditionsClause. In Julian v. Hartford Underwrit-ers Ins. Co. (2005) 35 Cal.4th 747, theCalifornia Supreme Court enforced a“weather conditions clause” relied on byHartford to deny a first party claim overthe insureds’ objection that the clauseviolated the efficient proximate causedoctrine. In this case, a rain-inducedlandslide caused damage to plaintiffs’home. Hartford denied coverage for allbut a minor part of the damage citing thepolicy’s exclusions for earth movementand weather conditions that “contributein any way with” another excludedcause to produce a loss (the “weatherconditions clause”). It was undisputedthat Hartford covered losses caused byweather conditions that did not join withanother excluded cause. Hartford filed amotion for summary judgment on theground that its denial was appropriatebecause the efficient proximate cause ofplaintiffs’ loss, the rain-induced landslide,was excluded under the weather condi-tions clause. The trial court granted themotion and the appellate court affirmed.The appellate court’s decision conflictedwith another appellate decision which

Summer 200512

By Robert J. WaltersGRACE HOLLIS LOWE HANSON& SCHAEFFER, LLP

It has been relatively quiet in theappellate decisions. However, less issometimes more as employers may hidebehind a lack of awareness of conditionsthat otherwise could provide the basis fora discrimination liability. In addition, theCalifornia Supreme Court has expandedthe discovery rule to permit the additionof a products liability claim in the medicalmalpractice context. The Supremes havealso attempted to clarify the scope ofpunitive damages awards in the aftermathof the U.S. Supreme Court’s State Farmrule limiting punitive damages. In theconstruction defect context, the statute oflimitations defense may be less of a factorwhen there is willful misconduct regard-less whether it stems from the generalcontractor or from subcontractors. Alsoin the construction defect context,insurers will be able to intervene toprotect its rights of subrogation. To be

sure, important issues continue to loom indefense practice, although the water stillseems a little muddy. As the water clears,some of the answers may still remaincloudy.

EMPLOYMENT LAWTrop v. Sony Pictures Entertainment

Inc. (2005) 129 Cal.App.4th 1133, 29Cal.Rptr.3d 144. A terminated employeefiled action against employer alleging, interalia, sexual discrimination based onpregnancy and wrongful termination inviolation of public policy, also based onpregnancy. The employer obtainedsummary adjudication of pregnancy-related causes of action, other causeswere dismissed, and the Superior Courtentered judgment for employer and theemployee appealed. The Second DistrictCourt of Appeal affirmed holding that theemployee (1) failed to establish a primafacie case of discrimination by failing toshow employer’s knowledge of herpregnancy, and (2) did not present directevidence of discrimination. In addition,the employer presented nondiscriminatorybasis for termination. The court appliedthe three-stage burden-shifting testestablished by the U.S. Supreme Court inMcDonnell Douglas Corp. v. Green, 411U.S. 792 (1973): (1) the plaintiff mustestablish a prima facie case of discrimina-tion; (2) if the plaintiff is successful, theemployer must offer a legitimate nondis-criminatory reason for its actions; and (3)if the employer produces such evidence,the plaintiff must then show that theemployer’s proffered reason was in fact apretext for discrimination.

The court rejected Trop’s argument thatthe McDonnell Douglas burden-shiftinganalysis was inapplicable in this case.Trop contended this was so because she

had presented direct evidence of discrimi-nation in the form of various statementsfrom Thomas, including several post-termination comments such as, “I needsomebody here who wants to be here anddoesn’t have a life” and “What were youthinking? How could you possibly be myassistant and be pregnant? How did youever think that was going to work?”However, the court concluded that thesestatements, among others, did not “rise tothe level of direct evidence of discrimina-tion based on pregnancy.” The court’sholding concerning the employer’signorance of an employee’s protectedstatus suggests significant implicationsnot only in the pregnancy-discriminationcontext, but also in cases involving allegeddiscrimination based upon other charac-teristics that may not be readily known toan employer. For example, employerswithout actual knowledge of the charac-teristic in question presumably should beable to defeat some claims of discrimina-tion based upon religion, national origin,ancestry, sexual orientation, medicalcondition, age and disability. See, e.g.,California Government Code Section12940(m) (employer must reasonablyaccommodate the known physical ormental disability of an applicant oremployee). This case also suggests theneed for employers to consider adopting amodified policy of “Don’t Ask, Don’tTell” when it comes to certain subjects.Had Thomas even informally pursued thetopic of Trop’s pregnancy in any of theirconversations, she unquestionably wouldhave been charged with having knowledgethereof, and the employer may have hadgreater difficulty extricating itself fromthe lawsuit. Trop v. Sony reinforces therule that the less an employer asks (orknows) about certain subjects, the easierit will be to avoid later claims of discrimi-nation based upon such information.

MEDICAL MALPRACTICEFox v. Ethicon Endo-Surgery, Inc.

(2005) 35 Cal.4th 797, 27 Cal.Rptr.3d661. Patient filed medical malpracticeaction against her surgeon and, based oninformation learned from surgeon’sdeposition, filed amended complaintasserting products liability cause of actionagainst manufacturer of stapler used in

HOT CASES!!!HOT CASES!!!

Summer 2005 13

surgery. Brandi Fox got gastric bypasssurgery on April 10, 1999. After havingsevere complications, she filed a medicalmalpractice suit against the surgeon onApril 6, 2000. She amended her com-plaint on Nov. 28, 2001, to include aproducts liability claim against EthiconEndo-Surgery Inc. She claimed that shecould not have discovered a basis for theclaim until the deposition of the surgeon,who indicated on Aug. 13, 2001, that astapler manufactured by Ethicon malfunc-tioned. Manufacturer filed demurrerbased on statute of limitations, and theSuperior Court sustained demurrerwithout leave to amend. Patient appealed.The Court of Appeal reversed and re-manded, and the Supreme Court grantedreview, superseding the opinion of theCourt of Appeal.

The Supreme Court held that thediscovery rule postpones accrual of acause of action until the plaintiff discov-ers, or has reason to discover, the causeof action. The court of appeal limited thatexception in Bristol-Myers Squibb Co. v.Superior Court (1995) 32 Cal.App.4th959, 38 Cal.Rptr.2d 298, holding thatwhen a plaintiff has cause to sue based onsuspicion of negligence, the statute beginsto run as to all potential defendants.However, the Supreme Court concludedthat the appellate court failed to note theimportant distinction between situations inwhich a plaintiff did not know the identityof a party and those in which the plaintiffdid not discover that a cause of actionexisted. Because it would be contrary topublic policy to require that plaintiffs file alawsuit at a time when the evidenceavailable to them failed to indicate a causeof action, that court’s holding is disap-proved to the extent that it indicatedotherwise. Fox’s complaint alleged factssufficient that the statute of limitations asto Ethicon was tolled to the date of thesurgeon’s deposition. Accordingly, theSupreme Court disapproved the opinion inBristol-Myers Squibb Co. v. SuperiorCourt.

CONSTRUCTION DEFECTHodge v. Kirkpatrick Development Inc.

(2005) __ Cal.App.4th __, __ Cal.Rptr.3d__, 2005 WL 1439193. Douglas andKylie Hodge purchased a homeowner

insurance policy from State Farm Insur-ance Co. In 2002, their home sufferedwater and mold damage resulting from thenegligence of a third party and theysubmitted a claim to State Farm to covertheir claimed losses, which was onlypartially approved. In 2003, the Hodgesfiled a construction defect lawsuit againstKirkpatrick Development Inc. They alsosued State Farm for bad faith denial ofcoverage. Citing a subrogation agreementin its contract with the Hodges, StateFarm sought to intervene in the construc-tion defect lawsuit against Kirkpatrick. Atrial court denied State Farm’s motion forleave to intervene. The Fourth DistrictCourt of Appeal reversed, holding that aparty may intervene as of right underCode of Civil Procedure Section 387(b) ina case in which an interest related to thetransaction of the underlying lawsuitexists, disposition of the action will impairthe party’s ability to protect that interest,and the interest is not adequately repre-sented by existing parties. As the insurer,State Farm has a direct, pecuniary interestrelating to the property in the constructiondefect lawsuit between the Hodges andKirkpatrick, the allegedly responsibleparty. Further, the disposition of thelawsuit without State Farm’s presencewould impede State Farm’s ability toprotect its subrogation rights because itwould have no other recourse. StateFarm’s interests are not adequatelyrepresented by the Hodges. Thus, itshould be allowed to intervene.

OF ADDITIONAL INTEREST:Punitive Damages Limitations Under

State Farm Clarified?The California Supreme Court, in two

separate cases authored by JusticeKathryn Mickle Werdegar, has nowenunciated rules that impacts decisionstesting the limits of punitive damages,represented by the 2003 landmark U.S.Supreme Court ruling, State Farm MutualAutomobile Insurance v. Campbell, 538U.S. 408, that curtailed large awards. Inmost cases under the State Farm decision,punitive damages should be no more thannine times compensatory damages.However, the United States SupremeCourt left room for exceptions, andplaintiffs and defendants have beensparring over when to go beyond the

“single-digit” range. The two casesdecided by the California Supreme Courtwere Simon v. San Paolo U.S. HoldingCo., Inc. (2005) __ Cal.3d __, __Cal.Rptr.3d__, 2005 WL 1404425 andJohnson v. Ford Motor Co. (2005) __Cal.3d __, __ Cal.Rptr.3d__, 2005 WL1404423.

In the Simon case, a prospective buyerof office building brought action againstseller for specific performance of con-tract, and also sought damages for breachof contract and fraud. The Superior Courtentered judgment on jury award toprospective buyer of $5000 in compensa-tory damages and $1.5 million in punitivedamages. Seller appealed, and prospectivebuyer cross-appealed. The Court ofAppeal affirmed. The Supreme Courtgranted review and held that (1) excessivepunitive damages violate due process; (2)punitive damages are reviewed de novo;(3) ratio of more than 10 to one betweenpunitive and compensatory damages ispresumed excessive, and (4) punitivedamages 340 times $5,000 compensatoryaward was constitutionally excessive.

In the companion case, Johnson v. FordMotor, the justices rejected a $10 millionjury award. However, they also weren’tsatisfied with the 5th District’s reductionto $53,435 and ordered appellate judges totake another look. There, certain carpurchasers recovered a judgment in theSuperior Court against manufacturer forconcealing the automobile’s history oftransmission repairs and replacementswhen reselling the car, and jury awardedthem $17,811.60 in compensatorydamages and $10 million in punitivedamages, which the manufacturerappealed. The Court of Appeal reducedpunitive damages award to $53,435. TheSupreme Court subsequently grantedreview, and held that (1) punitive damagesmay be awarded for the sake of exampleand deterrence; (2) punitive damages mayserve as a tool to protect the consumingpublic; (3) award based on disgorgementof profits may be invalid; (4) plaintiffswere not entitled to punitive damages on adisgorgement theory, and (5) reducedaward of three times compensatorydamages lacked justification.

Summer 200514

SDDL Brown Bag Series, March: By Shari I. Weintraub of Fredrickson Mazeika & Grant

DISCOVERY IS A PAIN...Judge Robert J. O’Neill has suggestions to lessen itIn April 2005,

the HonorableRobert J. O’Neill(Ret.) presidedover a gatheringof San DiegoDefense Lawyersto discuss discov-

ery, why it is so painful, and how partiescan work together to relieve that pain.

Discovery is a necessary “evil”. TheDiscovery Act was implemented in orderto facilitate the efficient sharing ofevidence between the parties in order tomove the litigation forward, whether thatmeans an informal settlement, a mediatedconclusion, or trial. In practice, this isoften forgotten. Instead, discoveryoftentimes is painful as one party pro-pounds broad-ranging, unfocused,argumentative requests, which then seemsto induce the responding party to provideresponses which contain objections(whether appropriate or not), is non-responsive and argumentative. Thismakes the process a waste of time,money and effort for counsel and client,

and is often tedious and unproductive.This also leads to visits with the court, asthe propounding party moves to compelresponses, which makes no one, not thecourt or the parties, happy.

Why has discovery become so painful?Conventional legal wisdom is that discov-ery is used for more than, well, discovery.It can be used to harass, intimidate,annoy, delay, overreach, and obfuscate.It can be more extensive than necessaryto posture for a pre-trial resolution, whenone is warranted. It is often unfocused.When over Ninety-Seven percent (97%)of all cases are actually disposed of shortof trial, it is important to remember thatdiscovery actually needs to be focused,effective and efficient in order to posturethe case for resolution.

How do we make this necessary “evil”more palatable? Judge O’Neill proposesattorneys in litigation keep the following inmind:

Attorneys should remember they areprofessionals. It serves no one, whetherthe client’s goals in the litigation or theattorneys reputations, to act otherwise.

· Fighting over who is right and wrongis not helpful to the process, includinginvolving the court. This will produce aspecies of “grudging compliance” but willnever provide real cooperation;

· Having said that, with the agreementof each attorney, it can be helpful toinvolve a neutral third party.

Judge O’Neill advocates a process ofcollaborative discovery, where the parties,at whatever stage of discovery requires it,evaluate their case, determine what theytruly need to posture the case for media-tion or trial, sit down with the opposingcounsel, and work out a plan to accom-plish those goals. Although the Codeprovides for a “meetand confer”process oncedisputes arisewith thediscovery,there isnothing inCalifornia Statecourts whichrequires it

SDDL Members sign in, engage in conversation and enjoy a nice lunchprovided by Peterson & Associates.

Summer 2005 15

before the process starts. In either casethough, a “meet and confer” should beface-to-face or telephonic. Correspon-dence does not often convey the coopera-tive nature of the process, as counsel isnot truly able to evaluate the opposingcounsel’s needs or desires.

If a third party neutral is needed toassist the parties in working out a collabo-rative discovery plan, the third partyneutral Judge O’Neill suggests does notalways have to be an official referee. Itcan be someone all counsel agree theyrespect, who will not insert themselvesinto the process so much as help counselfind the common ground. This neutralcan:

· Settle down the lawyers;· Settle down the parties;· Assist in the determination of profes-

sional and case related needs;

· Help to isolate and focus on the out-standing issues;

· Assist in prioritizing the issues and theirimmediacy;

· Assist in developing workable, andwhere necessary, innovative techniquesor procedures to accomplish the parties’goals;

· Aid in scheduling dates, locations, andorder of depositions;

· Provide real-time guidance in the world ofcomplex discovery;

· if absolutely necessary, and by stipula-tion, provide a binding resolution forissues which otherwise would require amotion to compel;

· serve as an ombudsman in incidentaldisputes;

Judge O’Neill advocates the “collabora-tive discovery” process because he hasbeen instrumental in implementing it incomplex litigation with success. It canwork in smaller-scale cases as well. Ittakes the job of discovery lawyering fromcompetitive, distasteful, inefficient,frustrating and stressful to respectful,professional, efficient, collaborative andrewarding.

“PREPARING FOR YOUR FIRST TRIAL”

SDDL Brown Bag Series,May 31, 2005By: Steven M. Polito, Esq., Lorber, Greenfield & Polito, LLP

On May 31, 2005, Kenneth J. Medel, Esq. of The Medel LawFirm presented the SDDL Brown Bag Seminar “Preparing forYour First Trial”. As a distinguished trial attorney, Mr. Medeldiscussed the necessary preparation for the following areas of a

trial: Voir Dire, Opening Statement, Direct Examination, Cross-Examination andClosing Arguments.

VOIR DIREMr. Medel explained that Voir Dire is sometimes considered the most difficult part

of a trial. Twenty-four to thirty-six names are given to the court for the Judge. Trialcounsel has sometimes as little as twenty to thirty minutes to pick juries in a case thathe has been working on for over a year. Mr. Medel explained that the purpose of theVoir Dire process is to attempt to select a juror most likely to be fair to your side ofthe story. It is also necessary to weed out those jurors that are most likely less fair toyour position and theories. Establishing a rapport with the jury is paramount duringthe Voir Dire process.

OPENING STATEMENTMr. Medel explained that this is simply an outline of the evidence to promote your

themes in the case. Mr. Medel made it clear that you are not defending the case, butyou are prosecuting your defense. These must be presented in orderly fashion andnot be argumentative. Introduction of witnesses along with reinforcing the themes areparamount.

DIRECT-EXAMINATIONThe purpose of direct-examination is to bring good information out of the witnesses

that helps your case in a concise and convincing presentation. Personalize yourclients and your experts as important witnesses. The preparation for the direct-examination is organization. Also anticipate evidentiary objections and prepare forthem. Typical objections during direct-examination are on leading, compound, as-sumes facts not in evidence, argumentative and no foundation.

CROSS-EXAMINATIONThe purpose of cross-examination, as Mr. Medel explained, was to establish through

adverse witnesses points that help your case. The additional purpose is to underminethe credibility of the adverse witness. Leading questions, unlike the direct-examina-tion, are permitted. Use of prior statements, photographic evidence and depositiontranscripts are used in cross-examination.

CLOSING ARGUMENTSThe purpose of the closing argument is to organize all the information that came out

during the trial that was persuasive for your client. Again, as noted, you are not todefend your case, but prosecute the version of your facts. Organization is paramountand must be repeated along with walking the jury through the verdict form. Discus-sions regarding the flaws in plaintiff’s case are also important along with a constantrecitation of the theme.

Overall, Mr. Medel explained that preparation for the trial is paramount for the juryand sticking with your theme is paramount. The current theme that came out in Mr.Medel’s presentation was simply being yourself, respectful and professional in thecourt. We look forward to asking Mr. Medel for future presentations.

Summer 200516

SDDL Annual Golf BenefitSan Diego Defense Lawyers held their Annual Golf Benefit

on June 10th. SDDL continued their partnership with The AuldCourse for the fourth consecutive (and successful) year. Sixty-eight players attended a beautiful day on the links-style coursein a best-ball format. Many members took advantage of theopportunity to spend a day out of the office golfing with friends,colleagues and clients. The weather was perfect, and thecompetition fierce, with the event winning foursome beingJudge Herb Hoffman, Bob May, Link Ladutko and KenPatrick. Second place went to Dennis Aiken, Darin Boles,Steve Todd and Del Tulao. The TRUTHFULNESSAWARD went to Anna Amundson (first time ever golfplayer!), Kristina Pfeifer, Joan Blaine and Bert Ruther-ford.

With many generous sponsors providing sponsorships, manyholes had more than just golf for the players. Sponsorsprovided food, beverages and giveaways for the players.SDDL wishes to thank all of the sponsors and will appreciatemembers patronizing these businesses as a THANK YOU! fortheir support.

As in the past, this year’s tournament was a benefit for theJuvenile Diabetes Research Foundation. JRDF providesfunding for research into finding a cure for juvenile diabetes,the fastest growing disease in children in the United States.SDDL started the benefit in memory of Tom Dymott who diedof complications from diabetes. In addition to receiving aportion of the entry fees, a raffle and auction were held afterthe BBQ dinner with the proceeds going to JRDF. SDDLwould like to thank the many generous attendees who boughtraffle tickets as well as those who bid on and secured variousauction items. The generosity of the participants and thesponsors is what makes this event a success every year!

Thanks also go out to the SDDL golf committee, ScottBarber, Dennis Aiken and Tony Case for organizing theevent. A big thank you also goes out to our own DinoBuzunis, who is a fantastic, results producing auctioneer.

If you attended this year we hope you will be back next yearand for those who missed out, plan on attending next year as itwill be another great benefit.

Summer 2005 17

Summer 200518

Beware of Plaintiffs Shoehorning A Professional Negligence CaseAgainst a Health Care Provider Into A Veritable Jackpot of HeightenedRemedies Under EADACPA

By Rachael A. Campbell 1

There is noquestion thatthe ElderAbuse andDependentAdult CivilProtection Act2

(“EADACPA”)reflects animportantpublic policyof protecting

elders and dependent adults. However, itmay provide a loophole wherebyplaintiff’s counsel will attempt to avoidthe procedural safeguards of Code of CivilProcedure section 425.13 (which pro-vides that no claim for punitive damagesmay be included in an action against ahealth care provider without a courtorder)3 by pleading an ordinary profes-sional negligence case under EADACPA.

Defense counsel has at least two linesof attack on this issue: (1) demur to thecomplaint on the basis that if the plaintiffhas any claim at all, it is for professionalnegligence, which is expressly excludedfrom the Elder Abuse Act; and (2)scrutinize the complaint for specific factsarticulating abuse or neglect and anyallegations of reckless, oppressive,fraudulent or malicious conduct, both ofwhich are mandatory prerequisites toobtaining relief under the EADACPA anddemur on that ground if the complaint isdeficient. In either case, counsel shouldalso concurrently move to strike anyreference to punitive damages.

EADACPA Does Not Apply toOrdinary Professional NegligenceActions

The California Supreme Court has heldthat the heightened remedies provided bythe Elder Abuse Act do not apply to anordinary professional negligence actionagainst a health care provider. (Delaney v.Baker (1999) 20 Cal.4th 23, 30-31.)Recently, the California Supreme Courtreiterated this principle. (Covenant Care,Inc. v. Superior Court (2004) 32 Cal.4th771, 783.)

Delaney concerned the relationship oftwo provisions of the Elder Abuse Act:Welfare & Institutions Code sections15657 and 15657.2.4 Section 15657provides for heightened remedies, such aspunitive damages, attorneys fees andcosts, among other things. Section15657.2 provides, “[n]otwithstanding thisarticle, any cause of action for injury ordamage against a health care provider . . .based on the health care provider’s allegedprofessional negligence, shall be governedby those laws which specifically apply tothose professional negligence causes ofaction.” Plaintiff Delaney argued that acause of action may be based on “profes-sional negligence” within the meaning ofsection 15657.2 and be for “recklessneglect” within the meaning of section15657. (Delaney, supra, 20 Cal.4th at 29.)

The California Supreme Court dis-agreed, and found that the legislativehistory of section 15657 indicated that“professional negligence,” at least withinthe meaning of section 15657.2, wasmutually exclusive of the abuse andneglect specified in section 15657.(Delaney, supra, 20 Cal.4th at 30.)

The Delaney court further held that “asused in [EADACPA], neglect refers not tothe substandard performance of medicalservices [citation] but, rather, to the‘failure of those responsible for attendingto the basic needs and comforts of theelderly or dependent adults, regardless oftheir professional standing, to carry outtheir custodial obligations.’” (Id. at 34.)The other forms of abuse as defined inEADACPA - - physical abuse and fidu-ciary abuse (Welfare & Inst. Code §15657) - - are forms of intentionalwrongdoing also distinct from ‘profes-sional negligence.’” (Delaney, supra, 20Cal.4th. at 34.)

Therefore, “the acts proscribed bysection 15657 do not include acts ofsimple professional negligence, but referto some forms of abuse or neglectperformed with some state of culpabilitygreater than mere negligence.” (Id. at 32.)While recognizing the difficulty in distin-guishing between “professional negli-gence” and “neglect,” the Delaney Courtemphasized that the language of section

15657 provides guidance. (Id.) TheCourt stated, if the neglect was ‘reck-less’5 or done with oppression, fraud ormalice,6 then the action falls within thescope of section 15657 and . . . cannot beconsidered simply ‘based on professionalnegligence’ within the meaning of section15657.2. . . . [T]he explicit exclusion of“professional negligence” in section15657.2, make clear the Elder Abuse Act’sgoal was to provide heightened remediesfor . . . ‘acts of egregious abuse’ againstelders and dependent adults. (Delaney,supra, 20 Cal.4th at 35.)

Therefore, plaintiff must allege specificfacts demonstrating that the health careprovider or any other defendant elected aconscious choice of course of action,knowing that it would injure the plaintiff.

To Obtain Relief Under EADACPAPlaintiff Must Plead Specific FactsArticulating Abuse Or NeglectAnd Reckless, Oppressive,Fraudulent Or Malicious Conduct

Mandatory prerequisites to obtain reliefunder EADACPA are that plaintiff mustplead specific facts articulating abuse orneglect and allegations of reckless,oppressive, fraudulent or maliciousconduct. Delaney is a perfect example ofa case that demonstrates the evils thatEADACPA was designed to prevent (incontrast to an ordinary professionalnegligence case). In Delaney, the 88-yearold mother of the plaintiff died after fourmonths in a nursing facility, which sheentered due to a fractured ankle.(Delaney, supra, 20 Cal.4th at 27.) At thetime of her death, the decedent had stageIII and stage IV pressure ulcers on herankles, feet and buttocks.7

Such a case demonstrates the type ofabuse that the Elder Abuse Act wasdesigned to redress. Plaintiff must allege“detailed and specific factual allegations”of abuse, such as the children of thedecedent in the Covenant Care case(there, decedent had Parkinson’s and wasunable to care for himself). The Cov-enant Care plaintiffs alleged that decedentwas left in his bed, unattended andunassisted for long periods of time, wasnot fed or provided hydration, was left in

Summer 2005 19

L to R: Jack Sleeth, Steve Polito,Scott Barber, Shari Weintraub, John Farmer,

Martha Dorsey, Kelly Boruszewski,Tony Case, Denny Aiken and Jay Bulger.

Absent: Alan Greenberg

SDDL OfficersPresident: John T. Farmer

Vice-President: Dennis AikenSecretary: D. Scott Barber

Treasurer: Martha J. Dorsey

Directors:Kelly T. Boruszewski

Jay M. BulgerAnthony T. Case

Alan E. GreenbergSteven M. PolitoJack M. Sleeth

Shari I. Weintraub

Editor:Jay M. Bulger

Koeller, Nebeker, Carlson & Haluck

Membership InformationMembership is open to any attorney

who is primarily engaged in thedefense of civil litigants. Membershipdues are: $ 90 for attorneys in practiceless than one year and $120 forattorneys in practice more than oneyear. Applications are available on theweb at www.sddl.org.

THE UPDATE is published for the mutualbenefit of the SDDL membership, a non-profitassociation composed of defense attorneys,judges and persons allied with the professionas suppliers of goods or services.

Views and opinions expressed in THEUPDATE are those of the authors and notnecessarily those of SDDL. Products andservices advertised are paid advertisementsand not endorsed by SDDL.

We welcome the submission of articles byour members on topics of general interest toour membership. Please submit material to:

Jay M. BulgerKoeller, Nebeker, Carlson & Haluck

225 Broadway, 21st FloorSan Diego, CA 92101Phone: 619-233-1600

Jay.bulger@knchlaw.com

his own excrement for hours, developed ulcers all over his body, became septic and diedas a result of the abuse and neglect that he sustained. (Covenant Care, supra, 32 Cal.4that 778.) The foregoing are examples of cases properly pled under EADACPA, becausethey include detailed, specific allegations of acts of egregious abuse.

Plaintiff Must Demonstrate by Clear and Convincing Evidence ThatDefendant is Liable For Elder Abuse and Has Been Guilty of Reckless-ness, Oppression, Fraud, or Malice in the Commission of Such Abuse

The California Supreme Court has held that in order to obtain the heightened remedies(including punitive damages, attorneys fees and costs) provided by Welfare & Institu-tions Code section 15657, a plaintiff must allege conduct essentially equivalent toconduct which would support recovery of punitive damages. (Covenant Care, supra, 32Cal.4th at 790.) Welfare & Institutions Code section 15657 requires the plaintiff todemonstrate: (1) clear and convincing evidence that a defendant is liable for elder abuse;and (2) that the defendant has been guilty of recklessness, oppression, fraud, or malicein the commission of the abuse.”

Clear and convincing evidence has been defined by the Fourth Appellate District,Division One as, “a finding of high probability, or evidence so clear as to leave nosubstantial doubt; sufficiently strong enough to command the unhesitating assent ofevery reasonable mind.” (In re Michael G. (2000) 63 Cal.App.4th 700, 709 [internalquotations omitted].)

Therefore, plaintiff must allege facts detailing abuse or neglect as defined byEADACPA that, if proven, demonstrate a high probability or are so clear as to leave nosubstantial doubt that the patient suffered abuse or neglect.8

ConclusionAs demonstrated by the foregoing, defense counsel should carefully examine any

complaint that claims relief under EADACPA and make sure that is not simply an actionfor ordinary professional negligence, which is expressly excluded from EADACPA. Inaddition, defense counsel should scrutinize the complaint, to make sure plaintiff has methis or her burden to plead specific facts articulating abuse or neglect and allegations ofreckless, oppressive, fraudulent or malicious conduct, both of which are mandatoryprerequisites to obtaining relief under EADACPA.

(Footnotes)1 Ms. Campbell is an associate of Deuprey &Associates, LLP. She assists Deuprey &Associates, LLP with appellate matters, the firm’srepresentation of physicians in medicalmalpractice cases and defense work in businessand general liability matters. For moreinformation about the firm, please see the firmwebsite at www.deupreylaw.com2 See California Welfare & Institutions Code§§ 15600 et. seq.3 California Code of Civil Procedure section425.13 provides, in relevant part, “In any actionfor damages arising out of the professionalnegligence of a health care provider, no claim forpunitive damages shall be included in a complaint. . . unless the court enters an order allowing anamended pleading that includes a claim forpunitive damages to be filed.” The section furtherprovides that the court shall only grant the motionfor an amended pleading where the plaintiff ’smoving papers and supporting affidavitsdemonstrate a substantial probability that theplaintiff will prevail on the claim pursuant to CivilCode section 3294.4 Hereafter, all code section references are to theCalifornia Welfare & Institutions Code, unlessotherwise noted.5 Recklessness, in the context of an Elder Abuse

Act action has been articulated by the CaliforniaSupreme Court as follows: “[r]ecklessness,unlike negligence, involves more than‘inadvertence, incompetence, unskillfulness, or afailure to take precautions’ but rather rises to thelevel of a ‘conscious choice of course of action . . .with knowledge of the serious danger to othersinvolved in it.’” (Delaney, supra, 20 Cal.4th 23,31-32, see also, Mack v. Soung (2000) 80Cal.App.4th 966, 972.)6 “‘Intentional, ‘willful’ or ‘conscious’wrongdoing of a ‘despicable’ or ‘injurious’nature. (Delaney, supra, 20 Cal.4th at 31.)7 A stage IV pressure ulcer means that the tissuewas eaten away down to the bone.8 Welfare & Institutions Code section 15610.07defines abuse of an elder or dependent adult as:“Physical abuse, neglect, financial abuse,abandonment, isolation, abduction, or othertreatment with resulting physical harm or pain ormental suffering.” Welfare & Institutions Codesection 15610.57 defines neglect as: “ (1) Failureto assist in personal hygiene, or in the provisionof food, clothing or shelter. (2) Failure to providemedical care for physical or mental health needs. .. . (3) Failure to protect from health or safetyhazards. (4) Failure to prevent malnutrition ordehydration.”

234-0660(619)

Service is What We’re All About.

Call Us!

facsimile: 619.234.0668 l www.legalrepro.com l sales@legalrepro.com

Legal Reprographics Inc.

has successfully committed itself

to remain the leading copying, imaging,

data and graphics service bureau

for the legal industry in San Diego.

We have dedicated our resources

in management, sales and production

to provide the best quality product

and service in our market.

If you're not convinced to call us now,

go to www.legalrepro.com and learn more.

1 1 0 W E S T C S T R E E T 1 6 T H F L O O R S A N D I E G O C A L I F O R N I A 9 2 1 0 1

C O P Y I N G • I M A G I N G • D A T A • G R A P H I C S

San Diego Defense LawyersP.O. Box 927062San Diego, CA 92192