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California Law Update – December 2021

By December 31, 2021January 11th, 2022Law Updates
  1. Disability Discrimination) In cases alleging Americans with Disabilities Act and Unruh Act violations, courts may properly decline supplemental jurisdiction due to exceptional circumstances but must do so before adjudicating the entire case. Rafael Arroyo, Jr. v. Carmen Rosas (No. 19-55974 D.C. No. 2:18-cv06338-PSG-GJS United States Court of Appeals Ninth Circuit Filed December 10, 2021)
  2. (Arbitration) A bank forfeited the right to demand disqualification of the arbitrator because it did not seek disqualification before the conclusion of the arbitration proceedings. Mark Goodwin v. Comerica Bank, N.A. (No. A160909 Alameda County Super Ct. No RG17855144 California Courts of Appeal First Appellate District Division Four Filed December 15, 2021)
  3. (Administrative Agencies) Gross negligence while conducting residential appraisals was unprofessional conduct subject to discipline by the Board of Registered Nursing. William Michael Clawson v. Board of Registered Nursing (No. A159990 City & County of San Francisco Super. Ct. No CPF19516578 California Courts of Appeal First Appellate District Division Five Filed December 17, 2021)
  4. (MICRA) Medical Injury Compensation Reform Act limits did not apply to plaintiffs’ causes of action under the Elder Abuse Act where jury found both professional negligence and reckless neglect. Samantha B. v. Aurora Vista Del Mar, LLC (2d Civ. No. B302321 Super Ct. No. 56-2015-00464635-CU-PO-VTA Ventura County California Courts of Appeal Second Appellate District Division Six Filed December 20, 2021)
  5. (Arbitration) Plaintiff was not bound by arbitration agreement signed by her adult daughter when placing her in a residential care facility because the daughter had not been granted authority to handle such matters. Theresa D., v. MBK Senior Living, LLC (No. A163312 Sonoma County Super. Ct. No. SCV-268130 California Courts of Appeal First Appellate District Division Three Filed December 21, 2021)
  6. (Medical Staff) Medical staff bylaws’ burden of proof for peer review with hearings must be consistent with Business and Professions Code Section 809.3(b)’s preponderance of the evidence burden. William N. Bichai v. Davita, Inc. (No. F079815 Super. Ct. No. BCV-18-100245 California Courts of Appeal Fifth Appellate District Filed December 20, 2021)
  7. (Anti-SLAPP) Statement made by bank representatives in forms filed with Securities Exchange Commission are protected activities as matters under review by the SEC. Steven A Sugarman v. Halle Benett (No. B307753 Los Angeles County Super. Ct. No. 19STCV36697 California Courts of Appeal Second Appellate District Division Eight Filed December 27, 2021)
  8. (Subpoena Expenses) Shifting third-party’s expenses incurred from complying with a subpoena was required by plain language of statute once the expenses incurred were determined to be an undue burden or expense. John Park v. Law Offices of Tracey Buck-Walsh (No. A161672 Sonoma County Super. Ct. Nos. SCV-2599791 & SCV-261163 California Courts of Appeal First Appellate District Division Three Filed December 27, 2021)
  9. (MICRA) Medical injury Compensation Reform Act limits did not apply to plaintiffs’ causes of action under the Elder Abuse Act where jury found both professional negligence and reckless neglect. Samantha B. v. Aurora Vista Del Mar, LLC (2d Civ. No. B302321 Super. Ct. No. 56-2015-00464635-CU-PO-VTA Ventura County California Court of Appeal Second Appellate District Division Six Filed December 20, 2021)

The above referenced court opinions have come to our attention during last month. Please find below a brief summary of these opinions for your consideration.

  1. Disability Discrimination) In cases alleging Americans with Disabilities Act and Unruh Act violations, courts may properly decline supplemental jurisdiction due to exceptional circumstances but must do so before adjudicating the entire case. Rafael Arroyo, Jr. v. Carmen Rosas (No. 19-55974 D.C. No. 2:18-cv06338-PSG-GJS United States Court of Appeals Ninth Circuit Filed December 10, 2021)

Plaintiff, a paraplegic, who uses a wheelchair for mobility, filed suit against defendant’s retail store alleging that the store’s premises contained barriers that denied him full and equal access in violation of Title III of the Americans with Disabilities Act (“ADA”) and California’s Unruh Civil Rights Act (“Unruh”). The district court granted summary judgment to plaintiff on the ADA claim, concluding the undisputed evidence established all of the elements of that claim. Because any violation of the ADA is automatically a violation of the Unruh Act, the district court’s summary judgment ruling effectively dictated the outcome of the plaintiff’s Unruh Act claim as well. Nonetheless, the district court concluded that extraordinary circumstances and compelling reasons existed under 28 U.S.C. Sections 1367(c)(4) to decline supplemental jurisdiction over plaintiff’s state law Unruh Act claim. Specifically, the district court noted that recent changes in California law had made it much more difficult to file Unruh Act claims in state court and that these changes had led to a wholesale shifting of such cases to the federal courts, where they now make up nearly a quarter of the district court’s entire civil docket. Retaining jurisdiction over the Unruh Act claim here, the court concluded, would allow the plaintiff to evade the California requirements, contrary to the interest in the federal-state comity. Accordingly, the district court dismissed the plaintiff’s Unruh Act claim without prejudice to refiling it in state court.

The plaintiff appealed. The appellate court noted that it agreed with the district court description of an extraordinary situation created by the unique confluence of the California rules involved here, which has led to systemic changes in which such cases are filed. However, the appellate court found presented “exceptional circumstances” existed which authorized consideration, on a case-by-case basis, of whether the “principles of economy, convenience, fairness, and comity which underlie the pendent jurisdiction doctrine” warrant declining supplemental jurisdiction. Because the district court effectively completed its adjudication of this entire case including the Unruh Act claim, whose outcome was dictated by the court’s ruling on the ADA claim before it considered the question of supplemental jurisdiction, the interests in judicial economy, convenience, comity, and fairness at that point all overwhelmingly favored retaining jurisdiction and entering the foreordained judgment on the Unruh Act claim. The district court therefore abused its discretion in declining supplemental jurisdiction over the Unruh Act claim in this case. Consequently, the appeals court reversed and remanded the case back to the district court.

  1. (Arbitration) A bank forfeited the right to demand disqualification of the arbitrator because it did not seek disqualification before the conclusion of the arbitration proceedings. Mark Goodwin v. Comerica Bank, N.A. (No. A160909 Alameda County Super Ct. No RG17855144 California Courts of Appeal First Appellate District Division Four Filed December 15, 2021)

Plaintiff appealed from two orders denying its petition to confirm an arbitration award and granting the defendant’s petition to vacate the award on the ground that the arbitrator made a material omission or misrepresentation in his disclosure of prior cases involving the parties’ lawyers per California Code of Civil Procedures section 1281.9. The disclosure described a prior case involving the plaintiff’s lawyers as “settled prior to final award” without disclosing that the case had settled after the arbitrator issued an interim award in favor of the client of the plaintiff’s attorney. On appeal, the parties debated whether sectioned 1281.9 required the arbitrator to disclose the interim award and whether the omission was sufficiently material to require vacation of the award. The appeals court noted that it need not decide those questions because the defendant forfeited any right to disqualify the arbitrator by failing to file a notice of disqualification within 15 days of discovering that omission. Hence, the appeals court reversed the orders at issue and remanded with instructions to enter an order confirming the award. The appeals court found that the defendant could have reasonably entertained a doubt as to the grounds of disqualification as to arbitrator before the conclusion of the arbitration and could have put forth an objection prior to then.

  1. (Administrative Agencies) Gross negligence while conducting residential appraisals was unprofessional conduct subject to discipline by the Board of Registered Nursing. William Michael Clawson v. Board of Registered Nursing (No. A159990 City & County of San Francisco Super. Ct. No CPF19516578 California Courts of Appeal First Appellate District Division Five Filed December 17, 2021)

After the unexpected death of the administrator of a residential care facility (RCF) for the elderly, the attorney for the administrator’s estate, hired the petitioner, who was a registered nurse and a certified legal nurse consultant, to assist with the closure of the estate of the administrator. The petitioner agreed to assess the administrator’s residents and recommend a new facility for them, as required by law. The petitioner, an employee of the RCF performed a minutes long assessment of a patient resident. In his appraisal, the petitioner noted significant redness of the patient’s bony prominences, but he did not, however, remove or check under the bandages where the bony prominences were noted. The patient was transferred to a new RCF where the caregivers there discovered significant wounds and infections. The patient was hospitalized, dying several weeks later. An investigation and hearing were conducted. Ultimately, the Board of Registered Nursing revoked the petitioner’s nursing license for gross negligence in performing the appraisal of the patient. The petitioner filed a writ of administrative mandate to overturn the Board’s decision, contending that the appraisal was not a “nursing function.” The trial court denied the petition of appeal.

The appeals court affirmed the trial court’s decision. It noted that a nurse may be disciplined for unprofessional conduct that constitutes gross negligence in carrying out usual licensed nursing functions, including observation of signs and symptoms of illness or general physical condition and implementation. Here, the petitioner conducted an assessment of the patient’s physical condition, reported her condition using technical terms, and signed both the appraisal and needs and services plan using its RN designation. Therefore, the petitioner was carrying out usual licensed nurse functions when conducting the assessment, and he may be disciplined for his negligence in carrying out that function.

  1. (MICRA) Medical Injury Compensation Reform Act limits did not apply to plaintiffs’ causes of action under the Elder Abuse Act where jury found both professional negligence and reckless neglect. Samantha B. v. Aurora Vista Del Mar, LLC (2d Civ. No. B302321 Super Ct. No. 56-2015-00464635-CU-PO-VTA Ventura County California Courts of Appeal Second Appellate District Division Six Filed December 20, 2021)

Civil Code section 3333.2, a statute enacted within the Medical Injury Compensation Reform Act of 1975 (MICRA), limits noneconomic damages to $250,000 in matters of professional negligence. In this case, the court decided this limitation did not apply to plaintiffs’ causes of action under the Elder Abuse and Dependent Adult Civil Protection Act (Elder Abuse Act).

The underlying facts involve the plaintiff’s former patients at an acute psychiatric facility. While residing at the hospital, they suffered sexual abuse by a hospital employee. They brought this action against the hospital and its management company, alleging professional negligence and breach of the Elder Abuse Act. The jury found for Plaintiffs and awarded substantial noneconomic damages against both defendants, as well as punitive damages against the management company. The appeals court affirmed the trial court’s decision.

  1. (Arbitration) Plaintiff was not bound by arbitration agreement signed by her adult daughter when placing her in a residential care facility because the daughter had not been granted authority to handle such matters. Theresa D., v. MBK Senior Living, LLC (No. A163312 Sonoma County Super. Ct. No. SCV-268130 California Courts of Appeal First Appellate District Division Three Filed December 21, 2021)

Plaintiff was a resident at a memory care assisted living facility for the elderly. During her brief residency at the facility, the plaintiff suffered four falls, fractured her hip, and was allegedly left in unsanitary conditions. Through her son and attorney-in-fact, she filed suit against the facility for failure to provide adequate care and supervision. The facility filed a motion to compel arbitration on the basis that the Plaintiff’s daughter, had signed an arbitration agreement when placing the Plaintiff at the facility. During the admission process, the daughter held herself out to be Plaintiff’s authorized representative with authority to make healthcare decisions, and she signed an optional arbitration agreement that was presented to her. Plaintiff, however, never signed the arbitration agreement herself, and in fact, her son, was the one with a general power of attorney to act on behalf of the Plaintiff, not her daughter. The trial court denied the motion to compel arbitration, ruling that the daughter did not have the authority to bind the Plaintiff to arbitration and the facility appealed.

The appeals court affirmed finding that under the Health & Safety Code, a family member may place an elderly relative in a RCF in certain circumstances. However, nothing grants the family member the authority to enter into an arbitration agreement on behalf of the elderly relative. Here, Plaintiff did not sign the arbitration agreement, and there was nothing to indicate that the Plaintiff had actually or impliedly given authority to the daughter to waive her right to seek redress from the courts.

  1. (Medical Staff) Medical staff bylaws’ burden of proof for peer review with hearings must be consistent with Business and Professions Code Section 809.3(b)’s preponderance of the evidence burden. William N. Bichai v. Davita, Inc. (No. F079815 Super. Ct. No. BCV-18-100245 California Courts of Appeal Fifth Appellate District Filed December 20, 2021)

Plaintiff, a physician, filed this lawsuit to challenge the denial of his application for appointment to the medical staff of a dialysis clinic. The trial court denied plaintiff’s request for writ of administrative mandate pursuant to Code of Civil Procedures section 1094.5. The plaintiff appealed.

This appeal addressed the procedural fairness of the hearing plaintiff received after the clinic’s peer review committee recommended his application be denied. The procedures for such a hearing are established by the medical staff bylaws and California’s peer review statute. The hearing officer, applying burdens specified in the bylaws, concluded that (1) the clinic sustained its initial burden of presenting evidence to support the denial of staff privileges and (2) the plaintiff did not sustain his burden of proving that the denial “lacks any substantial factual basis, or is otherwise arbitrary or capricious.”

The appeals court concluded the burden of proof contained in the medical staff bylaws was not consistent with the preponderance of the evidence standard required by Business and Professions Code section 809.3, subdivision (b)(2). It further concluded the statute controls in the event of an inconsistency, the application of the bylaws more demanding burden of proof constituted procedural error, the error deprived the plaintiff of a fair hearing and, therefore, was prejudicial. As a result, plaintiff was entitled to a writ of administrative mandamus vacating the hearing officer’s decision. The appeals court found that the standard of proof requiring the applicant to prove the lack of any substantial factual basis for the peer review committee’s recommendations was a more demanding standard of proof than the preponderance of the evidence standard required by Section 809.3 (b)(2). If noted the hearing officer imposed a greater burden of proof and thus, there was a reasonable probability that application of the correct burden of proof could have produced a result more favorable to the plaintiff.

  1. (Anti-SLAPP) Statement made by bank representatives in forms filed with Securities Exchange Commission are protected activities as matters under review by the SEC. Steven A Sugarman v. Halle Benett (No. B307753 Los Angeles County Super. Ct. No. 19STCV36697 California Courts of Appeal Second Appellate District Division Eight Filed December 27, 2021)

The plaintiff alleged that defendant made misrepresentations pertaining to an audit report included with defendant employers Securities Exchange Commission Form 10-K, which plaintiff contends caused plaintiff to be induced to hold the defendant employer’s securities. The defendant filed an anti-SLAPP motion in an attempt to strike the cause of action. The trial court found that the defendant’s representation in the audit report which were filed with the Securities Exchange Commission was a statement that was protected activity under the anti-SLAPP statute. The plaintiff appealed. The appeals court affirmed it held that the defendant was required to sign-off on the 10-K form as part of the duties as his employers lead audit partner, and so any representations resulting from his signature on the forms were protected statements under the anti-SLAPP statute. The anti-SLAPP statute protects any statements made in connection with an issue under review by an executive body or other official proceeding authorized by law.

  1. (Subpoena Expenses) Shifting third-party’s expenses incurred from complying with a subpoena was required by plain language of statute once the expenses incurred were determined to be an undue burden or expense. John Park v. Law Offices of Tracey Buck-Walsh (No. A161672 Sonoma County Super. Ct. Nos. SCV-2599791 & SCV-261163 California Courts of Appeal First Appellate District Division Three Filed December 27, 2021)

Plaintiff was engaged in litigation against his former attorneys, prompting this collateral dispute between the plaintiff and the California Department of Justice (DOJ) over his subpoena duces tecum requiring the DOJ to produce electronically stored documents. (California Code of Civil Procedure section 1985.8). The DOJ reportedly reviewed several hundred thousand electronic documents but produced fewer than a hundred. Partway through the production, the trial court ordered the plaintiff to pay over $32,000.00 to defray the “undue burden or expense” of the DOJ’s compliance with the subpoena. When the production was complete, the trial court ordered the plaintiff to pay the DOJ an additional $111,000.00. The plaintiff appealed the later order.

The appeals court affirmed. In the face of an undue burden or expense, the court may order a person to comply with a subpoena for Electronic Stored Information, but any such order shall protect a stranger to the litigation form any undue burden or expense. The court found that the plain language of Section 1985.8(l) mandated that the courts protect nonparties from undue burden or expense when ordering them to comply with a subpoena to produce Electronic Stored Information, but it leaves to the court’s discretion the determination of whether the burden or expense of compliance is undue in light of the facts of the particular case. Here, a discovery referee was engaged with determining that the expense of complying with the plaintiff’s subpoena was an undue burden, under the standard pursuant to Section 1985.8, and based upon the language of the statue, the court was bound to agreeing with the discovery referee and granted the DOJ’s request to shift the fees, as a stranger to the underlying litigation.

  1. (MICRA) Medical injury Compensation Reform Act limits did not apply to plaintiffs’ causes of action under the Elder Abuse Act where jury found both professional negligence and reckless neglect. Samantha B. v. Aurora Vista Del Mar, LLC (2d Civ. No. B302321 Super. Ct. No. 56-2015-00464635-CU-PO-VTA Ventura County California Court of Appeal Second Appellate District Division Six Filed December 20, 2021)

Plaintiffs were former patients at defendant’s acute psychiatric hospital. While residing at the hospital, they suffered sexual abuse by a hospital employee. They brought a lawsuit against the hospital and its management company, alleging professional negligence and breach of the Elder Abuse Act (“Act”). The jury found that the defendants acted with professional negligence and reckless neglect, the latter a threshold of liability for heightened remedies under the Act. The jury found for Plaintiffs and awarded substantial noneconomic damages against both defendants in excess of the $250,000.00 cap on noneconomic damages under the Medical Injury Compensation Reform Act of 1975 (MICRA), Code of Civil Code section 3333.2.

The appeals court affirmed the jury’s verdict. Based upon the finding of reckless neglect, the plaintiffs in this case were not bound by the laws specifically applicable to professional negligence, including MICRA. The jury finding of reckless neglect was found to be reasonably based upon the facility failing to properly train personnel, conduct a more robust background check of the perpetrator pre-hire, failing to report the incident once occurred as well as issues related to understaffing.

Note, this opinion should be required reading for those assessing risk and risk prevention in human resource departments and with employee training in healthcare settings.

Should you have any questions concerning these court decisions or desire a copy of any of them, please do not hesitate to contact our office.