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JAMES D. CROSBY – Complex and General Business Litigation – Business Trial Attorney – San Diego, CA. – jcrosby@hcesq.com – Office: (858) 755-3000 – Cell: (858) 705-0083

Copyright Defense Win Reversed – Proving Authorization to Copy is Defendant’s Burden

James D. Crosby - Complex and General Business and Commercial Litigation and Trial Representation - Henderson, Caverly, Pum & Charney, LLP - San Diego, California

This is a Trial Call guest post – an interesting piece on evidentiary burdens in copyright litigation from my partner, Doug Lytle. Doug discusses a recent Seventh Circuit copyright infringement case about making and distributing copies of a painting. The piece and the opinion identify some important pitfalls for copyright litigators, and offers some preventative guidance for those who make copies of or distribute the creative works of others. Thanks, Doug! Jim

Takes On Law

In a recent copyright infringement case about making and distributing copies of a painting, the Seventh Circuit Court of Appeals in  Ali v. Final Call, Inc. (7th Cir., Aug. 10, 2016, No. 15-2963) held that the district court misstated the elements of a prima facie copyright infringement claim and erroneously shifted to plaintiff the burden of proving that copies made and distributed by the defendant were unauthorized.  The opinion identifies some important pitfalls for copyright litigators, and offers some preventative guidance for those who make copies of or distribute the creative works of others.  [See THE TAKE-AWAYS below.]

Here are the basic facts:

Plaintiff Ali is an artist.  In 1983, Ali painted a portrait of Minister Louis Farrakhan (“Minister Farrakhan painting”), for which Farrakhan paid Ali $5,000.  Ali registered his copyright in the painting in 1997.  Defendant The Final Call (a newspaper for the Nation of Islam) sells various posters and prints.  The Final…

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California Supreme Court Affirms Use of Percentage Fee Awards in Class Action Cases Resulting in Recovery of Common Funds – Laffitte v. Robert Half International.

James D. Crosby - Complex and General Business and Commercial Litigation and Trial Representation - Henderson, Caverly, Pum & Charney, LLP - San Diego, California

In a significant victory for consumers and plaintiffs class action attorneys, the California Supreme Court, in Laffitte v. Robert Half International, Case No. S222996, clarified existing case law and approved the use of percentage fee awards in class action cases resulting in preservation or recovery of a “common fund” for the benefit of class members.

Facts

The facts of the case were simple. In three related wage and class action lawsuits, the defendant agreed to settle for a gross settlement amount of $19M. Plaintiffs counsel sought a fee award of the 1/3 of the gross settlement, or $6,333,333.33. Nice fee! A class member objected to the fee request arguing it was excessive and not adequately supported. The trial court overruled the objection and awarded plaintiffs the requested  1/3 “contingent fee”. Interestingly, the trial court “double-checked” the reasonableness of the contingent fee award with standard lodestar-multiplier analysis.

The objecting class member appealed arguing the trial court’s award of an attorney fee calculated as a percentage of the settlement amount violated the Court’s holding in Serrano v. Priest (1977) 20 Cal.3d.25 (Serrano III) to the effect that every fee award must be calculated on the basis of time spent by the attorney or attorneys on the case. The Court of Appeal affirmed. The Supreme Court granted review on the single issue of whether Serrano III permits a trial court to calculate an attorney fee award from a class action common fund as a percentage of the fund, while using the lodestar-multiplier method as a cross-check of the selected percentage.

Holding

In a lengthy opinion discussing the history and anaytical underpinnings of percentage and lodestar methods of determining reasonable fees in class action litigation and California law post-Serrano III, the court upheld the use of percentage fee awards in class action cases resulting in recovery of common funds.

Whatever doubts may have been created by Serrano III, supra, 20 Cal.3d 25, or the Court of Appeal cases that followed, we clarify today that use of the percentage method to calculate a fee in a common fund case, where the award serves to spread the attorney fee among all the beneficiaries of the fund, does not in itself constitute an abuse of discretion. We join the overwhelming majority of federal and state courts in holding that when class action litigation establishes a monetary fund for the benefit of the class members, and the trial court in its equitable powers awards class counsel a fee out of that fund, the court may determine the amount of a reasonable fee by choosing an appropriate percentage of the fund created. The recognized advantages of the percentage method—including relative ease of calculation, alignment of incentives between counsel and the class, a better approximation of market conditions in a contingency case, and the encouragement it provides counsel to seek an early settlement and avoid unnecessarily prolonging the litigation (See pt. I, ante; Lealao, supra, 82 Cal.App.4th at pp. 48–49; Rawlings v. Prudential-Bache Properties, Inc., supra, 9 F.3d at p. 516)—convince us the percentage method is a valuable tool that should not be denied our trial courts.

The court specifically limited its holding to true common fund cases. It specifically did not address whether the percentage method may be applied when there is no conventional common fund out of which the award is to be made but only a “ ‘constructive common fund’ ” created by the defendant’s agreement to pay claims made by class members or when a settlement agreement establishes a fund but provides that portions not distributed in claims revert to the defendant or be distributed to a third party or the state, making the fund’s value to the class dependent on how many claims are made and allowed. These class action types and the availability of percentage fee awards in same are left for future consideration.

The Court also endorsed the use of traditional lodestar analysis to “double-check” or “cross-check” the reasonableness of the percentage fee award, but held that trial courts have discretion to forego same.

As to the incentives a lodestar cross-check might create for class counsel, we emphasize the lodestar calculation, when used in this manner, does not override the trial court’s primary determination of the fee as a percentage of the common fund and thus does not impose an absolute maximum or minimum on the potential fee award. If the multiplier calculated by means of a lodestar cross-check is extraordinarily high or low, the trial court should consider whether the percentage used should be adjusted so as to bring the imputed multiplier within a justifiable range, but the court is not necessarily required to make such an adjustment. Courts using the percentage method have generally weighed the time counsel spent on the case as an important factor in choosing a reasonable percentage to apply. (5 Newberg on Class Actions, supra, § 15:86, pp. 332–333; see, e.g., In re Thirteen Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litigation, supra, 56 F.3d at p. 307 [“even under the [percentage of fund] method, time records tend to illuminate the attorneys’ role in the creation of the fund, and, thus, inform the court’s inquiry into the reasonableness of a particular percentage.”].) A lodestar cross-check is simply a quantitative method for bringing a measure of the time spent by counsel into the trial court’s reasonableness determination; as such, it is not likely to radically alter the incentives created by a court’s use of the percentage method.

We therefore agree with the Court of Appeal below that “[t]he percentage of fund method survives in California class action cases, and the trial court did not abuse its discretion in using it, in part, to approve the fee request in this class action.” We hold further that trial courts have discretion to conduct a lodestar cross-check on a percentage fee, as the court did here; they also retain the discretion to forgo a lodestar cross-check and use other means to evaluate the reasonableness of a requested percentage fee.

Takeaways

Laffitte v. Robert Half International is a significant victory for plaintiffs class action attorneys and, in turn, for California consumers injured by unfair, improper, and/or illegal business and employment practices. Whether it will result in a significant uptick in California class action litigation remains to be seen. I suspect it will. The lure of large contingent fees will likely bring in more players.

Plaintiffs class action attorneys should not throw out their time slips or unload their timekeeping software. While percentage fees are available in common fund cases, the Court tacitly endorsed, though it did not mandate, use of a lodestar calculation to “double-check” the reasonableness  of such percentage fee awards. In seeking percentage fee awards in class action common fund cases, plaintiffs would be well-served to evaluate and consider whether to offer a lodestar calculation “double-check” of the contingent fee sought. If the percentage fee and the lodestar “double-check” fee are within the same range, offer the lodestar as evidence of the reasonableness of the percentage fee.

But, if the percentage fee requested in a class action common fund case is far in excess of what the fee would be under a lodestar calculation, the likely best approach is not to offer a lodestar calculation and argue the court should “use other means to evaluate the reasonableness of a requested fee”. In such cases,  plaintiffs counsel would be well-served to provide other evidence, including detailed declarations, adressing the risks and potential value of the subject litigation, the novelty and difficulty of the issues involved, the history and course of the litigation, the result obtained and benefit to class members, comparable percentage fee awards in comparable cases, and the time and resources expended on the case. Under such circumstances, expect defense counsel to urge the court to require further lodestar evidence of time spent and applicable rates and to argue for lodestar analysis as a check against an exorbitant, unreasonable contingent fee.

After Laffitte v. Robert Half International, the percentage fee award survives in California class action common fund litigation. Again, a nice win for the plaintiffs class action bar!

Crosby Appointed to 2017-2018 California State Bar JNE Commission.

James D. Crosby - Complex and General Business and Commercial Litigation and Trial Representation - Henderson, Caverly, Pum & Charney, LLP - San Diego, California

I just received notice that I have been appointed by the State Bar of California Board of Trustees to serve on the Commission on Judicial Nominees Evaluation (“JNE Commission”) for 2017-2018. I am pleased and quite honored by this appointment.

The JNE Commission is tasked to provide independent, comprehensive, accurate and fair evaluations of candidates for judicial appointment and nomination, and to assist the governor in the judicial selection process. I am very pleased to be able to serve on this important State Bar commission and to play an active role to promote a California judiciary of quality and integrity. I will serve on the JNE Commission with attorneys and public members from all across the state. I am told it’s a lot of work, but also very rewarding and quite interesting.

To my clients and non-lawyer friends, this is a not a new job. I am not closing up shop. Far from it. I will continue, full-time at full speed, to represent clients in litigation and in court. As always. Rather, this is a professional undertaking, ancillary to my work – a volunteer opportunity to give back to my profession – an appointment to a State Bar Commission where, hopefully, I can have a positive impact on the quality, character, and integrity of our judiciary for many years to come.

I am quite happy about this! I can’t wait to get started!

Thanks.

Jim

A Reasonable Limitation on the Vexatious Litigant Statute – John v. Superior Court, 63 Cal. 4th 91, By Leor Hafuta.

James D. Crosby - Complex and General Business and Commercial Litigation and Trial Representation - Henderson, Caverly, Pum & Charney, LLP - San Diego, California

This is a guest Trial Call post by Leor Hafuta on John v. Superior Court, the recent California Supreme Court case addressing the vexatious litigant statute and its applicability in certain appeals. Leor is an incoming 3L at Loyola School of Law and a summer clerk at Henderson, Caverly, Pum & Charney, LLP.     


A plaintiff declared a vexatious litigant cannot file a law suit in California without first seeking a court’s leave or obtaining legal counsel pursuant Cal. Civ. Proc. § 391.7 (“Statute”).  The Statute, aimed at limiting misuse of the court system, allow courts to declare plaintiffs vexatious litigants if they have initiated five unsuccessful or unresolved lawsuits within the past seven years.

In John v. Superior Court, 63 Cal. 4th 91 (Cal. 2016), the California Supreme Court (“Supreme Court”) confronted the issue of whether the vexatious litigant Statute applies to defendants appealing a judgment against them.  In the underlying case, the Defendant appealed an unlawful detainer judgment and an award of attorney’s fees against her.  The court said it would entertain her appeals if she furnished security because she was a vexatious litigant.  After the court dismissed her appeals for failure to furnish security, she petitioned the Second District Court of Appeal (“Court of Appeal”) to have her underlying appeal heard on its merits.

The Court of Appeals ruled that the vexatious litigant filing requirements did not apply to the defendant because she did not initiate the litigation.  The plaintiff then petitioned the Supreme Court, arguing that a defendant who files an appeal is in the same position as a plaintiff filing new litigation.  The Supreme Court disagreed with the plaintiff, holding that the Statute only applies to a plaintiff’s appeal, not the party who did not initiate the litigation.

Therefore, the Supreme Court affirmed the Court of Appeal’s decision and disapproved prior case law, which stated that the filing requirements apply to all vexatious litigant appellants.

Takeaways:

Ruling Otherwise Would be Equivalent to Saying Two Wrongs Make a Right:  Overall, the case seems to place a necessary and logical limitation on the vexatious litigant Statute.  The Statute provides an important mechanism for curbing an unrepresented plaintiff’s ability to file vexatious lawsuits (a wrong), especially when he or she is not subject to discipline from the state bar.  However, if the Statute would apply when vexatious litigants appeal a case they did not initiate, the Supreme Court would essentially be punishing those vexatious litigants for their past actions rather than evaluating the appeal on its merits (also a wrong).  Thus, the Supreme Court ruling was consistent with the intent of Statute to limit abuse of the courts.

A Vexatious Defendant on Appeal is in the Clear:  If you ever find yourself filing suit against an unrepresented vexatious litigant, be aware that the Statute will not hinder that vexatious defendant from appealing a judgment in your favor.  However, if the defendant frivolously appeals that judgement, you may be able to recover attorney’s fees under Cal. Civ. Proc. Section 907 or move for sanctions under Cal. Rules of Court, rule 8.276.

 

Caretaking Relationship Required for Elder Abuse Action Against Physicians – Winn v. Pioneer Medical Group, 63 Cal. 4th 148 (2016), by Rae Y. Chung.

James D. Crosby - Complex and General Business and Commercial Litigation and Trial Representation - Henderson, Caverly, Pum & Charney, LLP - San Diego, California

This is a guest Trial Call post by Rae Y. Chung on Winn v. Pioneer Medical Group, the recent California Supreme Court case addressing Elder Abuse actions against physicians. Rae is an incoming 3L at UCLA School of Law and a summer clerk at Henderson, Caverly, Pum & Charney LLP. 


In Winn v. Pioneer Medical Group, Inc., 63 Cal. 4th 148 (2016), the California Supreme Court addressed the requirements and limitations of the Elder Abuse Act under California Welfare & Institution Code Section 15657 as applied to actions against physicians. The Court in Winn interpreted Welf. & Inst. Code Section 15657 to require as a precondition to any action for neglect against a physician the existence of a certain caretaking relationship between the decedent elder and the defendant physician. This decision will make it substantially more difficult for personal representatives of decedents to successfully bring elder abuse actions against defendant physicians.

THE CASE

This case arose when the daughters of the decedent sued the defendant physicians for elder abuse along with their medical malpractice action. The decedent elder had sought medical care from the defendant physician from 2000 to 2009 on an outpatient basis. Throughout the years, the physicians noticed various symptoms of peripheral vascular disease and gangrene but the physicians never referred her to a specialist. In early 2009, the decedent was admitted to hospital, where her leg was amputated and she subsequently died from blood poisoning. The decedent’s daughters sued, asserting the physician’s failure to refer an elder patient to a specialist constituted neglect under the Elder Abuse Act.

THE RULING

The Court held that a caretaking or custodial relationship is a requirement for bringing suit for neglect under the Elder Abuse Act. The Court held that the focus of Welf. & Inst. Code Section 15657 is on the nature of the relationship between an elder and a defendant physician, not on the defendant physician’s professional standing.

SIGNIFICANCE

The Elder Abuse Act enhances recoverable damages for physical abuse or neglect of elders. Under California Code of Civil Procedure Section 377.34, the damages recoverable for a civil action brought by decedent’s personal representative are usually limited to pre-death penalties or punitive damages, but exclude pre-death pain, suffering or disfigurement. However, the Elder Abuse Act establishes heightened remedies by allowing the plaintiffs to recover damages for pre-death pain and suffering. The ruling in Winn precludes plaintiffs access to such enhanced damages in abuse actions against physicians under the Act unless they can plead and prove the existence of a “caretaking or custodial relationship”.

TAKEAWAYS

The Court’s decision in Winn was seemingly driven by policy considerations. The Elder Abuse Act establishes heightened remedies. Allowing plaintiffs to proceed against physicians under the Act and expose physicians to the enhanced remedies under the Act, in addition to potential professional negligence exposure and in the absence of any caretaking relationship requirement was seemingly viewed by the Court as overly harsh.

Thus, after Winn, it will be harder for plaintiffs to plead neglect under the Elder Abuse Act against physicians. Therefore, when proceeding against a physician for physical abuse or neglect under the Elder Abuse Act, plaintiffs will be required to plead and prove a substantial personal and caretaking relationship between the elder and the physician. In that regard, plaintiffs may consider the following issues:

  • Whether the physician was seen on an outpatient or inpatient basis;
  • Whether the physician was in a position to initiate or deprive an elder of medical care;
  • Whether there was anyone other than the physician who controlled the scope of elder patient’s medical care; and
  • The number of years the physician took care of the elder patient.

 

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