- Employers Should Address New Postal Service "Postmark" Ruleon February 24, 2026 at 1:20 PM
The Postal Service added a new section (DMM 608.11) to the Domestic Mail Manual that formally defines the postmark for the first time in a regulation and explains what information it does and doesn't convey. It took effect December 24, 2025.
A postmark confirms USPS had possession of a mailpiece on the stamped date, but the postmark date does not necessarily match the date USPS first received the mailpiece. Most postmarks are applied by automated machines at processing facilities, and the date reflects when the mail was processed at that facility - not when it was initially deposited. This discrepancy has grown more common under USPS's Regional Transportation Optimization (RTO) initiative, which adds flexibility between collection and processing schedules.
This is a significant practical problem with perhaps significant legal consequences, even though USPS insists the rule is "just clarification." For example Internal Revenue Code § 7502, also known as the “mailbox rule.” IRC § 7502 says that if a tax return or payment arrives at the IRS after the deadline, it's still considered timely if the USPS postmark date is on or before the due date. Courts interpret this strictly - the postmark date controls, regardless of when the taxpayer actually deposited the document.
The problem is that § 7502 and its regulations never actually defined "postmark." As a result, the USPS's new DMM 608.11 effectively supplies the operative definition for § 7502 purposes. And that definition now makes clear that a machine-applied postmark reflects the date of first automated processing at a regional facility - not when you dropped it in the mailbox or handed it to a postal carrier. Tax professionals have been calling for the IRS to address this, but nothing had been issued as of the most recent reporting.
And it's just now getting attention from employment and benefits lawyers. Here's how the new postmark rule ripples into employer notice obligations. Under federal laws like ERISA, COBRA, HIPAA, and the ACA, employers are required to send a variety of notices to employees concerning health insurance coverage, retirement benefits, and other employee benefits.
Some key examples of these deadlines:
- - General COBRA notices must be sent to new plan participants within 90 days of health coverage starting. COBRA election notices must be sent within 14 days after an employer notifies the plan administrator about a qualifying event, such as a layoff, discharge, divorce, or reduction in hours.
- - Health plans must send HIPAA notices of privacy practices to enrollees within 60 days of any substantial change.
- - HIPAA-covered entities must notify affected individuals without unreasonable delay, or no later than 60 calendar days after discovering a security breach.
- - Other ERISA-required communications include summary plan descriptions (SPDs), summaries of benefits and coverage (SBCs), formulary notices, and annual disclosures - all with their own timing requirements.
- - COBRA regulations specifically say that the initial notice, election notice, and notice of unavailability are considered "provided" on the date they are postmarked. So if the postmark date is delayed by a day or two at a regional processing center, a notice that was mailed on time could be deemed late
Some options to avoid this problem include requesting a free manual (local) postmark at any Post Office retail counter. This stamp will align with the date the customer hands over the mail. Registered Mail and Certified Mail also provide mailing receipts.
The Postal Service claims this rule does not change any actual postmarking operations or procedures. USPS says it's purely an educational/transparency measure codifying longstanding practices. The era of dropping a deadline-sensitive document in a blue mailbox on the last day and trusting the postmark is effectively over. It would be wise for employers to take affirmative steps to secure proof of the actual mailing date.
- AI Is Not A Lawyer - and No Attorney-Client Privilege Applieson February 24, 2026 at 1:20 PM
Generative artificial intelligence tools have become increasingly prevalent across various domains of human activity. It has reliably been estimated, for instance that more than half of United States households have adapted AI in some form. Only three years after its release, one prominent AI platform is being used by more than 800 million people worldwide every week. Yet the implications of AI for the law are only beginning to be explored.
A ruling by Judge Jed S. Rakoff in United States v. Heppner (S.D.N.Y., Feb. 17, 2026) appears to be the first federal decision addressing whether a criminal defendant's conversations with a generative AI platform are protected by attorney-client privilege or the work product doctrine. The answer on both counts according to this ruling was "no." Most published decisions involving generative artificial intelligence have had to do with attorneys' misuse of that technology. That set of concerns is plainly net present here.
Bradley Heppner was indicted on securities fraud and related charges stemming from an alleged $150+ million scheme involving GWG Holdings. After receiving a grand jury subpoena and learning he was a target, Heppner - on his own initiative, without his lawyer's direction - used Claude to prepare roughly 31 documents outlining potential defense strategies and legal arguments. The FBI seized these "AI Documents" during a search of his home. Heppner's counsel claimed privilege over them.
Heppner, through his counsel asserted privilege over these documents arguing that (1) Heppner had inputted into Claude, among other things,information that Heppner had learned from counsel; (2) Heppner had created the AI Documents for the purpose of speaking with counsel to obtain legal advice; and (3) Heppner had subsequently shared the contents of the AI Documents with counsel. Heppner' s counsel conceded, however, that counsel "did net direct [Heppner] to run Claude searches."
The trial court noted that it is well established that the attorney-client privilege attaches to, and protects from disclosure, "communications (1) between a client and his or her attorney (2) that are intended to be, and in fact were, kept confidential (3) for the purpose of obtaining or providing legal advice." United States V. Mejia 655 F.3d 126, 132 (2d Cir. 2011). Courts construe the attorney-client privilege narrowly because it operates as an exception to the rule that "all relevant proof is essential" for a complete record and for "confidence in the fair administration of justice."
On attorney-client privilege, the court found the documents failed on multiple independent grounds. First, Claude is not an attorney, so there was no attorney-client relationship. Second, the communications were not confidential — Anthropic's privacy policy explicitly permits collecting user inputs and outputs, using them for training, and disclosing data to third parties including government authorities. Third, Heppner was not seeking legal advice from Claude; Claude itself disclaims the ability to give legal advice. The court noted that even though Heppner later shared the outputs with his lawyer, non-privileged communications don't become privileged simply by being passed along to counsel.
On work product doctrine, the court held that even assuming the documents were prepared in anticipation of litigation, they were not prepared "by or at the behest of counsel." Heppner acted entirely on his own. The documents didn't reflect defense counsel's strategy at the time they were created. The court distinguished a prior S.D.N.Y. magistrate decision (Shih v. Petal Card) that took a broader view, respectfully disagreeing and emphasizing that the doctrine's core purpose is protecting lawyers' mental processes, not a client's independent research with an AI tool.
"Thus, the communications between Heppner and Claude were not privileged at the time they took place. Moreover, even assuming that Heppner intended to share these communications with his counsel and eventually did so, it is black-letter law that non-privileged communications are not somehow alchemically changed into privileged ones upon being shared with counsel. Thus, because the AI Documents would not be privileged if they remained in [Heppner's] hands they did not acquire protection merely because they were transferred to counsel." The court concluded that AI's novelty doesn't exempt it from longstanding legal principles.
The ruling has obvious implications for the millions of people using AI platforms to think through legal problems - those conversations are likely discoverable.
- Former NFL Player and Lab Owner Convicted in $328M Medicare Fraudon February 23, 2026 at 11:53 AM
A federal jury convicted a Texas laboratory owner and former NFL player for his role in a $328 million cardiovascular genetic testing fraud scheme.
According to court documents and evidence presented at trial, Keith J. Gray, 39, of McKinney, Texas, orchestrated a scheme to bill Medicare for medically unnecessary genetic tests designed to evaluate the risk of various cardiovascular diseases and conditions. Gray, the owner and operator of two clinical laboratories, Axis Professional Labs LLC, and Kingdom Health Laboratory LLC, offered and paid kickbacks to marketers in exchange for their referral of Medicare beneficiaries’ DNA samples, personally identifiable information (including Medicare numbers) and signed test orders from medical providers authorizing the medically unnecessary genetic tests.
As part of the scheme, the marketers engaged other companies to solicit Medicare beneficiaries through telemarketing and to engage in “doctor chase,” to obtain the identity of beneficiaries’ primary care physicians and pressure them into approving genetic testing orders for patients who purportedly had already been “qualified” for the testing during telephone calls conducted by non-medical personnel at one of the companies retained by the marketers - not by their physicians.
In an effort to conceal the kickback payments, Gray used sham contracts and invoices that purported to charge for “marketing” hours but that in reality were reverse-engineered to match the amounts agreed to under the illegal per-sample kickback arrangement. Gray also sought to conceal the scheme by referring to the payments as being for “software” and loans that never existed. Evidence at trial included text messages between Gray and his co-conspirator becoming giddy over the amount of money they were making from Medicare.
Axis and Kingdom billed Medicare approximately $328 million for the false, fraudulent and kickback-tainted genetic testing claims, of which Medicare paid approximately $54 million. Gray laundered some of the proceeds by purchasing expensive luxury vehicles, including a Dodge Ram truck worth more than $142,000 and a Mercedes Benz SUV worth more than $145,000.
The jury convicted Gray of conspiracy to defraud the United States and to pay and receive health care kickbacks, five counts of violating the Anti-Kickback Statute and three counts of money laundering. He is scheduled to be sentenced at a later date. Gray faces a maximum penalty of 10 years in prison on each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI, HHS-OIG, MFCU and VA-OIG investigated the case.Trial Attorneys Ethan Womble and Adam Tisdall of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of eight strike forces operating in federal districts across the country, has charged more than 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes.
- NorCal Tow Company Operator Sentenced for Insurance Fraudon February 23, 2026 at 11:53 AM
Jose Vicente Badillo, the owner and operator of two towing companies, was sentenced to 60 months in federal prison for his involvement in a scheme to burn tow trucks throughout the Bay Area in 2023. U.S. District Judge Rita F. Lin handed down the sentence on Feb. 12, 2026.
Badillo, 29, of San Francisco, was also sentenced on Feb. 13, 2026, in an unrelated case to 27 months in federal prison for his role in a conspiracy to submit fraudulent auto insurance claims from at least 2017 until at least 2021. U.S. District Judge Trina L. Thompson handed down the sentence, which will run concurrently with the 60-month sentence imposed by Judge Lin.
Badillo was indicted by a federal grand jury in March 2025 for his involvement in the arson conspiracy. In October 2025, he pleaded guilty to one count of conspiracy to commit arson. According to the plea agreement, Badillo admitted to devising, orchestrating, and overseeing a scheme to set fire to tow trucks in the San Francisco Bay Area. The principal goals of Badillo’s scheme were to drive more business to his own towing companies, Auto Towing and Specialty Towing, by impeding competitor towing companies’ business prospects and to exact revenge against competitor towing companies and their owners for perceived wrongs. To accomplish those goals, Badillo recruited, agreed with, and directed others to execute the scheme by torching six tow trucks belonging to four competitor companies in April, July, and October of 2023.
Separately, Badillo was twice indicted by a federal grand jury in 2024 for his involvement in the automobile insurance fraud schemes. In October 2025, Badillo pleaded guilty to conspiracy to commit mail fraud and wire fraud in the second-charged insurance fraud case. According to the plea agreement, Badillo conspired with others to defraud automobile insurance companies by submitting fraudulent insurance claims. In furtherance of the scheme to defraud, Badillo staged an accident on Guadalupe Canyon Parkway in San Mateo County involving a Sterling tow truck and a vehicle carrier carrying four vehicles. Badillo also generated fake tow records concerning at least 18 vehicles involved in iterations of the scheme to defraud and orchestrated at least another nine iterations of the scheme to defraud, causing victim insurance companies hundreds of thousands of dollars in losses.
In another fraud case, Badillo and Abigail Fuentes were charged with multiple felonies in October 2023 by the San Francisco District Attorney’s Office. The charges stem from an alleged welfare fraud scheme. Fuentes, who worked as a Senior Eligibility Worker at the Human Services Agency, is accused of improperly approving Badillo’s application for public welfare programs without disclosing their personal relationship. Both individuals allegedly misrepresented their income and assets to qualify for benefits they were not eligible for, including Medi-Cal, CalFresh, and CalWORKs. Authorities say Badillo and Fuentes are in a relationship and have children.
At the time the application was filed, investigators said the pair had been operating three towing companies – Auto Towing, Jose’s Towing and Specialty Towing – which generated more than $2 million in gross annual income. Both Fuentes and Badillo allegedly lied about their substantial income and assets in order to receive public benefits they were not eligible for. The case led to more scrutiny of the pair’s business practices by San Francisco authorities, specifically from San Francisco City Atty. David Chiu, whose office later alleged that one of the couple’s companies was profiting from illegal tows.
In August 2023, the City Attorney initiated debarment proceedings against Auto Towing after the company violated multiple state and local laws by illegally towing vehicles from private property. Between February and May 2023, Auto Towing employees illegally towed several cars from a bank parking lot in the Portola neighborhood without the permission of the property owner. It is unlawful for a tow company to tow a car from private property without the consent of the property owner. In February 2024, Chiu moved to suspend the company. Auto Towing, and its affiliates, which included Specialty Towing, from receiving contracts from the city.
The perpetrator also made it difficult for vehicle owners to retrieve their vehicles, restricted the hours when vehicles could be retrieved, and pressured vehicle owners to pay in cash. Under the California Vehicle Code, vehicle owners have the right to retrieve their vehicles 24 hours a day, any day of the year, and have the right to pay with cash or major credit card. The victims whose cars were towed were primarily Spanish- and Cantonese-speaking residents, who are especially vulnerable to predatory tows.
Specialty Towing came under public scrutiny two months later when a bystander recorded one of its trucks trying to tow a woman’s car as she was driving in San Francisco. “We were freaking out calling and basically rolling down our window and saying, ‘Hey what you are doing? You can’t be doing that,’ ” the driver, identified only as Joanne, told ABC 7 News in an interview. “He started backing up and his lever came down and basically he was just backing up trying to latch onto our car.”
The video of this incident was horrifying. the driver was waiting on a public street behind a tow truck stopped for a red light. The two truck driver then dropped his towing apparatus hoping to hook onto Joanne’s car while she was in it with the motor running. She backed up, and the tow truck driver backed up chasing her backward down the street. Had the tow truck driver been successful he would have towed her car away with the motor running, while kidnapping her inside.
- Exclusive Remedy Ends City Office Workers Asbestos Lawsuiton February 19, 2026 at 1:42 PM
The City of San Diego leased several floors of a downtown high-rise office building in 2017 where it stationed many employees. The City knew the building contained asbestos. That July, the building owner began a window renovation project that would involve the removal of approximately 40 tons of asbestos-containing materials. The City notified employees by email about the project, explained that air quality would be monitored daily, and designated Karen Johnson, a manager in its Real Estate Asset Department, as the liaison between employees and the building owner and renovation contractors.
Within days, employees began expressing concerns. Over the following months, they reported to Johnson and other City officials that they were experiencing respiratory problems. Employees also reported that renovation workers were wearing protective masks, that plastic barriers meant to contain dust and debris were failing, and that a ventilator for a sealed asbestos-containing area was blowing exhaust into the employee parking structure. Johnson relayed these complaints to the building owner, the contractors, and Ronald Villa, the City's deputy chief operating officer. Despite the ongoing complaints, the City decided not to relocate employees because it had no legal grounds to break its lease and no alternative space available.
That changed on January 25, 2018, when the San Diego County Air Pollution Control District received a complaint and took samples from multiple floors of the building. The samples tested positive for asbestos the following day. On January 26, the City notified its employees of the results and instructed them to stay out of the building. Over the next several weeks, the District confirmed widespread asbestos contamination throughout the building and found that air samples collected between February 1 and 5 contained asbestos fibers exceeding permissible levels.
On March 2, 2018, City officials held a meeting with affected employees. Villa told them the asbestos found on January 25 was not airborne and that prior air testing had shown levels within EPA tolerances. George Katsikaris of the City's Environmental Services Department similarly told employees that air samples collected before the evacuation were within safe, breathable levels and that dust samples had come back clean. A toxicologist told employees they should not worry about adverse health effects. Nevertheless, Villa acknowledged employees' concerns and encouraged anyone worried about cancer to take whatever steps they needed, and a workers' compensation manager explained how to file claims.
Alina Cadena and other City employees who had worked in the building during the renovations sued the City and Villa in his official capacity. They alleged the City intentionally exposed them to asbestos and concealed the extent of the exposure because it determined their health and safety were not worth the cost of breaking the lease. They asserted causes of action for intentional infliction of emotional distress and fraudulent concealment, sought compensatory damages, costs, and attorney fees, and sought punitive damages against Villa.
The City moved for summary judgment, arguing that workers' compensation was the employees' exclusive remedy under Labor Code section 3602, subdivision (a), and that the employees could not establish the fraudulent concealment exception to that exclusivity rule under subdivision (b)(2). The City alternatively sought summary adjudication of the emotional distress claim and the punitive damages claim against Villa. In support, the City submitted declarations from Johnson and Villa stating they had no knowledge of loose or uncontrolled asbestos before January 26, 2018, and that the renovation project manager had regularly reported air samples at normal background levels. The City also submitted deposition testimony, including from employees themselves, who admitted they had no evidence the City knew of loose asbestos debris before that date.
The court granted summary judgment, finding the fraudulent concealment exception did not apply and workers' compensation was the exclusive remedy. The Court of Appeal affirmed the judgment in its entirety, reviewing the summary judgment de novo in the unpublished case of Cadena v. City of San Diego, - D084784 (February, 2026).
The court explained that under the workers' compensation exclusivity rule, when an employee suffers an injury arising out of and in the course of employment, workers' compensation is the sole and exclusive remedy against the employer. (Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 800, 812–813.) The fraudulent concealment exception in Labor Code section 3602, subdivision (b)(2), requires the employee to prove three elements: the employer knew of the employee's work-related injury, the employer concealed that knowledge, and the concealment aggravated the injury.
The court found the employees failed to raise a triable issue on the first element - actual prior knowledge of their injuries. Citing Ashdown v. Ameron Internat. Corp. (2000) 83 Cal.App.4th 868, 880, and Hughes Aircraft Co. v. Superior Court (1996) 44 Cal.App.4th 1790, 1797, the court emphasized that constructive or imputed knowledge is insufficient; only actual knowledge will do. The City's evidence showed it did not know about loose asbestos debris until January 26, 2018, the same day it notified employees. The employees themselves admitted they had no evidence the City knew earlier. Moreover, since employees had the same information the City did, the fraudulent concealment exception did not apply, because the exception requires the employer to have known of the injury before the employee.
The employees argued their emotional distress claim should proceed to trial because the City's conduct in knowingly exposing them to a known carcinogen was not a normal part of the employment relationship. The court disagreed, surveying a line of California Supreme Court decisions holding that workers' compensation is the exclusive remedy for intentional infliction of emotional distress claims against employers.
The court further relied on Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465, 474–475, where the California Supreme Court held that even if an employer knowingly concealed asbestos dangers from employees, workers' compensation was the only remedy.
- Court of Appeal Affirms Workplace Violence Restraining Orderon February 19, 2026 at 1:42 PM
Rayan Zarrabi graduated from Scripps Ranch High School, part of the San Diego Unified School District, in 2019. In the years that followed, he engaged in an escalating pattern of hostility directed at two school employees - M.L., a vice principal, and D.L., one of his former teachers. A few months after graduating, Zarrabi attended an SRHS football game where he shouted profanity and raised his middle finger at D.L. In December 2022, he entered the campus without permission, was told to leave, and was then caught sneaking back in through a rear gate, after which M.L. instructed him never to return.
In May 2023, Zarrabi attended an off-campus SRHS volleyball game at Southwestern Community College, where he sent disturbing electronic messages to students that included references to graves and tombstone emojis. When M.L. told him to leave, campus police had to escort him out while he shouted vulgar insults at M.L. In June 2023, he yelled profanity at M.L. from his car as M.L. sat on a restaurant patio. Around the same time, he tracked down D.L.'s family members on Facebook and sent them hateful, profanity-laden messages attacking D.L.'s appearance and character.
In February 2024, Zarrabi contacted a coworker of M.L. and D.L. on Facebook, repeating the same type of messages and adding lengthy, hostile commentary about both men. Then, in May 2024, a witness flagged down police to report that Zarrabi had been speaking rapidly and intensely about his hatred for M.L. and D.L., stating that he hoped they would die, that they did not deserve to live, that it was all he could think about, and that he was going to get his revenge. Police prepared a crime report, a suspicious activity report, and a psychiatric emergency response team referral, and an officer advised M.L. to seek a restraining order. Zarrabi reportedly continued telling third parties, including current students, that he intended to "go after" the two employees.
In October 2024, the District filed a petition for a workplace violence restraining order under Code of Civil Procedure section 527.8 on behalf of M.L. and D.L., also requesting that M.L.'s immediate family members be included as protected persons. The trial court granted a temporary restraining order based on a credible threat of violence or stalking and set a hearing. Zarrabi filed a written response denying the allegations. Following a hearing in November 2024, the trial court granted the petition, ordering Zarrabi to stay at least 100 yards from the employees' workplaces, homes, and vehicles, as well as from SRHS events held off campus.
The Court of Appeal affirmed the restraining order in its entirety in the unpublished case of San Diego Unified School District v. Zarrabi, No. D085415 (February 2026). The court addressed Zarrabi's arguments on four grounds.
First, on sufficiency of the evidence, the court held that Zarrabi had forfeited this argument by failing to include a reporter's transcript or an agreed or settled statement from the hearing.The court went on to find that even setting aside the forfeiture, the record - including declarations from M.L. and D.L., copies of Zarrabi's electronic messages, and a police report - contained substantial evidence supporting the order.
Second, regarding the First Amendment, the court found that Zarrabi failed to present a cogent argument supported by relevant authority. It noted that the cases he cited were inapposite. Relying on City of San Jose v. Garbett (2010) 190 Cal.App.4th 526, 537, the court explained that speech constituting a credible threat of violence under section 527.8 is not constitutionally protected and may properly be enjoined.
Third, on due process, Zarrabi complained that a police officer's declaration was filed shortly before the hearing and that he did not receive it in time. The court found he provided no evidence to support this claim, no evidence the trial court even considered the declaration, and no showing that the outcome would have been different without it, since the declarations of M.L. and D.L. alone were sufficient. The court cited City of Los Angeles v. Herman (2020) 54 Cal.App.5th 97, 105, where a similar due process argument was rejected because the defendant had the opportunity to question witnesses and present his own evidence.
Fourth, the court rejected Zarrabi's claim that the restraining order caused him disproportionate reputational and employment harm. It found he supported this argument with neither citations to the record nor relevant legal authority.Even considering the argument on its merits, the court found that the record did not establish any harm to Zarrabi that was disproportionate to the need for protection.
- Two SoCal Attorney's 13 Year Dispute Resolves Complex Litigation Issueson February 18, 2026 at 2:09 PM
Douglas A. Bagby is an attorney who represented clients in the Los Angeles, California area, primarily in family law and general litigation. Joseph Daniel Davis:is a Pasadena/Los Angeles, California attorney whose practice included personal injury and products liability. He has also been involved in toxic tort, legal malpractice, and medical malpractice work. This new published appellate case arises from a long-running dispute between these two Southern California attorneys.
The conflict began in July 2013 when Bagby was involved in a motor vehicle collision in which he lost one leg below the knee. He hired Davis to represent him in a personal injury action, which went to trial in June 2016 and resulted in a jury verdict of more than $5 million in Bagby's favor. In May 2017, Bagby sued Davis for breach of contract and malpractice. Davis defaulted, then successfully moved to set aside the default. Bagby petitioned for a writ of mandate, which the Court of Appeal granted, ordering the trial court to reinstate the default. (Bagby v. Superior Court (Apr. 16, 2018) B287188 [nonpub. opn.].)
On remand, the trial court entered judgment for $27 million, but Davis appealed, arguing Bagby was limited to the $5 million demanded in his complaint. The Court of Appeal agreed and reversed, directing the trial court to let Bagby choose between accepting a $5 million default judgment or vacating the default and filing an amended complaint. (Bagby v. Davis (Jan. 24, 2020) B294081 [nonpub. opn.].) Bagby chose the $5 million default judgment, which was entered in July 2020.
Bagby then attempted to enforce the judgment by seeking an order for sale of a residence Davis owned in Indian Wells and an order directing Davis to repatriate $3.5 million he had transferred to a limited liability company located in Nevis. The trial court denied those requests, and the Court of Appeal affirmed, explaining that the Indian Wells property sale had to be pursued in Riverside County and that unwinding the transfer required a separate fraudulent transfer action. (Bagby v. Davis (Dec. 13, 2022) B320533 [nonpub. opn.].) There was also a related appeal involving property in Idaho, which the Idaho Supreme Court resolved in 2023. (Bagby v. Davis (2023) 173 Idaho 903.)
In early 2023, Bagby obtained a writ of execution and sought to levy on two Individual Retirement Accounts belonging to Davis, held by LPL Financial Holdings Inc. The funds in those IRAs originated from an insurance policy held in a pension and profit-sharing plan established by Davis's former law firm, Davis & Thomas. The insurance policy had been cashed out and the proceeds rolled over into the IRAs.
Davis filed a claim of exemption, arguing the IRAs could not be collected upon for two reasons: first, because he had moved to Florida and Florida exemption law should govern; and second, because the IRAs were funded by proceeds traceable to exempt sources - specifically, an unmatured life insurance policy and a private retirement plan - both of which are exempt under California law.
The trial court held multiple hearings and issued several tentative rulings. Initially, the court considered applying Florida law but ultimately concluded that a claim of exemption must be determined under the law of the forum state - California - regardless of where the judgment debtor resides. The court relied on In re Marriage of DeLotel (1977) 73 Cal.App.3d 21, which held that exemption laws govern the remedies available in each state's courts rather than creating substantive rights that follow the debtor.
The Court of Appeal affirmed the trial court's order in its entirety in this new published case of Bagby v. Davis -B333649 (February 2026). The court addressed Davis's arguments in four categories: jurisdiction, choice of law, the merits under California law, and taxes.
Jurisdiction. Davis argued the trial court lacked jurisdiction because the IRA funds were physically located in South Carolina. The court rejected this, explaining that funds held in an account are intangible and have no physical location; they are deemed to be wherever personal jurisdiction exists over the custodian of the account, citing Pacific Decision Sciences Corp. v. Superior Court (2004) 121 Cal.App.4th 1100, 1107- 1108. Since Davis never challenged California's personal jurisdiction over LPL Financial, the funds were properly subject to the court's jurisdiction.
Choice of Law.The court held that claims of exemption are governed by the law of the forum state, directly following In re Marriage of DeLotel. That case established that exemption laws do not create substantive defenses but instead govern the remedies available in each state's courts. Davis's attempt to distinguish DeLotel on its facts was unpersuasive.
California Law - Life Insurance Exemption.The court addressed whether the proceeds from a voluntarily surrendered life insurance policy retain the exemption granted to unmatured policies under Code of Civil Procedure section 704.100, subdivision (a). The court held they do not. It reasoned that the purpose of the unmatured policy exemption is to prevent creditors from forcing a debtor to surrender a policy for its cash value, thereby preserving the policy as a source of future support. When the debtor voluntarily surrenders the policy, that protective purpose is fulfilled. The court further reasoned that treating a surrendered policy as still unmatured would produce an absurd result: there would be no loan value to collect and no procedural mechanism to collect it, effectively rendering the statutory provisions allowing partial collection a nullity, contrary to Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal.4th 1029, 1037. Instead, the court held that a voluntarily surrendered policy should be treated as matured, meaning the funds are exempt only to the extent they are reasonably necessary for the debtor's support under section 704.100, subdivision (c). Davis made no attempt to prove the funds were necessary for his support.
California Law - Private Retirement Plan Exemption. The court found that Davis failed to prove the pension and profit-sharing plan qualified as a "private retirement plan" under Code of Civil Procedure section 704.115. While there is no statutory definition of the term, case law establishes that such a plan must be principally designed and used for retirement purposes, citing O'Brien v. AMBS Diagnostics, LLC (2019) 38 Cal.App.5th 553, 560 and Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13-14. The evidence showed that Davis controlled the plan, its sole asset was a single insurance policy, and he had borrowed heavily against it without explanation and allowed substantial interest to accumulate. None of this indicated a plan designed and used for retirement.
California Law - IRA Exemption. The court noted that IRAs are exempt under section 704.115, subdivision (e) only to the extent the funds are necessary to support the debtor in retirement, taking into account all available resources. Since Davis was already retired and reported income exceeding $500,000 per year, and since he offered no evidence that the IRA funds were necessary for his support, the exemption did not apply.
Taxes.Davis argued for the first time on appeal that the trial court should have allowed him to hold back funds to pay taxes and penalties on the IRA withdrawal, as contemplated by section 704.115, subdivision (e)(3). The court held this argument was forfeited because Davis never raised it below, again citing Delta Stewardship Council Cases (2020) 48 Cal.App.5th 1014, 1074.
- Bayer Now Proposes $7.25B Roundup Litigation Settlementon February 18, 2026 at 2:09 PM
In 2015, the World Health Organization's International Agency for Research on Cancer (IARC) classified glyphosate - the active ingredient in Roundup - as "probably carcinogenic to humans." This finding became a catalyst for litigation. The IARC report initiated an avalanche of lawsuits American Council on Science and Health, even as the U.S. EPA and other regulators maintained that glyphosate was safe.
Federal lawsuits were consolidated into multidistrict litigation (MDL) in the U.S. District Court for the Northern District of California. As of early 2026, the Roundup MDL in the Northern District of California had about 4,511 pending cases out of 5,240 total.
On Tuesday, Bayer and attorneys for cancer patients announced a proposed $7.25 billion settlement to resolve thousands of U.S. lawsuits alleging the company failed to warn people that Roundup could cause cancer. The settlement was filed in St. Louis Circuit Court in Missouri. It is not clear at this time what effect this development will have on cases pending across the nation, and particularly cases pending here in California.
All three of the first Roundup trials took place in California, and all three resulted in massive plaintiff verdicts.
- - Johnson v. Monsanto (2018) — San Francisco Superior Court The first ever Roundup cancer lawsuit to proceed to trial was for Dewayne "Lee" Johnson, a groundskeeper for the Benicia Unified School District in the San Francisco Bay Area. Wisner Baum Johnson, 46, applied Roundup weedkiller 20 to 30 times per year while working as a groundskeeper for a school district near San Francisco. He testified that during his work, he had two accidents in which he was soaked with the product. He was diagnosed with terminal non-Hodgkin lymphoma in 2014. His case went first because in California, dying plaintiffs can be granted expedited trials. On August 10, 2018, a San Francisco jury ordered Monsanto to pay $39.25 million in compensatory damages and $250 million in punitive damages - a total of $289 million. The trial judge later reduced the total to $78.5 million, and an appellate court slashed it a second time. Johnson finally got paid late in 2020: $20.5 million, a fraction of the initial jury award.
- - Hardeman v. Monsanto (2019) — U.S. District Court, Northern District of California Edwin Hardeman, 70, and his wife spent decades living in Sonoma County, California, on 56 acres of land. He started using Monsanto herbicides to treat poison oak, overgrowth, and weeds on his property in 1986 and continued using Roundup through 2012. He was diagnosed with non-Hodgkin lymphoma in February 2015. This case served as a federal "bellwether" trial - a test case for the thousands of cases in the MDL. In 2019, a six-person jury awarded Hardeman $75 million in punitive damages and $5 million in compensatory damages. The judge later reduced the total to $25 million. In May 2021, the Ninth Circuit affirmed the jury's finding that Roundup caused Hardeman's cancer - the first federal appellate decision in the country on this issue. In June 2022, the U.S. Supreme Court declined to hear Bayer's appeal of the Hardeman verdict.
- - Pilliod v. Monsanto (2019) — Alameda County Superior Court Alva and Alberta Pilliod, a Bay Area couple, began using Roundup on their properties in 1982. Alva was diagnosed with non-Hodgkin lymphoma in 2011, and Alberta was diagnosed in 2015. On May 13, 2019, jurors returned a verdict awarding the Pilliods $2 billion in punitive damages and $55 million in compensatory damages - the largest Roundup verdict at that time. The judge later reduced their award to $87 million. Monsanto appealed, but the California Court of Appeal denied the appeal in August 2021, and the California Supreme Court denied review in November 2021. The U.S. Supreme Court also declined to take up the case in June 2022.
It wasn't all losses for Bayer. In October 2021, a jury in the Superior Court of California for the County of Los Angeles ruled in Bayer's favor in the Clark trial, finding that Roundup did not cause the plaintiff's child's illness. In December 2021, a jury in San Bernardino County ruled in Bayer's favor in the Stephens trial.
Meanwhile, the Ninth Circuit's rejection of Bayer's federal preemption argument in Hardeman was a critical setback. In May 2021, the Ninth Circuit held that EPA's approval of a pesticide label does not immunize a manufacturer from liability in the tort system. However, Bayer continued to push the preemption argument, and the U.S. Supreme Court has now agreed to hear a different case (Durnell) on this question, with oral arguments scheduled for late April 2026.
Although there are still over 4,500 cases pending in the California MDL, there is not a lot of focus on it at this point. Most new lawsuits are being filed in Pennsylvania, Missouri, or California, The litigation's center of gravity has shifted toward the state courts, the Supreme Court preemption case, and now the proposed $7.25 billion settlement filed in Missouri.
- More Employment Cases Unravel After Supreme Court Arbitration Rulingon February 17, 2026 at 12:43 PM
Jenny-Ashley Colon-Perez brought a claim against her employer, Security Industry Specialists, Inc., which was subject to a pre-dispute arbitration agreement. During the arbitration process, the employer was required to pay arbitration fees by certain statutory deadlines under Code of Civil Procedure section 1281.98. The employer had timely paid all prior arbitration invoices, but missed one payment deadline because defense counsel was dealing with a natural disaster that caused extensive property damage and forced her and her family to evacuate their home. The overdue invoice was paid within six days of the statutory deadline.
After the employer missed the payment deadline, Colon-Perez moved under section 1281.98 to withdraw from arbitration, arguing the late payment triggered her right to return to court litigation. The trial court granted that motion, allowing her to withdraw from arbitration. The employer then filed a motion under Code of Civil Procedure section 473, subdivision (b), seeking equitable relief from the withdrawal order on grounds of excusable neglect. The trial court denied that motion as well, effectively ending the employer's ability to enforce the arbitration agreement.
On the initial appeal, the First Appellate District affirmed the trial court, holding that section 1281.98 imposed a rigid, inflexible deadline and that section 473, subdivision (b) could not be used to excuse a failure to comply with that deadline, regardless of the reason for the late payment or how quickly payment was made afterward. That opinion was published as Colon-Perez v. Security Industry Specialists, Inc. (2025) 108 Cal.App.5th 403.
The California Supreme Court granted review and held the case pending its decision in Hohenshelt v. Superior Court (2025) 18 Cal.5th 310. In Hohenshelt, the Supreme Court rejected the rigid construction that several Courts of Appeal, including this one, had applied to section 1281.98. The Supreme Court held that equitable relief statutes - specifically section 473, subdivision (b), Civil Code section 3275, and Civil Code section 1511 - remain available to excuse late arbitration fee payments. It also concluded that, construed in harmony with these background equitable relief statutes, section 1281.98 does not impermissibly burden arbitration contracts and is therefore not preempted by the Federal Arbitration Act.
Following Hohenshelt, the Supreme Court transferred Colon-Perez back to the Court of Appeal with directions to vacate the prior opinion and reconsider in light of the new ruling. On remand, the Court of Appeal in the unpublished case of Colon-Perez v. Security Industry Specialists -A168297 (February 2026) reversed the trial court's denial of the employer's section 473, subdivision (b) motion.
Rather than simply sending the case back for further proceedings, the court concluded that the record compelled granting the employer relief outright. The court found there was no suggestion whatsoever of strategic or willful nonpayment - the exact conduct section 1281.98 was designed to address. To the contrary, the employer had a consistent track record of timely payments, missed only one deadline due to a natural disaster, and cured the late payment within six days.
The court noted that the Supreme Court itself had cited this very case in Hohenshelt as an example of a non-deliberate late payment that should not result in forfeiture of arbitral rights. Given the six-day delay, the court also found no basis for any claim of prejudice to Colon-Perez.
The court reversed the order denying relief under section 473, subdivision (b) and remanded with directions to grant the employer's motion and vacate the order that had allowed Colon-Perez to withdraw from arbitration. Each party was ordered to bear its own costs on appeal.
- DIR Proposes to Adopt Workplace Inspections Walkaround Ruleon February 17, 2026 at 12:43 PM
OSHA's 2024 Walkaround Rule published on April 1, 2024, and effective May 31, 2024, amends 29 C.F.R. § 1903.8(c) to clarify that employees may designate a non-employee third party as their representative during an OSHA inspection. Prior to the rule, the existing standard required that an employees' designee had to be an employee of the business being investigated, unless the OSHA inspector saw good cause to designate an outside party. The rule also removed the suggestion that non-employee representatives should be limited to individuals with formal credentials such as safety engineers or industrial hygienists. The rule largely reinstated an OSHA policy from 2013 known as the "Fairfax Memo," which the Trump administration rescinded in 2017.
A coalition of business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers filed a lawsuit in a Texas federal court claiming OSHA exceeded its authority. The 2024 rule's ultimate fate has been subject to ongoing litigation and the change in administration.
Pursuant to the federal Occupational Safety and Health Act of 1970 (29 USC § 651 et seq.), all states with occupational safety and health “state plans” must maintain workplace inspection rights and procedures that are at least as effective as those provided under federal law. (29 USC § 667(c)(3).) California is a state with its own approved occupational safety and health state plan. The Department of Industrial Relations’ Division of Occupational Safety and Health (“Division”) is the agency responsible for administering and enforcing California’s state plan.
California has adopted its own similar law. Labor Code Section 6314 provides that during an investigation by the Division of Occupational Safety and Health (DOSH or Cal/OSHA, also referred to as “the Division”), a representative of the employer and a representative authorized by the employees shall have the opportunity to accompany the Division’s representative during the inspection of a workplace.
Currently, there is no equivalent to 29 CFR § 1903.8 within Title 8 of the California Code of Regulations. To ensure that California’s state inspection process is as effective as the federal process, which the law requires, the DIR just issued a Notice of Proposed Title 8 regulation that defines who can be considered an authorized representative of employees and does so in such a way as to make the Division’s worksite inspections at least as effective as those of OSHA.
The proposed rule will enhance the Division’s ability to conduct effective workplace inspections by permitting a broader array of experts to serve as employee representatives and to accompany the Division during the workplace inspection when they are needed. The proposed rule would mirror the federal rule and grant the Division the same ability as federal OSHA to rely on a broader array of employee representatives.
And according to the Initial Statement of Reasons for the proposed regulations "Some employers refuse to consent to the Division’s inspection of their workplace. These denials may become even more common if the employer objects to the presence of the authorized representative of the employees. When an employer refuses access to the Division, the Division must seek a search warrant from the Superior Court. By codifying these rules, the Division will have stronger grounds for obtaining search warrants that allow for workplace access with the necessary representatives. Absent a rule that defines the representative authorized by employees, courts may be reluctant to issue a warrant which would permit the Division’s representative and third-party representative to access a workplace for purposes of conducting an inspection."
A public hearing has been scheduled to give all interested persons the opportunity to present statements or arguments, oral or in writing, with respect to the proposed amendments, on April 1, 2026 at 10:00 a.m. Pacific Time (US and Canada). Participants may use a Zoom link to join the meeting.
- Employers Should Address New Postal Service "Postmark" Ruleon February 24, 2026 at 1:20 PM
The Postal Service added a new section (DMM 608.11) to the Domestic Mail Manual that formally defines the postmark for the first time in a regulation and explains what information it does and doesn't convey. It took effect December 24, 2025.
A postmark confirms USPS had possession of a mailpiece on the stamped date, but the postmark date does not necessarily match the date USPS first received the mailpiece. Most postmarks are applied by automated machines at processing facilities, and the date reflects when the mail was processed at that facility - not when it was initially deposited. This discrepancy has grown more common under USPS's Regional Transportation Optimization (RTO) initiative, which adds flexibility between collection and processing schedules.
This is a significant practical problem with perhaps significant legal consequences, even though USPS insists the rule is "just clarification." For example Internal Revenue Code § 7502, also known as the “mailbox rule.” IRC § 7502 says that if a tax return or payment arrives at the IRS after the deadline, it's still considered timely if the USPS postmark date is on or before the due date. Courts interpret this strictly - the postmark date controls, regardless of when the taxpayer actually deposited the document.
The problem is that § 7502 and its regulations never actually defined "postmark." As a result, the USPS's new DMM 608.11 effectively supplies the operative definition for § 7502 purposes. And that definition now makes clear that a machine-applied postmark reflects the date of first automated processing at a regional facility - not when you dropped it in the mailbox or handed it to a postal carrier. Tax professionals have been calling for the IRS to address this, but nothing had been issued as of the most recent reporting.
And it's just now getting attention from employment and benefits lawyers. Here's how the new postmark rule ripples into employer notice obligations. Under federal laws like ERISA, COBRA, HIPAA, and the ACA, employers are required to send a variety of notices to employees concerning health insurance coverage, retirement benefits, and other employee benefits.
Some key examples of these deadlines:
- - General COBRA notices must be sent to new plan participants within 90 days of health coverage starting. COBRA election notices must be sent within 14 days after an employer notifies the plan administrator about a qualifying event, such as a layoff, discharge, divorce, or reduction in hours.
- - Health plans must send HIPAA notices of privacy practices to enrollees within 60 days of any substantial change.
- - HIPAA-covered entities must notify affected individuals without unreasonable delay, or no later than 60 calendar days after discovering a security breach.
- - Other ERISA-required communications include summary plan descriptions (SPDs), summaries of benefits and coverage (SBCs), formulary notices, and annual disclosures - all with their own timing requirements.
- - COBRA regulations specifically say that the initial notice, election notice, and notice of unavailability are considered "provided" on the date they are postmarked. So if the postmark date is delayed by a day or two at a regional processing center, a notice that was mailed on time could be deemed late
Some options to avoid this problem include requesting a free manual (local) postmark at any Post Office retail counter. This stamp will align with the date the customer hands over the mail. Registered Mail and Certified Mail also provide mailing receipts.
The Postal Service claims this rule does not change any actual postmarking operations or procedures. USPS says it's purely an educational/transparency measure codifying longstanding practices. The era of dropping a deadline-sensitive document in a blue mailbox on the last day and trusting the postmark is effectively over. It would be wise for employers to take affirmative steps to secure proof of the actual mailing date. - AI Is Not A Lawyer - and No Attorney-Client Privilege Applieson February 24, 2026 at 1:20 PM
Generative artificial intelligence tools have become increasingly prevalent across various domains of human activity. It has reliably been estimated, for instance that more than half of United States households have adapted AI in some form. Only three years after its release, one prominent AI platform is being used by more than 800 million people worldwide every week. Yet the implications of AI for the law are only beginning to be explored.
A ruling by Judge Jed S. Rakoff in United States v. Heppner (S.D.N.Y., Feb. 17, 2026) appears to be the first federal decision addressing whether a criminal defendant's conversations with a generative AI platform are protected by attorney-client privilege or the work product doctrine. The answer on both counts according to this ruling was "no." Most published decisions involving generative artificial intelligence have had to do with attorneys' misuse of that technology. That set of concerns is plainly net present here.
Bradley Heppner was indicted on securities fraud and related charges stemming from an alleged $150+ million scheme involving GWG Holdings. After receiving a grand jury subpoena and learning he was a target, Heppner - on his own initiative, without his lawyer's direction - used Claude to prepare roughly 31 documents outlining potential defense strategies and legal arguments. The FBI seized these "AI Documents" during a search of his home. Heppner's counsel claimed privilege over them.
Heppner, through his counsel asserted privilege over these documents arguing that (1) Heppner had inputted into Claude, among other things,information that Heppner had learned from counsel; (2) Heppner had created the AI Documents for the purpose of speaking with counsel to obtain legal advice; and (3) Heppner had subsequently shared the contents of the AI Documents with counsel. Heppner' s counsel conceded, however, that counsel "did net direct [Heppner] to run Claude searches."
The trial court noted that it is well established that the attorney-client privilege attaches to, and protects from disclosure, "communications (1) between a client and his or her attorney (2) that are intended to be, and in fact were, kept confidential (3) for the purpose of obtaining or providing legal advice." United States V. Mejia 655 F.3d 126, 132 (2d Cir. 2011). Courts construe the attorney-client privilege narrowly because it operates as an exception to the rule that "all relevant proof is essential" for a complete record and for "confidence in the fair administration of justice."
On attorney-client privilege, the court found the documents failed on multiple independent grounds. First, Claude is not an attorney, so there was no attorney-client relationship. Second, the communications were not confidential — Anthropic's privacy policy explicitly permits collecting user inputs and outputs, using them for training, and disclosing data to third parties including government authorities. Third, Heppner was not seeking legal advice from Claude; Claude itself disclaims the ability to give legal advice. The court noted that even though Heppner later shared the outputs with his lawyer, non-privileged communications don't become privileged simply by being passed along to counsel.
On work product doctrine, the court held that even assuming the documents were prepared in anticipation of litigation, they were not prepared "by or at the behest of counsel." Heppner acted entirely on his own. The documents didn't reflect defense counsel's strategy at the time they were created. The court distinguished a prior S.D.N.Y. magistrate decision (Shih v. Petal Card) that took a broader view, respectfully disagreeing and emphasizing that the doctrine's core purpose is protecting lawyers' mental processes, not a client's independent research with an AI tool.
"Thus, the communications between Heppner and Claude were not privileged at the time they took place. Moreover, even assuming that Heppner intended to share these communications with his counsel and eventually did so, it is black-letter law that non-privileged communications are not somehow alchemically changed into privileged ones upon being shared with counsel. Thus, because the AI Documents would not be privileged if they remained in [Heppner's] hands they did not acquire protection merely because they were transferred to counsel." The court concluded that AI's novelty doesn't exempt it from longstanding legal principles.
The ruling has obvious implications for the millions of people using AI platforms to think through legal problems - those conversations are likely discoverable.
- Former NFL Player and Lab Owner Convicted in $328M Medicare Fraudon February 23, 2026 at 11:53 AM
A federal jury convicted a Texas laboratory owner and former NFL player for his role in a $328 million cardiovascular genetic testing fraud scheme.
According to court documents and evidence presented at trial, Keith J. Gray, 39, of McKinney, Texas, orchestrated a scheme to bill Medicare for medically unnecessary genetic tests designed to evaluate the risk of various cardiovascular diseases and conditions. Gray, the owner and operator of two clinical laboratories, Axis Professional Labs LLC, and Kingdom Health Laboratory LLC, offered and paid kickbacks to marketers in exchange for their referral of Medicare beneficiaries’ DNA samples, personally identifiable information (including Medicare numbers) and signed test orders from medical providers authorizing the medically unnecessary genetic tests.
As part of the scheme, the marketers engaged other companies to solicit Medicare beneficiaries through telemarketing and to engage in “doctor chase,” to obtain the identity of beneficiaries’ primary care physicians and pressure them into approving genetic testing orders for patients who purportedly had already been “qualified” for the testing during telephone calls conducted by non-medical personnel at one of the companies retained by the marketers - not by their physicians.
In an effort to conceal the kickback payments, Gray used sham contracts and invoices that purported to charge for “marketing” hours but that in reality were reverse-engineered to match the amounts agreed to under the illegal per-sample kickback arrangement. Gray also sought to conceal the scheme by referring to the payments as being for “software” and loans that never existed. Evidence at trial included text messages between Gray and his co-conspirator becoming giddy over the amount of money they were making from Medicare.
Axis and Kingdom billed Medicare approximately $328 million for the false, fraudulent and kickback-tainted genetic testing claims, of which Medicare paid approximately $54 million. Gray laundered some of the proceeds by purchasing expensive luxury vehicles, including a Dodge Ram truck worth more than $142,000 and a Mercedes Benz SUV worth more than $145,000.
The jury convicted Gray of conspiracy to defraud the United States and to pay and receive health care kickbacks, five counts of violating the Anti-Kickback Statute and three counts of money laundering. He is scheduled to be sentenced at a later date. Gray faces a maximum penalty of 10 years in prison on each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI, HHS-OIG, MFCU and VA-OIG investigated the case.Trial Attorneys Ethan Womble and Adam Tisdall of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of eight strike forces operating in federal districts across the country, has charged more than 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. - NorCal Tow Company Operator Sentenced for Insurance Fraudon February 23, 2026 at 11:53 AM
Jose Vicente Badillo, the owner and operator of two towing companies, was sentenced to 60 months in federal prison for his involvement in a scheme to burn tow trucks throughout the Bay Area in 2023. U.S. District Judge Rita F. Lin handed down the sentence on Feb. 12, 2026.
Badillo, 29, of San Francisco, was also sentenced on Feb. 13, 2026, in an unrelated case to 27 months in federal prison for his role in a conspiracy to submit fraudulent auto insurance claims from at least 2017 until at least 2021. U.S. District Judge Trina L. Thompson handed down the sentence, which will run concurrently with the 60-month sentence imposed by Judge Lin.
Badillo was indicted by a federal grand jury in March 2025 for his involvement in the arson conspiracy. In October 2025, he pleaded guilty to one count of conspiracy to commit arson. According to the plea agreement, Badillo admitted to devising, orchestrating, and overseeing a scheme to set fire to tow trucks in the San Francisco Bay Area. The principal goals of Badillo’s scheme were to drive more business to his own towing companies, Auto Towing and Specialty Towing, by impeding competitor towing companies’ business prospects and to exact revenge against competitor towing companies and their owners for perceived wrongs. To accomplish those goals, Badillo recruited, agreed with, and directed others to execute the scheme by torching six tow trucks belonging to four competitor companies in April, July, and October of 2023.
Separately, Badillo was twice indicted by a federal grand jury in 2024 for his involvement in the automobile insurance fraud schemes. In October 2025, Badillo pleaded guilty to conspiracy to commit mail fraud and wire fraud in the second-charged insurance fraud case. According to the plea agreement, Badillo conspired with others to defraud automobile insurance companies by submitting fraudulent insurance claims. In furtherance of the scheme to defraud, Badillo staged an accident on Guadalupe Canyon Parkway in San Mateo County involving a Sterling tow truck and a vehicle carrier carrying four vehicles. Badillo also generated fake tow records concerning at least 18 vehicles involved in iterations of the scheme to defraud and orchestrated at least another nine iterations of the scheme to defraud, causing victim insurance companies hundreds of thousands of dollars in losses.
In another fraud case, Badillo and Abigail Fuentes were charged with multiple felonies in October 2023 by the San Francisco District Attorney’s Office. The charges stem from an alleged welfare fraud scheme. Fuentes, who worked as a Senior Eligibility Worker at the Human Services Agency, is accused of improperly approving Badillo’s application for public welfare programs without disclosing their personal relationship. Both individuals allegedly misrepresented their income and assets to qualify for benefits they were not eligible for, including Medi-Cal, CalFresh, and CalWORKs. Authorities say Badillo and Fuentes are in a relationship and have children.
At the time the application was filed, investigators said the pair had been operating three towing companies – Auto Towing, Jose’s Towing and Specialty Towing – which generated more than $2 million in gross annual income. Both Fuentes and Badillo allegedly lied about their substantial income and assets in order to receive public benefits they were not eligible for. The case led to more scrutiny of the pair’s business practices by San Francisco authorities, specifically from San Francisco City Atty. David Chiu, whose office later alleged that one of the couple’s companies was profiting from illegal tows.
In August 2023, the City Attorney initiated debarment proceedings against Auto Towing after the company violated multiple state and local laws by illegally towing vehicles from private property. Between February and May 2023, Auto Towing employees illegally towed several cars from a bank parking lot in the Portola neighborhood without the permission of the property owner. It is unlawful for a tow company to tow a car from private property without the consent of the property owner. In February 2024, Chiu moved to suspend the company. Auto Towing, and its affiliates, which included Specialty Towing, from receiving contracts from the city.
The perpetrator also made it difficult for vehicle owners to retrieve their vehicles, restricted the hours when vehicles could be retrieved, and pressured vehicle owners to pay in cash. Under the California Vehicle Code, vehicle owners have the right to retrieve their vehicles 24 hours a day, any day of the year, and have the right to pay with cash or major credit card. The victims whose cars were towed were primarily Spanish- and Cantonese-speaking residents, who are especially vulnerable to predatory tows.
Specialty Towing came under public scrutiny two months later when a bystander recorded one of its trucks trying to tow a woman’s car as she was driving in San Francisco. “We were freaking out calling and basically rolling down our window and saying, ‘Hey what you are doing? You can’t be doing that,’ ” the driver, identified only as Joanne, told ABC 7 News in an interview. “He started backing up and his lever came down and basically he was just backing up trying to latch onto our car.”
The video of this incident was horrifying. the driver was waiting on a public street behind a tow truck stopped for a red light. The two truck driver then dropped his towing apparatus hoping to hook onto Joanne’s car while she was in it with the motor running. She backed up, and the tow truck driver backed up chasing her backward down the street. Had the tow truck driver been successful he would have towed her car away with the motor running, while kidnapping her inside. - Exclusive Remedy Ends City Office Workers Asbestos Lawsuiton February 19, 2026 at 1:42 PM
The City of San Diego leased several floors of a downtown high-rise office building in 2017 where it stationed many employees. The City knew the building contained asbestos. That July, the building owner began a window renovation project that would involve the removal of approximately 40 tons of asbestos-containing materials. The City notified employees by email about the project, explained that air quality would be monitored daily, and designated Karen Johnson, a manager in its Real Estate Asset Department, as the liaison between employees and the building owner and renovation contractors.
Within days, employees began expressing concerns. Over the following months, they reported to Johnson and other City officials that they were experiencing respiratory problems. Employees also reported that renovation workers were wearing protective masks, that plastic barriers meant to contain dust and debris were failing, and that a ventilator for a sealed asbestos-containing area was blowing exhaust into the employee parking structure. Johnson relayed these complaints to the building owner, the contractors, and Ronald Villa, the City's deputy chief operating officer. Despite the ongoing complaints, the City decided not to relocate employees because it had no legal grounds to break its lease and no alternative space available.
That changed on January 25, 2018, when the San Diego County Air Pollution Control District received a complaint and took samples from multiple floors of the building. The samples tested positive for asbestos the following day. On January 26, the City notified its employees of the results and instructed them to stay out of the building. Over the next several weeks, the District confirmed widespread asbestos contamination throughout the building and found that air samples collected between February 1 and 5 contained asbestos fibers exceeding permissible levels.
On March 2, 2018, City officials held a meeting with affected employees. Villa told them the asbestos found on January 25 was not airborne and that prior air testing had shown levels within EPA tolerances. George Katsikaris of the City's Environmental Services Department similarly told employees that air samples collected before the evacuation were within safe, breathable levels and that dust samples had come back clean. A toxicologist told employees they should not worry about adverse health effects. Nevertheless, Villa acknowledged employees' concerns and encouraged anyone worried about cancer to take whatever steps they needed, and a workers' compensation manager explained how to file claims.
Alina Cadena and other City employees who had worked in the building during the renovations sued the City and Villa in his official capacity. They alleged the City intentionally exposed them to asbestos and concealed the extent of the exposure because it determined their health and safety were not worth the cost of breaking the lease. They asserted causes of action for intentional infliction of emotional distress and fraudulent concealment, sought compensatory damages, costs, and attorney fees, and sought punitive damages against Villa.
The City moved for summary judgment, arguing that workers' compensation was the employees' exclusive remedy under Labor Code section 3602, subdivision (a), and that the employees could not establish the fraudulent concealment exception to that exclusivity rule under subdivision (b)(2). The City alternatively sought summary adjudication of the emotional distress claim and the punitive damages claim against Villa. In support, the City submitted declarations from Johnson and Villa stating they had no knowledge of loose or uncontrolled asbestos before January 26, 2018, and that the renovation project manager had regularly reported air samples at normal background levels. The City also submitted deposition testimony, including from employees themselves, who admitted they had no evidence the City knew of loose asbestos debris before that date.
The court granted summary judgment, finding the fraudulent concealment exception did not apply and workers' compensation was the exclusive remedy. The Court of Appeal affirmed the judgment in its entirety, reviewing the summary judgment de novo in the unpublished case of Cadena v. City of San Diego, - D084784 (February, 2026).
The court explained that under the workers' compensation exclusivity rule, when an employee suffers an injury arising out of and in the course of employment, workers' compensation is the sole and exclusive remedy against the employer. (Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 800, 812–813.) The fraudulent concealment exception in Labor Code section 3602, subdivision (b)(2), requires the employee to prove three elements: the employer knew of the employee's work-related injury, the employer concealed that knowledge, and the concealment aggravated the injury.
The court found the employees failed to raise a triable issue on the first element - actual prior knowledge of their injuries. Citing Ashdown v. Ameron Internat. Corp. (2000) 83 Cal.App.4th 868, 880, and Hughes Aircraft Co. v. Superior Court (1996) 44 Cal.App.4th 1790, 1797, the court emphasized that constructive or imputed knowledge is insufficient; only actual knowledge will do. The City's evidence showed it did not know about loose asbestos debris until January 26, 2018, the same day it notified employees. The employees themselves admitted they had no evidence the City knew earlier. Moreover, since employees had the same information the City did, the fraudulent concealment exception did not apply, because the exception requires the employer to have known of the injury before the employee.
The employees argued their emotional distress claim should proceed to trial because the City's conduct in knowingly exposing them to a known carcinogen was not a normal part of the employment relationship. The court disagreed, surveying a line of California Supreme Court decisions holding that workers' compensation is the exclusive remedy for intentional infliction of emotional distress claims against employers.
The court further relied on Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465, 474–475, where the California Supreme Court held that even if an employer knowingly concealed asbestos dangers from employees, workers' compensation was the only remedy. - Court of Appeal Affirms Workplace Violence Restraining Orderon February 19, 2026 at 1:42 PM
Rayan Zarrabi graduated from Scripps Ranch High School, part of the San Diego Unified School District, in 2019. In the years that followed, he engaged in an escalating pattern of hostility directed at two school employees - M.L., a vice principal, and D.L., one of his former teachers. A few months after graduating, Zarrabi attended an SRHS football game where he shouted profanity and raised his middle finger at D.L. In December 2022, he entered the campus without permission, was told to leave, and was then caught sneaking back in through a rear gate, after which M.L. instructed him never to return.
In May 2023, Zarrabi attended an off-campus SRHS volleyball game at Southwestern Community College, where he sent disturbing electronic messages to students that included references to graves and tombstone emojis. When M.L. told him to leave, campus police had to escort him out while he shouted vulgar insults at M.L. In June 2023, he yelled profanity at M.L. from his car as M.L. sat on a restaurant patio. Around the same time, he tracked down D.L.'s family members on Facebook and sent them hateful, profanity-laden messages attacking D.L.'s appearance and character.
In February 2024, Zarrabi contacted a coworker of M.L. and D.L. on Facebook, repeating the same type of messages and adding lengthy, hostile commentary about both men. Then, in May 2024, a witness flagged down police to report that Zarrabi had been speaking rapidly and intensely about his hatred for M.L. and D.L., stating that he hoped they would die, that they did not deserve to live, that it was all he could think about, and that he was going to get his revenge. Police prepared a crime report, a suspicious activity report, and a psychiatric emergency response team referral, and an officer advised M.L. to seek a restraining order. Zarrabi reportedly continued telling third parties, including current students, that he intended to "go after" the two employees.
In October 2024, the District filed a petition for a workplace violence restraining order under Code of Civil Procedure section 527.8 on behalf of M.L. and D.L., also requesting that M.L.'s immediate family members be included as protected persons. The trial court granted a temporary restraining order based on a credible threat of violence or stalking and set a hearing. Zarrabi filed a written response denying the allegations. Following a hearing in November 2024, the trial court granted the petition, ordering Zarrabi to stay at least 100 yards from the employees' workplaces, homes, and vehicles, as well as from SRHS events held off campus.
The Court of Appeal affirmed the restraining order in its entirety in the unpublished case of San Diego Unified School District v. Zarrabi, No. D085415 (February 2026). The court addressed Zarrabi's arguments on four grounds.
First, on sufficiency of the evidence, the court held that Zarrabi had forfeited this argument by failing to include a reporter's transcript or an agreed or settled statement from the hearing.The court went on to find that even setting aside the forfeiture, the record - including declarations from M.L. and D.L., copies of Zarrabi's electronic messages, and a police report - contained substantial evidence supporting the order.
Second, regarding the First Amendment, the court found that Zarrabi failed to present a cogent argument supported by relevant authority. It noted that the cases he cited were inapposite. Relying on City of San Jose v. Garbett (2010) 190 Cal.App.4th 526, 537, the court explained that speech constituting a credible threat of violence under section 527.8 is not constitutionally protected and may properly be enjoined.
Third, on due process, Zarrabi complained that a police officer's declaration was filed shortly before the hearing and that he did not receive it in time. The court found he provided no evidence to support this claim, no evidence the trial court even considered the declaration, and no showing that the outcome would have been different without it, since the declarations of M.L. and D.L. alone were sufficient. The court cited City of Los Angeles v. Herman (2020) 54 Cal.App.5th 97, 105, where a similar due process argument was rejected because the defendant had the opportunity to question witnesses and present his own evidence.
Fourth, the court rejected Zarrabi's claim that the restraining order caused him disproportionate reputational and employment harm. It found he supported this argument with neither citations to the record nor relevant legal authority.Even considering the argument on its merits, the court found that the record did not establish any harm to Zarrabi that was disproportionate to the need for protection. - Two SoCal Attorney's 13 Year Dispute Resolves Complex Litigation Issueson February 18, 2026 at 2:09 PM
Douglas A. Bagby is an attorney who represented clients in the Los Angeles, California area, primarily in family law and general litigation. Joseph Daniel Davis:is a Pasadena/Los Angeles, California attorney whose practice included personal injury and products liability. He has also been involved in toxic tort, legal malpractice, and medical malpractice work. This new published appellate case arises from a long-running dispute between these two Southern California attorneys.
The conflict began in July 2013 when Bagby was involved in a motor vehicle collision in which he lost one leg below the knee. He hired Davis to represent him in a personal injury action, which went to trial in June 2016 and resulted in a jury verdict of more than $5 million in Bagby's favor. In May 2017, Bagby sued Davis for breach of contract and malpractice. Davis defaulted, then successfully moved to set aside the default. Bagby petitioned for a writ of mandate, which the Court of Appeal granted, ordering the trial court to reinstate the default. (Bagby v. Superior Court (Apr. 16, 2018) B287188 [nonpub. opn.].)
On remand, the trial court entered judgment for $27 million, but Davis appealed, arguing Bagby was limited to the $5 million demanded in his complaint. The Court of Appeal agreed and reversed, directing the trial court to let Bagby choose between accepting a $5 million default judgment or vacating the default and filing an amended complaint. (Bagby v. Davis (Jan. 24, 2020) B294081 [nonpub. opn.].) Bagby chose the $5 million default judgment, which was entered in July 2020.
Bagby then attempted to enforce the judgment by seeking an order for sale of a residence Davis owned in Indian Wells and an order directing Davis to repatriate $3.5 million he had transferred to a limited liability company located in Nevis. The trial court denied those requests, and the Court of Appeal affirmed, explaining that the Indian Wells property sale had to be pursued in Riverside County and that unwinding the transfer required a separate fraudulent transfer action. (Bagby v. Davis (Dec. 13, 2022) B320533 [nonpub. opn.].) There was also a related appeal involving property in Idaho, which the Idaho Supreme Court resolved in 2023. (Bagby v. Davis (2023) 173 Idaho 903.)
In early 2023, Bagby obtained a writ of execution and sought to levy on two Individual Retirement Accounts belonging to Davis, held by LPL Financial Holdings Inc. The funds in those IRAs originated from an insurance policy held in a pension and profit-sharing plan established by Davis's former law firm, Davis & Thomas. The insurance policy had been cashed out and the proceeds rolled over into the IRAs.
Davis filed a claim of exemption, arguing the IRAs could not be collected upon for two reasons: first, because he had moved to Florida and Florida exemption law should govern; and second, because the IRAs were funded by proceeds traceable to exempt sources - specifically, an unmatured life insurance policy and a private retirement plan - both of which are exempt under California law.
The trial court held multiple hearings and issued several tentative rulings. Initially, the court considered applying Florida law but ultimately concluded that a claim of exemption must be determined under the law of the forum state - California - regardless of where the judgment debtor resides. The court relied on In re Marriage of DeLotel (1977) 73 Cal.App.3d 21, which held that exemption laws govern the remedies available in each state's courts rather than creating substantive rights that follow the debtor.
The Court of Appeal affirmed the trial court's order in its entirety in this new published case of Bagby v. Davis -B333649 (February 2026). The court addressed Davis's arguments in four categories: jurisdiction, choice of law, the merits under California law, and taxes.
Jurisdiction. Davis argued the trial court lacked jurisdiction because the IRA funds were physically located in South Carolina. The court rejected this, explaining that funds held in an account are intangible and have no physical location; they are deemed to be wherever personal jurisdiction exists over the custodian of the account, citing Pacific Decision Sciences Corp. v. Superior Court (2004) 121 Cal.App.4th 1100, 1107- 1108. Since Davis never challenged California's personal jurisdiction over LPL Financial, the funds were properly subject to the court's jurisdiction.
Choice of Law.The court held that claims of exemption are governed by the law of the forum state, directly following In re Marriage of DeLotel. That case established that exemption laws do not create substantive defenses but instead govern the remedies available in each state's courts. Davis's attempt to distinguish DeLotel on its facts was unpersuasive.
California Law - Life Insurance Exemption.The court addressed whether the proceeds from a voluntarily surrendered life insurance policy retain the exemption granted to unmatured policies under Code of Civil Procedure section 704.100, subdivision (a). The court held they do not. It reasoned that the purpose of the unmatured policy exemption is to prevent creditors from forcing a debtor to surrender a policy for its cash value, thereby preserving the policy as a source of future support. When the debtor voluntarily surrenders the policy, that protective purpose is fulfilled. The court further reasoned that treating a surrendered policy as still unmatured would produce an absurd result: there would be no loan value to collect and no procedural mechanism to collect it, effectively rendering the statutory provisions allowing partial collection a nullity, contrary to Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal.4th 1029, 1037. Instead, the court held that a voluntarily surrendered policy should be treated as matured, meaning the funds are exempt only to the extent they are reasonably necessary for the debtor's support under section 704.100, subdivision (c). Davis made no attempt to prove the funds were necessary for his support.
California Law - Private Retirement Plan Exemption. The court found that Davis failed to prove the pension and profit-sharing plan qualified as a "private retirement plan" under Code of Civil Procedure section 704.115. While there is no statutory definition of the term, case law establishes that such a plan must be principally designed and used for retirement purposes, citing O'Brien v. AMBS Diagnostics, LLC (2019) 38 Cal.App.5th 553, 560 and Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13-14. The evidence showed that Davis controlled the plan, its sole asset was a single insurance policy, and he had borrowed heavily against it without explanation and allowed substantial interest to accumulate. None of this indicated a plan designed and used for retirement.
California Law - IRA Exemption. The court noted that IRAs are exempt under section 704.115, subdivision (e) only to the extent the funds are necessary to support the debtor in retirement, taking into account all available resources. Since Davis was already retired and reported income exceeding $500,000 per year, and since he offered no evidence that the IRA funds were necessary for his support, the exemption did not apply.
Taxes.Davis argued for the first time on appeal that the trial court should have allowed him to hold back funds to pay taxes and penalties on the IRA withdrawal, as contemplated by section 704.115, subdivision (e)(3). The court held this argument was forfeited because Davis never raised it below, again citing Delta Stewardship Council Cases (2020) 48 Cal.App.5th 1014, 1074. - Bayer Now Proposes $7.25B Roundup Litigation Settlementon February 18, 2026 at 2:09 PM
In 2015, the World Health Organization's International Agency for Research on Cancer (IARC) classified glyphosate - the active ingredient in Roundup - as "probably carcinogenic to humans." This finding became a catalyst for litigation. The IARC report initiated an avalanche of lawsuits American Council on Science and Health, even as the U.S. EPA and other regulators maintained that glyphosate was safe.
Federal lawsuits were consolidated into multidistrict litigation (MDL) in the U.S. District Court for the Northern District of California. As of early 2026, the Roundup MDL in the Northern District of California had about 4,511 pending cases out of 5,240 total.
On Tuesday, Bayer and attorneys for cancer patients announced a proposed $7.25 billion settlement to resolve thousands of U.S. lawsuits alleging the company failed to warn people that Roundup could cause cancer. The settlement was filed in St. Louis Circuit Court in Missouri. It is not clear at this time what effect this development will have on cases pending across the nation, and particularly cases pending here in California.
All three of the first Roundup trials took place in California, and all three resulted in massive plaintiff verdicts.
- - Johnson v. Monsanto (2018) — San Francisco Superior Court The first ever Roundup cancer lawsuit to proceed to trial was for Dewayne "Lee" Johnson, a groundskeeper for the Benicia Unified School District in the San Francisco Bay Area. Wisner Baum Johnson, 46, applied Roundup weedkiller 20 to 30 times per year while working as a groundskeeper for a school district near San Francisco. He testified that during his work, he had two accidents in which he was soaked with the product. He was diagnosed with terminal non-Hodgkin lymphoma in 2014. His case went first because in California, dying plaintiffs can be granted expedited trials. On August 10, 2018, a San Francisco jury ordered Monsanto to pay $39.25 million in compensatory damages and $250 million in punitive damages - a total of $289 million. The trial judge later reduced the total to $78.5 million, and an appellate court slashed it a second time. Johnson finally got paid late in 2020: $20.5 million, a fraction of the initial jury award.
- - Hardeman v. Monsanto (2019) — U.S. District Court, Northern District of California Edwin Hardeman, 70, and his wife spent decades living in Sonoma County, California, on 56 acres of land. He started using Monsanto herbicides to treat poison oak, overgrowth, and weeds on his property in 1986 and continued using Roundup through 2012. He was diagnosed with non-Hodgkin lymphoma in February 2015. This case served as a federal "bellwether" trial - a test case for the thousands of cases in the MDL. In 2019, a six-person jury awarded Hardeman $75 million in punitive damages and $5 million in compensatory damages. The judge later reduced the total to $25 million. In May 2021, the Ninth Circuit affirmed the jury's finding that Roundup caused Hardeman's cancer - the first federal appellate decision in the country on this issue. In June 2022, the U.S. Supreme Court declined to hear Bayer's appeal of the Hardeman verdict.
- - Pilliod v. Monsanto (2019) — Alameda County Superior Court Alva and Alberta Pilliod, a Bay Area couple, began using Roundup on their properties in 1982. Alva was diagnosed with non-Hodgkin lymphoma in 2011, and Alberta was diagnosed in 2015. On May 13, 2019, jurors returned a verdict awarding the Pilliods $2 billion in punitive damages and $55 million in compensatory damages - the largest Roundup verdict at that time. The judge later reduced their award to $87 million. Monsanto appealed, but the California Court of Appeal denied the appeal in August 2021, and the California Supreme Court denied review in November 2021. The U.S. Supreme Court also declined to take up the case in June 2022.
It wasn't all losses for Bayer. In October 2021, a jury in the Superior Court of California for the County of Los Angeles ruled in Bayer's favor in the Clark trial, finding that Roundup did not cause the plaintiff's child's illness. In December 2021, a jury in San Bernardino County ruled in Bayer's favor in the Stephens trial.
Meanwhile, the Ninth Circuit's rejection of Bayer's federal preemption argument in Hardeman was a critical setback. In May 2021, the Ninth Circuit held that EPA's approval of a pesticide label does not immunize a manufacturer from liability in the tort system. However, Bayer continued to push the preemption argument, and the U.S. Supreme Court has now agreed to hear a different case (Durnell) on this question, with oral arguments scheduled for late April 2026.
Although there are still over 4,500 cases pending in the California MDL, there is not a lot of focus on it at this point. Most new lawsuits are being filed in Pennsylvania, Missouri, or California, The litigation's center of gravity has shifted toward the state courts, the Supreme Court preemption case, and now the proposed $7.25 billion settlement filed in Missouri. - More Employment Cases Unravel After Supreme Court Arbitration Rulingon February 17, 2026 at 12:43 PM
Jenny-Ashley Colon-Perez brought a claim against her employer, Security Industry Specialists, Inc., which was subject to a pre-dispute arbitration agreement. During the arbitration process, the employer was required to pay arbitration fees by certain statutory deadlines under Code of Civil Procedure section 1281.98. The employer had timely paid all prior arbitration invoices, but missed one payment deadline because defense counsel was dealing with a natural disaster that caused extensive property damage and forced her and her family to evacuate their home. The overdue invoice was paid within six days of the statutory deadline.
After the employer missed the payment deadline, Colon-Perez moved under section 1281.98 to withdraw from arbitration, arguing the late payment triggered her right to return to court litigation. The trial court granted that motion, allowing her to withdraw from arbitration. The employer then filed a motion under Code of Civil Procedure section 473, subdivision (b), seeking equitable relief from the withdrawal order on grounds of excusable neglect. The trial court denied that motion as well, effectively ending the employer's ability to enforce the arbitration agreement.
On the initial appeal, the First Appellate District affirmed the trial court, holding that section 1281.98 imposed a rigid, inflexible deadline and that section 473, subdivision (b) could not be used to excuse a failure to comply with that deadline, regardless of the reason for the late payment or how quickly payment was made afterward. That opinion was published as Colon-Perez v. Security Industry Specialists, Inc. (2025) 108 Cal.App.5th 403.
The California Supreme Court granted review and held the case pending its decision in Hohenshelt v. Superior Court (2025) 18 Cal.5th 310. In Hohenshelt, the Supreme Court rejected the rigid construction that several Courts of Appeal, including this one, had applied to section 1281.98. The Supreme Court held that equitable relief statutes - specifically section 473, subdivision (b), Civil Code section 3275, and Civil Code section 1511 - remain available to excuse late arbitration fee payments. It also concluded that, construed in harmony with these background equitable relief statutes, section 1281.98 does not impermissibly burden arbitration contracts and is therefore not preempted by the Federal Arbitration Act.
Following Hohenshelt, the Supreme Court transferred Colon-Perez back to the Court of Appeal with directions to vacate the prior opinion and reconsider in light of the new ruling. On remand, the Court of Appeal in the unpublished case of Colon-Perez v. Security Industry Specialists -A168297 (February 2026) reversed the trial court's denial of the employer's section 473, subdivision (b) motion.
Rather than simply sending the case back for further proceedings, the court concluded that the record compelled granting the employer relief outright. The court found there was no suggestion whatsoever of strategic or willful nonpayment - the exact conduct section 1281.98 was designed to address. To the contrary, the employer had a consistent track record of timely payments, missed only one deadline due to a natural disaster, and cured the late payment within six days.
The court noted that the Supreme Court itself had cited this very case in Hohenshelt as an example of a non-deliberate late payment that should not result in forfeiture of arbitral rights. Given the six-day delay, the court also found no basis for any claim of prejudice to Colon-Perez.
The court reversed the order denying relief under section 473, subdivision (b) and remanded with directions to grant the employer's motion and vacate the order that had allowed Colon-Perez to withdraw from arbitration. Each party was ordered to bear its own costs on appeal. - DIR Proposes to Adopt Workplace Inspections Walkaround Ruleon February 17, 2026 at 12:43 PM
OSHA's 2024 Walkaround Rule published on April 1, 2024, and effective May 31, 2024, amends 29 C.F.R. § 1903.8(c) to clarify that employees may designate a non-employee third party as their representative during an OSHA inspection. Prior to the rule, the existing standard required that an employees' designee had to be an employee of the business being investigated, unless the OSHA inspector saw good cause to designate an outside party. The rule also removed the suggestion that non-employee representatives should be limited to individuals with formal credentials such as safety engineers or industrial hygienists. The rule largely reinstated an OSHA policy from 2013 known as the "Fairfax Memo," which the Trump administration rescinded in 2017.
A coalition of business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers filed a lawsuit in a Texas federal court claiming OSHA exceeded its authority. The 2024 rule's ultimate fate has been subject to ongoing litigation and the change in administration.
Pursuant to the federal Occupational Safety and Health Act of 1970 (29 USC § 651 et seq.), all states with occupational safety and health “state plans” must maintain workplace inspection rights and procedures that are at least as effective as those provided under federal law. (29 USC § 667(c)(3).) California is a state with its own approved occupational safety and health state plan. The Department of Industrial Relations’ Division of Occupational Safety and Health (“Division”) is the agency responsible for administering and enforcing California’s state plan.
California has adopted its own similar law. Labor Code Section 6314 provides that during an investigation by the Division of Occupational Safety and Health (DOSH or Cal/OSHA, also referred to as “the Division”), a representative of the employer and a representative authorized by the employees shall have the opportunity to accompany the Division’s representative during the inspection of a workplace.
Currently, there is no equivalent to 29 CFR § 1903.8 within Title 8 of the California Code of Regulations. To ensure that California’s state inspection process is as effective as the federal process, which the law requires, the DIR just issued a Notice of Proposed Title 8 regulation that defines who can be considered an authorized representative of employees and does so in such a way as to make the Division’s worksite inspections at least as effective as those of OSHA.
The proposed rule will enhance the Division’s ability to conduct effective workplace inspections by permitting a broader array of experts to serve as employee representatives and to accompany the Division during the workplace inspection when they are needed. The proposed rule would mirror the federal rule and grant the Division the same ability as federal OSHA to rely on a broader array of employee representatives.
And according to the Initial Statement of Reasons for the proposed regulations "Some employers refuse to consent to the Division’s inspection of their workplace. These denials may become even more common if the employer objects to the presence of the authorized representative of the employees. When an employer refuses access to the Division, the Division must seek a search warrant from the Superior Court. By codifying these rules, the Division will have stronger grounds for obtaining search warrants that allow for workplace access with the necessary representatives. Absent a rule that defines the representative authorized by employees, courts may be reluctant to issue a warrant which would permit the Division’s representative and third-party representative to access a workplace for purposes of conducting an inspection."
A public hearing has been scheduled to give all interested persons the opportunity to present statements or arguments, oral or in writing, with respect to the proposed amendments, on April 1, 2026 at 10:00 a.m. Pacific Time (US and Canada). Participants may use a Zoom link to join the meeting.