- Hyundai and Kia Face 200 Carriers' California Subrogation Jurisdictionon September 15, 2026 at 9:01 AM
In 2020, a social-media trend nicknamed the "Kia Boyz" popularized a method for stealing certain Hyundai and Kia vehicles in seconds, by exploiting the fact that many of those vehicles lacked an engine immobilizer, a standard anti-theft device. Thefts of Hyundai and Kia vehicles surged nationwide. Lawsuits filed across the country were consolidated into a multidistrict litigation in the Central District of California, organized into three tracks: subrogation claims, consumer claims, and claims by governmental entities. This appeal concerns the subrogation track, brought by roughly 200 insurance companies that paid claims to policyholders whose Hyundai or Kia vehicles, model years 2011 through 2022, were stolen or damaged.
The insurers sued not only the U.S. distributors, Hyundai Motor America and Kia America, but also the Korean parent manufacturers, Hyundai Motor Company (HMC) and Kia Corporation (KC). They alleged the Korean entities designed standard-model vehicles without engine immobilizers specifically for the U.S. market — reserving that anti-theft feature for higher trim packages — even though the same models sold with immobilizers standard in Canada and other markets. Plaintiffs also alleged the Korean entities shipped thousands of vehicles through California's ports: more than 70 percent of HMC's U.S.-bound shipments and about 77 percent of KC's, according to bills of lading plaintiffs submitted.
The Korean entities moved to dismiss for lack of personal jurisdiction, submitting declarations from their American subsidiaries' sales executives stating that vehicles are sold "FOB Origin" in Korea — meaning title and risk of loss pass to the American subsidiaries at the point of shipment — and that the subsidiaries, not the Korean entities, handle importation, port logistics, and distribution once the vehicles reach the United States. Plaintiffs did not submit any competing declarations of their own, relying instead on their complaint's allegations. The district court (Judge James V. Selna) dismissed the claims against the Korean entities, concluding the shipping records did not show the Korean entities intentionally aimed their conduct at California and that, in any event, plaintiffs had not shown their claims arose from California-related conduct. The court also denied plaintiffs leave to amend and denied their request for jurisdictional discovery, then entered a Rule 54(b) final judgment dismissing the Korean entities from the subrogation track.
In the published case of In re: Kia Hyundai Vehicle Theft Marketing, Sales Practices, and Products Liability Litigation: Insurance Subrogation Appeal, No. 24-5219 (9th Cir. Sept. 2026). The Ninth Circuit reversed the dismissal and remanded for further proceedings.
The panel first held the district court properly disregarded plaintiffs' complaint allegations that the Korean entities controlled U.S. distribution, since those allegations were directly contradicted by the subsidiaries' declarations and plaintiffs offered no competing evidence of their own. Turning to the merits, the panel applied the Ninth Circuit's three-part test for specific personal jurisdiction over non-resident defendants, tracing its due-process roots to International Shoe Co. v. Washington, 326 U.S. 310 (1945): the defendant must have purposefully directed activities at, or availed itself of, the forum; the claims must arise out of or relate to those forum contacts; and the exercise of jurisdiction must be reasonable.
On the first element, the panel held the Korean entities' contacts were not the kind of passive "stream of commerce" placement that the Supreme Court held insufficient in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987). Even though the Korean entities did not themselves sell vehicles in California, they were listed as shippers of record on thousands of shipments routed through California ports, and nothing in the record suggested a distributor independently chose that routing. Combined with evidence the Korean entities designed their vehicles without immobilizers specifically for the U.S. market, the panel found this sufficient "purposeful availment and direction," rejecting the Korean entities' argument that only California-specific (as opposed to nationwide) targeting could support jurisdiction. The panel relied heavily on its own 2025 en banc decision in Briskin v. Shopify, Inc., 135 F.4th 739 (9th Cir. 2025), which held that "differential targeting" of a particular state is not required, and on the Supreme Court's decision in Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. 351 (2021), which held that serving a nationwide market does not immunize a company from jurisdiction in any particular state where its products cause injury.
On the second element, the panel held plaintiffs' claims arose from the Korean entities' California contacts because their injuries were caused by vehicles the Korean entities shipped through California's ports. The panel distinguished its earlier decision in Yamashita v. LG Chem, Ltd., 62 F.4th 496 (9th Cir. 2023), where a plaintiff failed to allege that the specific battery that injured him had been shipped through the forum port; here, given that the large majority of the Korean entities' U.S. shipments passed through California, it was reasonable to infer many of the vehicles at issue did too.
The panel left the third element — whether exercising jurisdiction would ultimately be "reasonable," a multi-factor test neither party had briefed on appeal — for the district court to resolve on remand, and did not reach whether the court abused its discretion in denying jurisdictional discovery.
- Sheriff Deputies' Built-In Overtime Counts Toward OCERS Pensionson September 15, 2026 at 9:01 AM
Under the County Employees Retirement Law of 1937 (CERL), an Orange County employee's pension is based in part on "compensation earnable," defined by Government Code section 31461 as average pay computed using the number of days "ordinarily worked by persons in the same grade or class of positions" at "the same rate of pay." Following a 2008 reorganization of the Orange County Sheriff's Department, deputies classified as deputy sheriff II were assigned to patrol, while jail operations were staffed by deputy sheriff I's and by deputy sheriff II's who had opted to remain in the jail. All deputies working exclusively in jail operations, regardless of rank, worked a "platoon schedule" of 80.5 hours every two weeks, which built in a half-hour of overtime known as "6FE" overtime.
Robert Szewczyk and Rodney Morikawa, deputy sheriff II's who worked in jail operations, retired in 2018 and asked the Orange County Employees Retirement System (OCERS) to include their 6FE overtime in their compensation earnable. OCERS denied the request, reasoning that most deputy sheriff II's work outside corrections and are not required to work the extra half-hour, so the 6FE time was not "ordinarily worked" by others in their grade or class. After an administrative hearing officer recommended granting Szewczyk's and Morikawa's appeals, the OCERS Board rejected that recommendation and reaffirmed the exclusion.
Szewczyk and Morikawa petitioned the Orange County Superior Court for writs of administrative mandamus and traditional mandamus to set aside the Board's decision. The trial court granted the petitions, finding that after the 2008 reorganization, deputy sheriff II's working in jail operations were treated as a separate grade or class from other deputy sheriff II's for purposes of the platoon schedule and 6FE overtime, and that the 6FE overtime was ordinarily included in the normal working hours for all deputies assigned to the jail. Relying on section 31461 and the California Supreme Court's decision in Alameda County Deputy Sheriff's Assn. v. Alameda County Employees' Retirement Assn. (2020) 9 Cal.5th 1032, the court ordered OCERS to include the 6FE overtime in Szewczyk's and Morikawa's compensation earnable, retroactive to their retirement dates with interest. OCERS's motion for reconsideration was denied, and OCERS appealed.
In the published case of Szewczyk et al. v. Orange County Employees Retirement System et al., No. G065386 (Cal. Ct. App., 4th Dist., Div. 3, Aug. 2026) the Court of Appeal affirmed the judgment in full, with respondents to recover costs on appeal.
The court explained that CERL does not define "grade or class of positions," and that the California Supreme Court in Alameda described the statutory phrase as "both very general and somewhat inscrutable." Applying Alameda's framework, the court looked to whether deputy sheriff II's in jail operations were truly "comparable" to deputy sheriff II's on patrol. It found they were not: only 30 of 630 deputy sheriff II's worked in the jail and the platoon schedule, jail assignment had historically been a matter of employee choice tied to the 2008 reorganization, and deputies in the jail had markedly different duties, unit-recruitment requirements, work locations, and schedules than those on patrol. The court also noted this conclusion aligned with a 2024 amendment to section 31461 allowing retirement systems to define "grade" by reference to shared job duties, schedules, and similar factors, even though that amendment was not yet effective when the trial court ruled.
OCERS argued the case was controlled by Stevenson v. Board of Retirement of Orange County Employees Retirement System (2010) 186 Cal.App.4th 498, in which the same appellate district held that a narcotics investigator's unusually heavy overtime did not make him part of a distinct "narcotics investigator" grade, since the department's own job descriptions and memoranda of understanding recognized only five broader classes. The court distinguished Stevenson on two grounds: the overtime there arose case-by-case "whenever it was necessary to complete an ongoing investigation," rather than being built into a fixed, regularly scheduled shift, and a 2022 Orange County Board of Supervisors resolution — issued after Stevenson — confirmed that the County's labor agreements had never bothered to formally designate grades for retirement purposes even where real differences in duties and schedules existed, undercutting the inference that the absence of a "custody deputy" job title meant no such grade could exist.
The court also rejected OCERS's argument that the trial court ignored section 31461's requirement that comparable employees share the "same rate of pay," clarifying that the trial court never found deputy sheriff I's and deputy sheriff II's in the jail formed a single combined grade; rather, it found deputy sheriff II's in jail operations formed their own grade, separate from deputy sheriff II's on patrol, a distinction the court held was adequately supported by the record. Reviewing for substantial evidence, the court found the record amply supported the trial court's findings and affirmed.
- Section 504 of the Rehabilitation Act Requires VA to House Veteranson September 14, 2026 at 9:16 AM
This case is a class action brought by homeless veterans with serious mental illness or traumatic brain injuries against the Department of Veterans Affairs (VA), centered on the VA's West Los Angeles campus. The named plaintiffs, along with the National Veterans Foundation, alleged that the VA's failure to build permanent supportive housing on or near the campus discriminates against disabled veterans in violation of § 504 of the Rehabilitation Act, because without such housing they cannot meaningfully access the medical care the VA otherwise provides. They pressed two theories: a "meaningful access" claim (housing as a necessary accommodation to reach VA healthcare) and an "Olmstead" claim, drawing on Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999), that the lack of housing places veterans at risk of institutionalization.
Following an August 2024 bench trial, the district court (Judge David O. Carter, C.D. Cal.) ruled for the plaintiffs on both § 504 theories and ruled that the land-use leases the VA had with the Regents of the University of California, Los Angeles, Brentwood School, and Bridgeland Resources, LLC, were unlawful; voided these leases; and enjoined the VA from renegotiating them.and requiring the VA to develop, within six months, a plan to construct 1,800 additional units of permanent supportive housing on the campus, to be built and operational within six years — a project both dissents peg at over $100 million.
On appeal, a three-judge Ninth Circuit panel affirmed the judgment and injunction against the VA based on the meaningful-access and Olmstead theories, vacated the judgment as to a co-defendant (HUD) for lack of legal basis, and upheld certification of the veteran class under Federal Rule of Civil Procedure 23(b)(2). See Powers v. McDonough, 163 F.4th 1162 (9th Cir. 2025). The VA petitioned for rehearing en banc, arguing the panel's decision conflicts with Supreme Court and circuit precedent limiting § 504 claims and misapplied the class-certification commonality requirement.
In the 2026 ruling in Powers, et al. v. McDonough, et al., No. 24-6576 (9th Cir. Sept. 2026), the full court, by vote of the non-recused active judges, denied the petition for rehearing en banc; no further petitions for rehearing would be entertained. Two judges did not participate. The panel's 2025 decision therefore stands as circuit precedent. Judge Collins and Judge Bumatay each filed a dissent from the denial, but a dissent from denial of rehearing en banc is not a ruling and does not alter the panel's judgment.
In a dissenting opinion, Judge Collins argued the panel's "meaningful access" holding cannot be squared with Alexander v. Choate, 469 U.S. 287 (1985), in which the Supreme Court held that § 504 requires only "reasonable" modifications to a federal program, not ones that "fundamentally alter" it. In his view, ordering the VA to build an entirely new, $100-million-plus housing program to accompany its medical-care program is a fundamental alteration by any measure, and the panel could not evade that conclusion by treating the VA's separate, statutorily distinct housing initiatives on the campus as part of the same "program."
He also argued the panel misapplied Olmstead, which addresses the risk of institutionalization inherent in how an agency delivers its own services, not the general risk that homelessness exposes someone to jail or hospitalization by other actors. And he argued both theories independently fail because § 504 requires that a plaintiff be denied a benefit "solely by reason of" disability, whereas the veterans' inability to access campus healthcare stems from many intersecting circumstances, not disability alone. On class certification, Judge Collins argued individualized differences among class members' diagnoses, housing situations, and proximity to other VA facilities defeat the commonality required by Federal Rule of Civil Procedure 23(a)(2), as construed in, Wal-Mart Stores, Inc. v. Dukes 564 U.S. 338 (2011).
Judge Bumatay's dissent pressed two further points. First, he argued the Rehabilitation Act contains no private right of action, express or implied, against a federal agency operating its own programs (as opposed to acting as a grant-maker), and that the panel's contrary position rests on outdated Ninth Circuit precedent he says should be overruled, citing a split with the First, Second, and Fourth Circuits on the question. Second, he argued the class certified here lacks the "glue" Wal-Mart requires: because many class members may not be injured by the VA's housing policy at all — some already live on or near the campus, some receive vouchers, some may not seek care there — certifying them together conflicts with Article III standing principles as well as Rule 23(a)(2).
Because this is an order denying en banc rehearing rather than a merits ruling, the panel's 2025 opinion continues to bind the district court on remand, and the dissents' criticisms carry no immediate legal effect beyond flagging the issue for possible Supreme Court review.
- 6 BART Employees Recover $7.8M in FEHA Caseon September 14, 2026 at 9:16 AM
In October 2021, the San Francisco Bay Area Rapid Transit District (BART) adopted a policy requiring employees to be fully vaccinated against COVID-19 by December 13, 2021, subject to medical or religious exemptions. Employees seeking a religious exemption submitted a standardized questionnaire to BART's Leave Management Department describing their beliefs and the accommodation sought. Of 181 religious exemption requests, BART found 70 employees eligible for a potential exemption, but concluded that none of the 70 could actually be accommodated without undue hardship to its operations. Those employees were told to get vaccinated or lose their jobs; about half complied, and the remaining 37 resigned, retired, or were terminated. Combined with 36 employees whose exemption requests were denied outright, 73 employees who had sought a religious accommodation lost their positions.
Six of those former employees — Tonya Lewis-Williams, Raymond Lockett, Rosalind Parker, Bradford Mitchell, Ryan Rivera, and Szu-Cheng Sun — ultimately took their claims to trial. Their jobs included a platform utility worker, a train-car maintenance supervisor, a ticket-window clerk behind a bullet-proof partition, a computer technician who said 90 percent of his work could be done alone or remotely, a contractor-escort supervisor who worked mostly outdoors, and a storekeeper who could have worked alone in an isolated, separately ventilated office. None of the six were shown to be in frequent close contact with the public or with co-workers, and BART did not present evidence that any of them were unwilling to mask or take other precautions.
Thirty-five former BART employees originally sued in the U.S. District Court for the Northern District of California (Judge William Alsup), asserting failure-to-accommodate claims under Title VII and California's Fair Employment and Housing Act (FEHA), plus a First Amendment free-exercise claim under 42 U.S.C. § 1983. The district court granted BART summary judgment on the free-exercise claim and denied the employees summary judgment on their statutory claims. After that ruling, most plaintiffs settled, leaving the six above for trial.
The district court split the case into two phases: whether BART could prove its "undue hardship" defense, and, if not, the remaining liability and damages issues. The jury found BART had not established undue hardship, then awarded the six plaintiffs a combined $7,824,580. BART renewed its motion for judgment as a matter of law and moved in the alternative for a new trial; the district court denied both, and also declined to order reinstatement for one plaintiff, Ryan Rivera, awarding him front pay instead. BART appealed; the employees cross-appealed the summary-judgment ruling on their free-exercise claim, and Rivera separately appealed the reinstatement question.
In the published case of Lewis-Williams, et al. v. San Francisco Bay Area Rapid Transit District, Nos. 25-618, 25-619 & 25-740 (9th Cir. Sept. 2026). The Ninth Circuit affirmed the judgment in full. It held BART was entitled to neither judgment as a matter of law nor a new trial, and it found Rivera's front-pay award was not plain error. Because the verdict was affirmed, the panel found the cross-appeal on the free-exercise claim moot and did not decide it. Judge R. Nelson wrote the opinion for a unanimous panel (Judges Rawlinson and Bade joining) and also wrote separately, concurring in the panel's judgment but writing at length to criticize the district court's free-exercise analysis and, more broadly, to argue that Employment Division v. Smith, 494 U.S. 872 (1990), was wrongly decided.
The panel applied the Title VII/FEHA undue-hardship standard the Supreme Court articulated in Groff v. DeJoy, 600 U.S. 447 (2023): an employer must show the accommodation's burden would be "substantial," "excessive," or "unjustifiable," not merely somewhat less safe than the challenged requirement. BART argued that because vaccination was the most effective way to limit COVID-19 transmission, any less-effective alternative (masking, distancing, remote work) was unreasonable as a matter of law, and that its reliance on public-health guidance settled the question. The panel rejected that framing. Citing Bragdon v. Abbott, 524 U.S. 624 (1998), it reasoned that public-health guidance is entitled to special weight but is not conclusive, and it noted that BART never introduced the actual guidance it claimed to rely on, instead offering only after-the-fact litigation experts whose testimony the jury was free to weigh rather than accept outright.
The panel distinguished two of its own recent decisions in which similar hardship defenses succeeded, involving firefighters and hospital workers whose jobs required close, continuous contact with the public and colleagues and whose accommodation would have created serious operational and financial risk. BART, by contrast, is a transportation agency, not a health-care provider, and the evidence showed the six employees' jobs involved little sustained close contact with others. Because the "undue hardship" inquiry is fact-specific and generally suited to jury resolution, and because the record here did not make the outcome obvious as a matter of law, the panel held the jury's verdict was adequately supported and that the district court did not abuse its discretion in denying a new trial, including over a since-cured order-in-limine violation by plaintiffs' counsel that the court found non-prejudicial.
Judge Nelson's concurrence went further than the majority opinion needed to. He argued the district court erred in applying an "unfettered discretion" test to conclude BART's exemption process was a neutral, generally applicable policy not subject to strict scrutiny — a test the Ninth Circuit had already rejected en banc in Fellowship of Christian Athletes v. San Jose Unified School District Board of Education, 82 F.4th 664 (9th Cir. 2023), applying Fulton v. City of Philadelphia, 593 U.S. 522 (2021). Because the panel's affirmance on the Title VII and FEHA claims mooted the cross-appealed free-exercise issue, this discussion is not part of the court's binding holding. Judge Nelson used the balance of his concurrence to argue at length, on originalist grounds, that Employment Division v. Smith was wrongly decided and should eventually be overturned, noting that the Supreme Court has granted certiorari in a case, St. Mary Catholic Parish v. Roy (cert. granted Apr. 20, 2026), that may address related questions about Smith's "generally applicable" test.
- Supreme Court Asked to Resolve Conflicting Insurance Pricing Lawson September 11, 2026 at 12:10 PM
The plaintiffs in this Ninth Circuit Court of Appeals case are current or former enlisted members of the U.S. military who hold automobile insurance through USAA General Indemnity Company (GIC), one of several affiliated insurers within the United Services Automobile Association family that sell auto coverage to military members and their families in California. USAA's underwriting rules route policyholders to different affiliates based on military rank: United Services Automobile Association insures officers and senior enlisted members (paygrade E-7 and above), while GIC insures more junior enlisted members (E-6 and below). United Services offers its policyholders a larger "good driver" discount than GIC offers to its policyholders. The plaintiffs sued in federal court, arguing that California's Insurance Code required USAA to give them the same lowest-available discount offered to the higher-ranking affiliate's policyholders, and sought both an injunction barring the practice going forward and refunds for amounts already overcharged.
The dispute turns on how two provisions of the Insurance Code interact. Section 1861.02, part of the voter-approved Proposition 103 (1988), requires auto insurers to offer a "good driver" discount to policyholders who qualify for one. Section 1861.16(b), enacted afterward to close what lawmakers saw as a loophole, requires that when affiliated insurers operate under common ownership or control, they must sell good-driver policies at the lowest rate available anywhere in the affiliated group. Still later, the Legislature enacted section 11628(f)(1), which allows insurers to limit the issuance of coverage to military members or "segments of categories thereof" without running afoul of certain other Code provisions, including the article containing section 1861.16(b). The plaintiffs read section 11628(f)(1) as permitting USAA to serve different military segments through different affiliates, but not as excusing USAA from giving policyholders in any segment the group's lowest available rate; USAA reads the same language as authorizing exactly the rank-based, differently priced structure it uses.
The case was filed in the U.S. District Court for the Southern District of California. USAA moved to dismiss, and Judge Bencivengo denied the motion, ruling that section 11628(f)(1) might authorize limiting coverage to a particular military segment but said nothing excusing compliance with section 1861.16(b)'s lowest-rate requirement. The case was later reassigned to Judge Huie, and the parties cross-moved for summary judgment. Judge Huie reached the opposite conclusion from her predecessor, granting summary judgment to USAA and denying the plaintiffs' motion; in her view, section 11628(f)(1) shields USAA's practice of serving different military segments through separately priced affiliates from section 1861.16(b)'s reach. The district court also rejected the plaintiffs' fallback argument that, if section 11628(f)(1) does excuse compliance, it must be an invalid legislative amendment to Proposition 103 (which cannot be amended except to further its purposes); the court reasoned that section 1861.16(b) was never itself part of Proposition 103, so the later statute did not "amend" the initiative at all.
In the published case of Coleman v. United Services Automobile Association, No. 25-793 (9th Cir., filed Sept. 10, 2026). Rather than affirming or reversing the district court's summary judgment ruling, the Ninth Circuit panel (Circuit Judges Friedland, Forrest, and Tung) has certified two questions of California law to the California Supreme Court under California Rule of Court 8.548, has withdrawn the case from submission, and has stayed the appeal pending the state court's decision whether to accept certification and, if so, its answer. No merits ruling has yet been made on the underlying summary judgment order.
The panel found no controlling California authority resolving either question, and concluded both were better resolved by California's own courts given their significant implications for California insurance regulation; the parties do not dispute that nearly 200,000 California policyholders are affected. On the first question, the panel noted that two federal district judges reached opposite readings of how section 11628(f)(1) and section 1861.16(b) interact, and that if section 11628(f)(1) does excuse compliance with the lowest-rate rule, a further threshold question arises: whether section 1861.16(b) should be treated as part of Proposition 103 at all, since the initiative as originally adopted contained only sections 1861.01 through 1861.14, and section 1861.16(b) was enacted afterward to address a loophole the initiative was seen to have left open. Resolving whether a later, loophole-closing statute becomes incorporated into the initiative it supplements — and is therefore subject to Proposition 103's restriction on legislative amendment recognized in Amwest Surety Insurance Co. v. Wilson (1995) 11 Cal.4th 1243 — is, the panel concluded, a question of state initiative law California courts are better positioned to answer.
On the second question, the panel pointed to a three-way tension in the Insurance Code: sections 1860.1 and 1860.2 broadly shield actions taken under the Code's rate-filing chapter from liability under other state laws, while section 1861.03, added by Proposition 103, subjects the business of insurance to the state's ordinary business laws, including unfair-competition law. The California Supreme Court's decision in Villanueva v. Fidelity National Title Co. (2021) 482 P.3d 989 touched on sections 1860.1 and 1860.2 but did not resolve the tension, and California's Courts of Appeal have split on whether a "filed-rate doctrine" limiting such claims applies in the insurance context at all: Fogel v. Farmers Group, Inc. (2008) 74 Cal.Rptr.3d 61 held no such doctrine applies to approved insurance rates, while MacKay v. Superior Court (2010) 115 Cal.Rptr.3d 893 disagreed and recognized one. The panel also questioned whether, if a filed-rate doctrine does apply, the standard should mirror the one the California Supreme Court applied to public utilities in Waters v. Pacific Telephone Co. (1974) 12 Cal.3d 1, which limited a utility's immunity to situations where allowing relief would frustrate the regulator's supervisory policies, and whether a recent Court of Appeal decision permitting insurers to keep commissioner-approved rates even when challenged as "excessive," Davis v. CSAA Insurance Exchange (2025) 336 Cal.Rptr.3d 789, would extend to a challenge like this one that does not center on whether the rates themselves are excessive.
- Injured Worker - Who is Employer - Files Claim Denial Bad Faith Caseon September 11, 2026 at 12:10 PM
Grigsby & Associates, Inc. (G&A) sued State Farm Fire and Casualty Company in state court for bad faith breach of contract of its policy of workers' compensation insurance for the company. State Farm had the case removed to federal court. According to the allegations of his complaint, the employer had only one employee, Calvin Grigsby, whose wages comprise the entire payroll upon which the premium was based.
The dispute connects to separate proceedings before the California Workers' Compensation Appeals Board (WCAB) involving Calvin Grigsby. On August 8,2021 Grigsby suffered an alleged work-related injury which required two separate prolonged hospitalizations for surgical procedures and operations approximately a year apart resulting in the permanent fusion of the first four vertebrae in his neck, permanent head injuries, permanent spinal injuries and permanent injuries to the left hand and foot.
The basis of his civil case for breach of contract and bad faith alleges State Farm initially decided to deny policy coverage. After Grigsby obtained an attorney, State Farm agreed Grigsby was covered under the policy. State Farm then use lack of medical information as a basis to "delay" the claim on the 14th day of the claim. However Grigsby had sent State Farm a complete medical report including imaging of about 12 pages prior to the 14th day. Grigsby therefore said that the State Farm delay notice for lack of medical information was an alleged "pretextual Delay Notice."
Subsequently he alleges "the claim was denied in complete bad faith claiming Employee was being paid $7000 a month, post injury, which is over the state maximum. Grigsby allegedly he sent adjusters the QuickBooks accounting records showing he was paid $200, $921, $1062 and $799 per month for the months of August, September, October and November 2021. He claims the denial of paying benefits was therefore allegedly made with no objective evidence.The complaint continues to allege violations of the Labor Code procedures for processing his claim for similar irregularities.
As the federal civil case proceeded in the U.S. District Court for the Northern District of California, State Farm asked the district court to pause the federal contract case until WCAB proceedings concluded, and the district court agreed. G&A appealed that stay order.
In the unpublished case of Grigsby & Associates, Inc. v. State Farm Fire and Casualty Co., No. 25-7219 (9th Cir., filed Sept. 8, 2026) (unpublished mem. disp.). A three-judge Ninth Circuit panel affirmed the district court's stay order, deciding the appeal without oral argument.
The panel first confirmed it had jurisdiction to hear the appeal at all. Ordinarily a stay order is not a final, appealable decision, but the panel found this stay was "lengthy and indefinite" and effectively put the litigants out of court, making it appealable as a final decision under Blue Cross & Blue Shield of Ala. v. Unity Outpatient Surgery Ctr., Inc. (2007) 490 F.3d 718, giving the court jurisdiction under 28 U.S.C. § 1291.
On the merits of the stay, the panel explained that district courts have discretion to stay a case pending resolution of independent proceedings that bear on it, citing Leyva v. Certified Grocers of Cal., Ltd. (1979) 593 F.2d 857, and that such a decision is evaluated against three non-exclusive factors drawn from Lockyer v. Mirant Corp. (2005) 398 F.3d 1098, as quoted in Ernest Bock, LLC v. Steelman (2023) 76 F.4th 827: the possible damage from granting a stay, the hardship or inequity a party would suffer if forced to proceed, and the orderly course of justice as measured by simplifying or complicating the issues, proof, and questions of law.
Applying those factors, the panel found no abuse of discretion. Because G&A seeks only money damages, any delay caused by the stay would not amount to irreparable harm weighing against it, citing In re PG&E Corp. Securities Litigation (2024) 100 F.4th 1076 and CMAX, Inc. v. Hall (1962) 300 F.2d 265. On hardship, the panel agreed that without a stay, State Farm could face pressure to waive attorney-client privilege over communications related to its defense before the WCAB in order to defend against G&A's punitive damages claim, since California law bars punitive damages against a party that acted in good faith on advice of counsel under Fox v. Aced (1957) 317 P.2d 608 — a result the panel found would be inequitable to State Farm. The panel also agreed that resolving the related WCAB issues first would clarify G&A's theory of damages in the federal case and promote efficient adjudication, again citing In re PG&E Corp.
Finally, the panel rejected any suggestion that the abstention framework from Colorado River Water Conservation Dist. v. United States (1976) 424 U.S. 800 governed the analysis, agreeing with the district court that Colorado River applies only where a federal court and a state court are contemporaneously exercising concurrent jurisdiction over the same dispute — a circumstance not present here, citing United States v. State Water Resources Control Board (2021) 988 F.3d 1194.
- California CRD Subpoena Reach Extended in SpaceX FEHA Caseon September 10, 2026 at 9:42 AM
In April 2024, a former SpaceX employee filed an administrative complaint with California's Civil Rights Department (CRD), alleging the company violated the Fair Employment and Housing Act (FEHA) by paying her less than a male colleague hired around the same time, passing her over for a promotion in favor of a less experienced man, and firing her in retaliation for helping draft and circulate an open letter accusing the company and its CEO of fostering a hostile work environment and engaging in sexual harassment and gender discrimination. The employee listed a California address for SpaceX.
CRD served SpaceX with interrogatories and a subpoena seeking records related to the employee and her allegations. SpaceX objected on the ground that CRD lacked jurisdiction because the employee resided in Washington state and worked out of SpaceX's Redmond, Washington office, and FEHA does not apply outside California. CRD narrowed its request to fourteen items aimed at the jurisdictional question. Based on SpaceX's supplemental responses, CRD concluded it had jurisdiction over the retaliation claim but needed more information to assess jurisdiction over the discrimination claims. SpaceX declined to provide it, prompting CRD to go to court. In its filings, CRD pointed to a related lawsuit in which the employee alleged she reported to a SpaceX vice president based in California, her direct manager since 2021 was located in California, her pay statements were issued from and listed a California facility, and her new-hire paperwork referenced California employment law.
In April 2025, CRD petitioned the Los Angeles County Superior Court to compel SpaceX's compliance with the subpoena, both on the merits of the retaliation claim and on the jurisdictional question underlying the discrimination claims. SpaceX opposed, submitting a declaration from a Redmond-based HR director asserting that Washington-based managers made the relevant compensation, promotion, and termination decisions, and that the employee was hired, worked, and lived in Washington throughout. On May 23, 2025, Judge Maureen Duffy-Lewis granted CRD's petition without stating her reasons, and set a further hearing on the scope of the requests. SpaceX appealed.
In the partially published opinion of Civil Rights Department v. Space Exploration Technologies Corp., No. B346853 (Cal. Ct. App., 2d Dist., Div. 3, filed Aug. 11, 2026; certified for partial pub. Sept. 9, 2026). The Court of Appeal affirmed the order compelling SpaceX to comply with CRD's subpoena, and awarded CRD its costs on appeal.The Second Appellate District expressly excluded Part 2 of its Discussion section (the portion addressing SpaceX's federal constitutional arguments) from publication
The panel first addressed — in the unpublished portion of the opinion — SpaceX's argument that enforcing the subpoena violates the federal constitution. It found SpaceX's briefing on the commerce clause, due process, full faith and credit, and supremacy clause theories too cursory to preserve any of them, noting that "the most fundamental rule of appellate review is that the judgment or order challenged on appeal is presumed to be correct," placing the burden on the appellant to show error with reasoned legal argument (citing Argueta v. Worldwide Flight Services, Inc. (2023) 97 Cal.App.5th 822, and City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266). A "fishing expedition"/unreasonable-search theory raised for the first time in SpaceX's reply brief was forfeited on the same basis.
Turning to the published portion, the court addressed whether enforcing the subpoena violates the presumption against extraterritorial application of California law. Applying the California Supreme Court's framework in Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732, the panel explained that because SpaceX did not argue any extraterritorial effect categorically bars applying FEHA, the real question is what California connections are sufficient to trigger the statute — a question that must be answered separately for CRD's investigatory authority (Gov. Code §§ 12930, 12963.1, 12963.5) than for FEHA's substantive prohibitions, since a subpoena carries less risk of conflict with another state's law than an injunction would.
The court rejected SpaceX's proposed categorical rule, drawn from Kearney v. Salomon Smith Barney, Inc. (2006) 39 Cal.4th 95, that FEHA applies only if the adverse employment action itself occurred in California. It found SpaceX never explained where an "adverse employment action" occurs when employer and employee touch multiple states, and that the complaint's actual California connections — including allegations the employee's manager and reporting chain were based in California and her pay statements issued from California — undercut SpaceX's characterization that everything happened in Washington. The court likewise rejected a broader rule, urged at oral argument, that California labor and employment statutes never protect a worker who did not work in California, distinguishing Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, and Oman v. Delta Air Lines, Inc. (2020) 9 Cal.5th 762, as wage-and-hour decisions that left open the possibility of extraterritorial application and that, per Ward, must be read statute-by-statute rather than as announcing a blanket rule for all California employment law.
Finally, the court distinguished Campbell v. Arco Marine, Inc. (1996) 42 Cal.App.4th 1850, where FEHA was held inapplicable to a Washington-based employee's shipboard harassment claims, because there the relevant California connections were undisputed and absent, whereas here the very purpose of the subpoena was to determine whether sufficient California connections exist. The court added that SpaceX's reliance on earlier cases involving conduct that was not actionable under FEHA at all was misplaced, since it is undisputed the conduct the employee alleges — sex/gender discrimination and retaliation — is unlawful under FEHA; the only open question is whether the California nexus is sufficient, which is precisely what CRD's subpoena seeks to investigate.
- California Hospital Association Challenges State Caps on Costson September 10, 2026 at 9:41 AM
A San Francisco judge has tentatively kept alive the California Hospital Association's (CHA) challenge to the state's caps on hospital spending growth, rejecting — at least for now — the state's argument that hospitals cannot sue over the caps until they are actually penalized for exceeding them. San Francisco County Superior Court Judge Joseph M. Quinn issued the tentative ruling ahead of a Wednesday, September 9, 2026 hearing on the state's demurrer to CHA's second amended complaint; because the ruling is tentative and Judge Quinn took the matter under submission after argument, it is not yet a final order, and this account of the court's reasoning is drawn from Courthouse News Service's report of the hearing rather than the tentative ruling itself, which was not independently available.
CHA, which represents roughly 400 California hospitals and health systems, sued the Office of Health Care Affordability (OHCA), its parent Department of Health Care Access and Information, Director Elizabeth Landsberg, and the Health Care Affordability Board on October 15, 2025, in a verified petition for writ of mandate and complaint for declaratory relief filed in San Francisco County Superior Court, Case No. CPF-25-519370.
The original filing challenges five OHCA actions: a statewide health care cost target starting at 3.5% annual growth in 2025 and 2026 and declining to 3.0% by 2029; the creation of a hospital-specific "sector" subject to that same statewide target; and a further, stricter target of 1.8% declining to 1.6% by 2029 for seven hospitals OHCA designated as "high-cost." OHCA was created by the Legislature in 2022 under the California Health Care Quality and Affordability Act, Health and Safety Code section 127500 et seq., and is tasked with slowing health care spending growth while maintaining access, quality, equity, and workforce stability.
CHA's petition argues the cost targets are inconsistent with that statutory mandate, arbitrary and capricious, and violate the takings and due process clauses of the state and federal constitutions; it separately argues the criteria OHCA used to identify "high-cost" hospitals amount to an underground regulation adopted without following the state's rulemaking procedures under the Administrative Procedure Act. CHA's petition states the targets are "arbitrary and irresponsible cost targets that single out hospitals" and projects that if the targets stand, more than 75% of California hospitals would operate at a loss, forcing layoffs and cuts to services including labor and delivery, mental health, and trauma care.
Enforcement of the 2026 targets technically began January 1, but the state has represented in court filings that actual monetary penalties are likely years away, since OHCA must first collect and analyze a full year of spending data and then work through a multi-step notice, waiver, and appeal process before any sanction could be imposed.
The state moved to dismiss the suit by demurrer, filed December 15, 2025 by the Attorney General's office on OHCA's behalf, arguing primarily that CHA's member hospitals lack the "beneficial interest" needed to sue because no hospital has been penalized, or shown it will be penalized, for exceeding a cost target; the state's brief called any such injury "too imaginary or speculative" to support standing.
The state separately argued CHA should not be permitted to sue on a "public interest" theory instead, and that the petition fails to plausibly allege the targets were arbitrary and capricious given OHCA's multi-year public rulemaking process. According to Courthouse News' account of Wednesday's hearing, Deputy Attorney General David Houska pressed the standing argument, telling the court that CHA's asserted harms remain hypothetical and that even a successful lawsuit might only produce a similar or higher target on remand. Judge Quinn reportedly rejected that framing, characterizing the harm CHA alleges not as the numerical targets themselves but as the product of an allegedly unlawful process for setting them — telling the state's counsel, as Courthouse News reported, that "the problem is not with the number 3.5" but with OHCA's alleged failure to weigh the factors the Legislature required, and that hospitals' operational impacts from that allegedly unauthorized rate do not depend on waiting for a formal enforcement action.
For employers in the health care and insurance industries, the litigation matters regardless of how the standing question is ultimately resolved: a ruling allowing the case to proceed keeps in play CHA's broader claims that OHCA's rate-setting methodology, and its process for designating "high-cost" hospitals, did not follow the statutory criteria the Legislature imposed — claims that, if successful, could force OHCA to redo target-setting work that commercial payers and providers have already begun building into contract negotiations. Judge Quinn gave no indication of when a final ruling will issue.
- Russians Behind Largest $1.3B Healthcare Fraud in U.S. Historyon September 9, 2026 at 9:50 AM
A federal grand jury in Boston has indicted a 33-year-old Georgian national on a single count of conspiracy to launder money, in a case federal prosecutors say is tied to the largest health care fraud scheme the Department of Justice has ever prosecuted.
The U.S. Department of Justice announced that Erekle Gugava was charged in the District of Massachusetts in connection with Operation Gold Rush, the government's name for its investigation into a transnational fraud and money-laundering network that DOJ says targeted Medicare and other health insurers. According to a companion release from the U.S. Attorney's Office for the District of Massachusetts, Gugava fled the United States in July 2025, after the conduct alleged in the indictment.
Gugava served as a money launderer for a criminal organization based in Russia and elsewhere that prosecutors describe as responsible for the largest health care fraud case the department has ever brought. Gugava is alleged to have owned ND Medical Solutions LLC, a durable medical equipment supplier based in Pennsylvania, between February and July 2025. During that roughly five-month period, ND Medical is alleged to have submitted at least $1.3 billion in fraudulent equipment claims to Medicare, to private insurers that sell Medicare supplemental coverage, to employer-sponsored health plans, and to other insurers. DOJ states that insurers actually paid out approximately $6.5 million on those claims before the scheme was uncovered — a gap the department attributes to the claims being caught before most of the billed amount was paid.
The fraudulent billings relied in part on stolen identities of Medicare beneficiaries, including elderly and disabled Americans across New England and elsewhere in the country, some of whom reported concerns to Medicare after receiving explanation-of-benefit notices for equipment they say they never received, prescribed by doctors they say they never saw. Prosecutors allege Gugava opened several bank accounts in ND Medical's name, was the sole signatory on those accounts, deposited insurance reimbursement checks into them, and then moved the funds to overseas accounts for the benefit of the broader organization. DOJ's release notes that health care fraud proceeds are especially attractive to launderers because they originate from legitimate payors — Medicare and established private carriers — which gives the funds an initial appearance of legitimacy.
Assistant Attorney General Colin M. McDonald of DOJ's National Fraud Enforcement Division was quoted in the department's release saying deterring "facilitators is essential to safeguarding taxpayer resources," and that the indictment reflects the department's "resolve to hold all participants in fraud networks accountable." Those are characterizations from a DOJ official, not adjudicated findings, and the indictment itself remains only an accusation — DOJ's own release states that Gugava is presumed innocent unless and until the government proves the charge beyond a reasonable doubt.
Gugava is charged with one count of conspiracy to commit money laundering and faces a maximum of 20 years in prison if convicted. The case was announced jointly by the National Fraud Enforcement Division, the U.S. Attorney's Office for Massachusetts, and investigators from HHS's Office of Inspector General, the FBI, the U.S. Postal Inspection Service, IRS Criminal Investigation, Homeland Security Investigations, and the Department of Labor's Employee Benefits Security Administration. DOJ's release places the case in the context of its Health Care Fraud Strike Force Program, which it says has charged more than 6,200 defendants tied to over $45 billion in claims billed to federal health programs and private insurers since 2007, and notes that its fraud-enforcement work supports the White House's Task Force to Eliminate Fraud, chaired by Vice President J.D. Vance.
For employers and insurers, the case is a reminder that durable medical equipment billing — an area with comparatively light utilization review compared to other claim types — remains a favored vector for large-scale, organized fraud rings, and that fraudulent claims can flow not just to Medicare but directly into employer-sponsored plans and Medicare supplemental products. Claims and special-investigations units may want to revisit DME billing controls and identity-verification protocols for beneficiaries in light of the pattern DOJ describes.
- DME CEO Pleads Guilty to $137M Health Care Fraudon September 9, 2026 at 9:50 AM
Sevindik Huseynov, a national of Azerbaijan, pleaded guilty in federal court to three counts of health care fraud in connection with a $137 million scheme targeting Medicare Advantage Programs.
Huseynov, 48, formerly of Sunnyvale, California and a national of Azerbaijan was indicted by a federal grand jury on September 25, 2025. Under the plea agreement, Huseynov pleaded guilty to three counts of health care fraud.
In pleading guilty, Huseynov, who was the Chief Executive Officer of a fraudulent durable medical equipment (DME) company, Vonyes Inc., admitted to aiding and abetting a scheme to submit thousands of fraudulent claims to Medicare Advantage Organizations (MAOs). The claims were submitted on behalf of unsuspecting beneficiaries and sought reimbursement for medical equipment such as wound dressing and orthotic braces. Beginning in January 2025 and continuing until Huseynov was arrested on June 17, 2025, he participated in the scheme with other individuals in the United States and abroad to submit large volumes of claims to MAOs offering Medicare Part C benefit plans.
In total, Huseynov, through Vonyes, sought reimbursements of at least $137 million from MAOs for medical equipment that was not provided, not needed by patients, and not authorized by a medical provider. Huseynov admitted to receiving reimbursement checks for $2.8 million and depositing those checks in Vonyes bank accounts he set up. After the money was deposited, Huseynov wired most of the money to bank accounts in Hong Kong.
Huseynov is currently in federal custody. Huseynov’s sentencing hearing is scheduled for February 2, 2027 at 1:30 PM before U.S. District Judge Noel Wise. Huseynov faces a maximum statutory penalty of 10 years in prison and a $250,000 fine for a violation of 18 U.S.C. § 1347, health care fraud. Any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by Assistant U.S. Attorney Maya Karwande with the assistance of Lynette Dixon, Ambereise McElrath, and Mimi Lam. The prosecution is the result of an investigation by the U.S. Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.
On April 7, 2026, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.
- Hyundai and Kia Face 200 Carriers' California Subrogation Jurisdictionon September 15, 2026 at 9:01 AM
In 2020, a social-media trend nicknamed the "Kia Boyz" popularized a method for stealing certain Hyundai and Kia vehicles in seconds, by exploiting the fact that many of those vehicles lacked an engine immobilizer, a standard anti-theft device. Thefts of Hyundai and Kia vehicles surged nationwide. Lawsuits filed across the country were consolidated into a multidistrict litigation in the Central District of California, organized into three tracks: subrogation claims, consumer claims, and claims by governmental entities. This appeal concerns the subrogation track, brought by roughly 200 insurance companies that paid claims to policyholders whose Hyundai or Kia vehicles, model years 2011 through 2022, were stolen or damaged.
The insurers sued not only the U.S. distributors, Hyundai Motor America and Kia America, but also the Korean parent manufacturers, Hyundai Motor Company (HMC) and Kia Corporation (KC). They alleged the Korean entities designed standard-model vehicles without engine immobilizers specifically for the U.S. market — reserving that anti-theft feature for higher trim packages — even though the same models sold with immobilizers standard in Canada and other markets. Plaintiffs also alleged the Korean entities shipped thousands of vehicles through California's ports: more than 70 percent of HMC's U.S.-bound shipments and about 77 percent of KC's, according to bills of lading plaintiffs submitted.
The Korean entities moved to dismiss for lack of personal jurisdiction, submitting declarations from their American subsidiaries' sales executives stating that vehicles are sold "FOB Origin" in Korea — meaning title and risk of loss pass to the American subsidiaries at the point of shipment — and that the subsidiaries, not the Korean entities, handle importation, port logistics, and distribution once the vehicles reach the United States. Plaintiffs did not submit any competing declarations of their own, relying instead on their complaint's allegations. The district court (Judge James V. Selna) dismissed the claims against the Korean entities, concluding the shipping records did not show the Korean entities intentionally aimed their conduct at California and that, in any event, plaintiffs had not shown their claims arose from California-related conduct. The court also denied plaintiffs leave to amend and denied their request for jurisdictional discovery, then entered a Rule 54(b) final judgment dismissing the Korean entities from the subrogation track.
In the published case of In re: Kia Hyundai Vehicle Theft Marketing, Sales Practices, and Products Liability Litigation: Insurance Subrogation Appeal, No. 24-5219 (9th Cir. Sept. 2026). The Ninth Circuit reversed the dismissal and remanded for further proceedings.
The panel first held the district court properly disregarded plaintiffs' complaint allegations that the Korean entities controlled U.S. distribution, since those allegations were directly contradicted by the subsidiaries' declarations and plaintiffs offered no competing evidence of their own. Turning to the merits, the panel applied the Ninth Circuit's three-part test for specific personal jurisdiction over non-resident defendants, tracing its due-process roots to International Shoe Co. v. Washington, 326 U.S. 310 (1945): the defendant must have purposefully directed activities at, or availed itself of, the forum; the claims must arise out of or relate to those forum contacts; and the exercise of jurisdiction must be reasonable.
On the first element, the panel held the Korean entities' contacts were not the kind of passive "stream of commerce" placement that the Supreme Court held insufficient in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987). Even though the Korean entities did not themselves sell vehicles in California, they were listed as shippers of record on thousands of shipments routed through California ports, and nothing in the record suggested a distributor independently chose that routing. Combined with evidence the Korean entities designed their vehicles without immobilizers specifically for the U.S. market, the panel found this sufficient "purposeful availment and direction," rejecting the Korean entities' argument that only California-specific (as opposed to nationwide) targeting could support jurisdiction. The panel relied heavily on its own 2025 en banc decision in Briskin v. Shopify, Inc., 135 F.4th 739 (9th Cir. 2025), which held that "differential targeting" of a particular state is not required, and on the Supreme Court's decision in Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. 351 (2021), which held that serving a nationwide market does not immunize a company from jurisdiction in any particular state where its products cause injury.
On the second element, the panel held plaintiffs' claims arose from the Korean entities' California contacts because their injuries were caused by vehicles the Korean entities shipped through California's ports. The panel distinguished its earlier decision in Yamashita v. LG Chem, Ltd., 62 F.4th 496 (9th Cir. 2023), where a plaintiff failed to allege that the specific battery that injured him had been shipped through the forum port; here, given that the large majority of the Korean entities' U.S. shipments passed through California, it was reasonable to infer many of the vehicles at issue did too.
The panel left the third element — whether exercising jurisdiction would ultimately be "reasonable," a multi-factor test neither party had briefed on appeal — for the district court to resolve on remand, and did not reach whether the court abused its discretion in denying jurisdictional discovery. - Sheriff Deputies' Built-In Overtime Counts Toward OCERS Pensionson September 15, 2026 at 9:01 AM
Under the County Employees Retirement Law of 1937 (CERL), an Orange County employee's pension is based in part on "compensation earnable," defined by Government Code section 31461 as average pay computed using the number of days "ordinarily worked by persons in the same grade or class of positions" at "the same rate of pay." Following a 2008 reorganization of the Orange County Sheriff's Department, deputies classified as deputy sheriff II were assigned to patrol, while jail operations were staffed by deputy sheriff I's and by deputy sheriff II's who had opted to remain in the jail. All deputies working exclusively in jail operations, regardless of rank, worked a "platoon schedule" of 80.5 hours every two weeks, which built in a half-hour of overtime known as "6FE" overtime.
Robert Szewczyk and Rodney Morikawa, deputy sheriff II's who worked in jail operations, retired in 2018 and asked the Orange County Employees Retirement System (OCERS) to include their 6FE overtime in their compensation earnable. OCERS denied the request, reasoning that most deputy sheriff II's work outside corrections and are not required to work the extra half-hour, so the 6FE time was not "ordinarily worked" by others in their grade or class. After an administrative hearing officer recommended granting Szewczyk's and Morikawa's appeals, the OCERS Board rejected that recommendation and reaffirmed the exclusion.
Szewczyk and Morikawa petitioned the Orange County Superior Court for writs of administrative mandamus and traditional mandamus to set aside the Board's decision. The trial court granted the petitions, finding that after the 2008 reorganization, deputy sheriff II's working in jail operations were treated as a separate grade or class from other deputy sheriff II's for purposes of the platoon schedule and 6FE overtime, and that the 6FE overtime was ordinarily included in the normal working hours for all deputies assigned to the jail. Relying on section 31461 and the California Supreme Court's decision in Alameda County Deputy Sheriff's Assn. v. Alameda County Employees' Retirement Assn. (2020) 9 Cal.5th 1032, the court ordered OCERS to include the 6FE overtime in Szewczyk's and Morikawa's compensation earnable, retroactive to their retirement dates with interest. OCERS's motion for reconsideration was denied, and OCERS appealed.
In the published case of Szewczyk et al. v. Orange County Employees Retirement System et al., No. G065386 (Cal. Ct. App., 4th Dist., Div. 3, Aug. 2026) the Court of Appeal affirmed the judgment in full, with respondents to recover costs on appeal.
The court explained that CERL does not define "grade or class of positions," and that the California Supreme Court in Alameda described the statutory phrase as "both very general and somewhat inscrutable." Applying Alameda's framework, the court looked to whether deputy sheriff II's in jail operations were truly "comparable" to deputy sheriff II's on patrol. It found they were not: only 30 of 630 deputy sheriff II's worked in the jail and the platoon schedule, jail assignment had historically been a matter of employee choice tied to the 2008 reorganization, and deputies in the jail had markedly different duties, unit-recruitment requirements, work locations, and schedules than those on patrol. The court also noted this conclusion aligned with a 2024 amendment to section 31461 allowing retirement systems to define "grade" by reference to shared job duties, schedules, and similar factors, even though that amendment was not yet effective when the trial court ruled.
OCERS argued the case was controlled by Stevenson v. Board of Retirement of Orange County Employees Retirement System (2010) 186 Cal.App.4th 498, in which the same appellate district held that a narcotics investigator's unusually heavy overtime did not make him part of a distinct "narcotics investigator" grade, since the department's own job descriptions and memoranda of understanding recognized only five broader classes. The court distinguished Stevenson on two grounds: the overtime there arose case-by-case "whenever it was necessary to complete an ongoing investigation," rather than being built into a fixed, regularly scheduled shift, and a 2022 Orange County Board of Supervisors resolution — issued after Stevenson — confirmed that the County's labor agreements had never bothered to formally designate grades for retirement purposes even where real differences in duties and schedules existed, undercutting the inference that the absence of a "custody deputy" job title meant no such grade could exist.
The court also rejected OCERS's argument that the trial court ignored section 31461's requirement that comparable employees share the "same rate of pay," clarifying that the trial court never found deputy sheriff I's and deputy sheriff II's in the jail formed a single combined grade; rather, it found deputy sheriff II's in jail operations formed their own grade, separate from deputy sheriff II's on patrol, a distinction the court held was adequately supported by the record. Reviewing for substantial evidence, the court found the record amply supported the trial court's findings and affirmed. - Section 504 of the Rehabilitation Act Requires VA to House Veteranson September 14, 2026 at 9:16 AM
This case is a class action brought by homeless veterans with serious mental illness or traumatic brain injuries against the Department of Veterans Affairs (VA), centered on the VA's West Los Angeles campus. The named plaintiffs, along with the National Veterans Foundation, alleged that the VA's failure to build permanent supportive housing on or near the campus discriminates against disabled veterans in violation of § 504 of the Rehabilitation Act, because without such housing they cannot meaningfully access the medical care the VA otherwise provides. They pressed two theories: a "meaningful access" claim (housing as a necessary accommodation to reach VA healthcare) and an "Olmstead" claim, drawing on Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999), that the lack of housing places veterans at risk of institutionalization.
Following an August 2024 bench trial, the district court (Judge David O. Carter, C.D. Cal.) ruled for the plaintiffs on both § 504 theories and ruled that the land-use leases the VA had with the Regents of the University of California, Los Angeles, Brentwood School, and Bridgeland Resources, LLC, were unlawful; voided these leases; and enjoined the VA from renegotiating them.and requiring the VA to develop, within six months, a plan to construct 1,800 additional units of permanent supportive housing on the campus, to be built and operational within six years — a project both dissents peg at over $100 million.
On appeal, a three-judge Ninth Circuit panel affirmed the judgment and injunction against the VA based on the meaningful-access and Olmstead theories, vacated the judgment as to a co-defendant (HUD) for lack of legal basis, and upheld certification of the veteran class under Federal Rule of Civil Procedure 23(b)(2). See Powers v. McDonough, 163 F.4th 1162 (9th Cir. 2025). The VA petitioned for rehearing en banc, arguing the panel's decision conflicts with Supreme Court and circuit precedent limiting § 504 claims and misapplied the class-certification commonality requirement.
In the 2026 ruling in Powers, et al. v. McDonough, et al., No. 24-6576 (9th Cir. Sept. 2026), the full court, by vote of the non-recused active judges, denied the petition for rehearing en banc; no further petitions for rehearing would be entertained. Two judges did not participate. The panel's 2025 decision therefore stands as circuit precedent. Judge Collins and Judge Bumatay each filed a dissent from the denial, but a dissent from denial of rehearing en banc is not a ruling and does not alter the panel's judgment.
In a dissenting opinion, Judge Collins argued the panel's "meaningful access" holding cannot be squared with Alexander v. Choate, 469 U.S. 287 (1985), in which the Supreme Court held that § 504 requires only "reasonable" modifications to a federal program, not ones that "fundamentally alter" it. In his view, ordering the VA to build an entirely new, $100-million-plus housing program to accompany its medical-care program is a fundamental alteration by any measure, and the panel could not evade that conclusion by treating the VA's separate, statutorily distinct housing initiatives on the campus as part of the same "program."
He also argued the panel misapplied Olmstead, which addresses the risk of institutionalization inherent in how an agency delivers its own services, not the general risk that homelessness exposes someone to jail or hospitalization by other actors. And he argued both theories independently fail because § 504 requires that a plaintiff be denied a benefit "solely by reason of" disability, whereas the veterans' inability to access campus healthcare stems from many intersecting circumstances, not disability alone. On class certification, Judge Collins argued individualized differences among class members' diagnoses, housing situations, and proximity to other VA facilities defeat the commonality required by Federal Rule of Civil Procedure 23(a)(2), as construed in, Wal-Mart Stores, Inc. v. Dukes 564 U.S. 338 (2011).
Judge Bumatay's dissent pressed two further points. First, he argued the Rehabilitation Act contains no private right of action, express or implied, against a federal agency operating its own programs (as opposed to acting as a grant-maker), and that the panel's contrary position rests on outdated Ninth Circuit precedent he says should be overruled, citing a split with the First, Second, and Fourth Circuits on the question. Second, he argued the class certified here lacks the "glue" Wal-Mart requires: because many class members may not be injured by the VA's housing policy at all — some already live on or near the campus, some receive vouchers, some may not seek care there — certifying them together conflicts with Article III standing principles as well as Rule 23(a)(2).
Because this is an order denying en banc rehearing rather than a merits ruling, the panel's 2025 opinion continues to bind the district court on remand, and the dissents' criticisms carry no immediate legal effect beyond flagging the issue for possible Supreme Court review. - 6 BART Employees Recover $7.8M in FEHA Caseon September 14, 2026 at 9:16 AM
In October 2021, the San Francisco Bay Area Rapid Transit District (BART) adopted a policy requiring employees to be fully vaccinated against COVID-19 by December 13, 2021, subject to medical or religious exemptions. Employees seeking a religious exemption submitted a standardized questionnaire to BART's Leave Management Department describing their beliefs and the accommodation sought. Of 181 religious exemption requests, BART found 70 employees eligible for a potential exemption, but concluded that none of the 70 could actually be accommodated without undue hardship to its operations. Those employees were told to get vaccinated or lose their jobs; about half complied, and the remaining 37 resigned, retired, or were terminated. Combined with 36 employees whose exemption requests were denied outright, 73 employees who had sought a religious accommodation lost their positions.
Six of those former employees — Tonya Lewis-Williams, Raymond Lockett, Rosalind Parker, Bradford Mitchell, Ryan Rivera, and Szu-Cheng Sun — ultimately took their claims to trial. Their jobs included a platform utility worker, a train-car maintenance supervisor, a ticket-window clerk behind a bullet-proof partition, a computer technician who said 90 percent of his work could be done alone or remotely, a contractor-escort supervisor who worked mostly outdoors, and a storekeeper who could have worked alone in an isolated, separately ventilated office. None of the six were shown to be in frequent close contact with the public or with co-workers, and BART did not present evidence that any of them were unwilling to mask or take other precautions.
Thirty-five former BART employees originally sued in the U.S. District Court for the Northern District of California (Judge William Alsup), asserting failure-to-accommodate claims under Title VII and California's Fair Employment and Housing Act (FEHA), plus a First Amendment free-exercise claim under 42 U.S.C. § 1983. The district court granted BART summary judgment on the free-exercise claim and denied the employees summary judgment on their statutory claims. After that ruling, most plaintiffs settled, leaving the six above for trial.
The district court split the case into two phases: whether BART could prove its "undue hardship" defense, and, if not, the remaining liability and damages issues. The jury found BART had not established undue hardship, then awarded the six plaintiffs a combined $7,824,580. BART renewed its motion for judgment as a matter of law and moved in the alternative for a new trial; the district court denied both, and also declined to order reinstatement for one plaintiff, Ryan Rivera, awarding him front pay instead. BART appealed; the employees cross-appealed the summary-judgment ruling on their free-exercise claim, and Rivera separately appealed the reinstatement question.
In the published case of Lewis-Williams, et al. v. San Francisco Bay Area Rapid Transit District, Nos. 25-618, 25-619 & 25-740 (9th Cir. Sept. 2026). The Ninth Circuit affirmed the judgment in full. It held BART was entitled to neither judgment as a matter of law nor a new trial, and it found Rivera's front-pay award was not plain error. Because the verdict was affirmed, the panel found the cross-appeal on the free-exercise claim moot and did not decide it. Judge R. Nelson wrote the opinion for a unanimous panel (Judges Rawlinson and Bade joining) and also wrote separately, concurring in the panel's judgment but writing at length to criticize the district court's free-exercise analysis and, more broadly, to argue that Employment Division v. Smith, 494 U.S. 872 (1990), was wrongly decided.
The panel applied the Title VII/FEHA undue-hardship standard the Supreme Court articulated in Groff v. DeJoy, 600 U.S. 447 (2023): an employer must show the accommodation's burden would be "substantial," "excessive," or "unjustifiable," not merely somewhat less safe than the challenged requirement. BART argued that because vaccination was the most effective way to limit COVID-19 transmission, any less-effective alternative (masking, distancing, remote work) was unreasonable as a matter of law, and that its reliance on public-health guidance settled the question. The panel rejected that framing. Citing Bragdon v. Abbott, 524 U.S. 624 (1998), it reasoned that public-health guidance is entitled to special weight but is not conclusive, and it noted that BART never introduced the actual guidance it claimed to rely on, instead offering only after-the-fact litigation experts whose testimony the jury was free to weigh rather than accept outright.
The panel distinguished two of its own recent decisions in which similar hardship defenses succeeded, involving firefighters and hospital workers whose jobs required close, continuous contact with the public and colleagues and whose accommodation would have created serious operational and financial risk. BART, by contrast, is a transportation agency, not a health-care provider, and the evidence showed the six employees' jobs involved little sustained close contact with others. Because the "undue hardship" inquiry is fact-specific and generally suited to jury resolution, and because the record here did not make the outcome obvious as a matter of law, the panel held the jury's verdict was adequately supported and that the district court did not abuse its discretion in denying a new trial, including over a since-cured order-in-limine violation by plaintiffs' counsel that the court found non-prejudicial.
Judge Nelson's concurrence went further than the majority opinion needed to. He argued the district court erred in applying an "unfettered discretion" test to conclude BART's exemption process was a neutral, generally applicable policy not subject to strict scrutiny — a test the Ninth Circuit had already rejected en banc in Fellowship of Christian Athletes v. San Jose Unified School District Board of Education, 82 F.4th 664 (9th Cir. 2023), applying Fulton v. City of Philadelphia, 593 U.S. 522 (2021). Because the panel's affirmance on the Title VII and FEHA claims mooted the cross-appealed free-exercise issue, this discussion is not part of the court's binding holding. Judge Nelson used the balance of his concurrence to argue at length, on originalist grounds, that Employment Division v. Smith was wrongly decided and should eventually be overturned, noting that the Supreme Court has granted certiorari in a case, St. Mary Catholic Parish v. Roy (cert. granted Apr. 20, 2026), that may address related questions about Smith's "generally applicable" test. - Supreme Court Asked to Resolve Conflicting Insurance Pricing Lawson September 11, 2026 at 12:10 PM
The plaintiffs in this Ninth Circuit Court of Appeals case are current or former enlisted members of the U.S. military who hold automobile insurance through USAA General Indemnity Company (GIC), one of several affiliated insurers within the United Services Automobile Association family that sell auto coverage to military members and their families in California. USAA's underwriting rules route policyholders to different affiliates based on military rank: United Services Automobile Association insures officers and senior enlisted members (paygrade E-7 and above), while GIC insures more junior enlisted members (E-6 and below). United Services offers its policyholders a larger "good driver" discount than GIC offers to its policyholders. The plaintiffs sued in federal court, arguing that California's Insurance Code required USAA to give them the same lowest-available discount offered to the higher-ranking affiliate's policyholders, and sought both an injunction barring the practice going forward and refunds for amounts already overcharged.
The dispute turns on how two provisions of the Insurance Code interact. Section 1861.02, part of the voter-approved Proposition 103 (1988), requires auto insurers to offer a "good driver" discount to policyholders who qualify for one. Section 1861.16(b), enacted afterward to close what lawmakers saw as a loophole, requires that when affiliated insurers operate under common ownership or control, they must sell good-driver policies at the lowest rate available anywhere in the affiliated group. Still later, the Legislature enacted section 11628(f)(1), which allows insurers to limit the issuance of coverage to military members or "segments of categories thereof" without running afoul of certain other Code provisions, including the article containing section 1861.16(b). The plaintiffs read section 11628(f)(1) as permitting USAA to serve different military segments through different affiliates, but not as excusing USAA from giving policyholders in any segment the group's lowest available rate; USAA reads the same language as authorizing exactly the rank-based, differently priced structure it uses.
The case was filed in the U.S. District Court for the Southern District of California. USAA moved to dismiss, and Judge Bencivengo denied the motion, ruling that section 11628(f)(1) might authorize limiting coverage to a particular military segment but said nothing excusing compliance with section 1861.16(b)'s lowest-rate requirement. The case was later reassigned to Judge Huie, and the parties cross-moved for summary judgment. Judge Huie reached the opposite conclusion from her predecessor, granting summary judgment to USAA and denying the plaintiffs' motion; in her view, section 11628(f)(1) shields USAA's practice of serving different military segments through separately priced affiliates from section 1861.16(b)'s reach. The district court also rejected the plaintiffs' fallback argument that, if section 11628(f)(1) does excuse compliance, it must be an invalid legislative amendment to Proposition 103 (which cannot be amended except to further its purposes); the court reasoned that section 1861.16(b) was never itself part of Proposition 103, so the later statute did not "amend" the initiative at all.
In the published case of Coleman v. United Services Automobile Association, No. 25-793 (9th Cir., filed Sept. 10, 2026). Rather than affirming or reversing the district court's summary judgment ruling, the Ninth Circuit panel (Circuit Judges Friedland, Forrest, and Tung) has certified two questions of California law to the California Supreme Court under California Rule of Court 8.548, has withdrawn the case from submission, and has stayed the appeal pending the state court's decision whether to accept certification and, if so, its answer. No merits ruling has yet been made on the underlying summary judgment order.
The panel found no controlling California authority resolving either question, and concluded both were better resolved by California's own courts given their significant implications for California insurance regulation; the parties do not dispute that nearly 200,000 California policyholders are affected. On the first question, the panel noted that two federal district judges reached opposite readings of how section 11628(f)(1) and section 1861.16(b) interact, and that if section 11628(f)(1) does excuse compliance with the lowest-rate rule, a further threshold question arises: whether section 1861.16(b) should be treated as part of Proposition 103 at all, since the initiative as originally adopted contained only sections 1861.01 through 1861.14, and section 1861.16(b) was enacted afterward to address a loophole the initiative was seen to have left open. Resolving whether a later, loophole-closing statute becomes incorporated into the initiative it supplements — and is therefore subject to Proposition 103's restriction on legislative amendment recognized in Amwest Surety Insurance Co. v. Wilson (1995) 11 Cal.4th 1243 — is, the panel concluded, a question of state initiative law California courts are better positioned to answer.
On the second question, the panel pointed to a three-way tension in the Insurance Code: sections 1860.1 and 1860.2 broadly shield actions taken under the Code's rate-filing chapter from liability under other state laws, while section 1861.03, added by Proposition 103, subjects the business of insurance to the state's ordinary business laws, including unfair-competition law. The California Supreme Court's decision in Villanueva v. Fidelity National Title Co. (2021) 482 P.3d 989 touched on sections 1860.1 and 1860.2 but did not resolve the tension, and California's Courts of Appeal have split on whether a "filed-rate doctrine" limiting such claims applies in the insurance context at all: Fogel v. Farmers Group, Inc. (2008) 74 Cal.Rptr.3d 61 held no such doctrine applies to approved insurance rates, while MacKay v. Superior Court (2010) 115 Cal.Rptr.3d 893 disagreed and recognized one. The panel also questioned whether, if a filed-rate doctrine does apply, the standard should mirror the one the California Supreme Court applied to public utilities in Waters v. Pacific Telephone Co. (1974) 12 Cal.3d 1, which limited a utility's immunity to situations where allowing relief would frustrate the regulator's supervisory policies, and whether a recent Court of Appeal decision permitting insurers to keep commissioner-approved rates even when challenged as "excessive," Davis v. CSAA Insurance Exchange (2025) 336 Cal.Rptr.3d 789, would extend to a challenge like this one that does not center on whether the rates themselves are excessive. - Injured Worker - Who is Employer - Files Claim Denial Bad Faith Caseon September 11, 2026 at 12:10 PM
Grigsby & Associates, Inc. (G&A) sued State Farm Fire and Casualty Company in state court for bad faith breach of contract of its policy of workers' compensation insurance for the company. State Farm had the case removed to federal court. According to the allegations of his complaint, the employer had only one employee, Calvin Grigsby, whose wages comprise the entire payroll upon which the premium was based.
The dispute connects to separate proceedings before the California Workers' Compensation Appeals Board (WCAB) involving Calvin Grigsby. On August 8,2021 Grigsby suffered an alleged work-related injury which required two separate prolonged hospitalizations for surgical procedures and operations approximately a year apart resulting in the permanent fusion of the first four vertebrae in his neck, permanent head injuries, permanent spinal injuries and permanent injuries to the left hand and foot.
The basis of his civil case for breach of contract and bad faith alleges State Farm initially decided to deny policy coverage. After Grigsby obtained an attorney, State Farm agreed Grigsby was covered under the policy. State Farm then use lack of medical information as a basis to "delay" the claim on the 14th day of the claim. However Grigsby had sent State Farm a complete medical report including imaging of about 12 pages prior to the 14th day. Grigsby therefore said that the State Farm delay notice for lack of medical information was an alleged "pretextual Delay Notice."
Subsequently he alleges "the claim was denied in complete bad faith claiming Employee was being paid $7000 a month, post injury, which is over the state maximum. Grigsby allegedly he sent adjusters the QuickBooks accounting records showing he was paid $200, $921, $1062 and $799 per month for the months of August, September, October and November 2021. He claims the denial of paying benefits was therefore allegedly made with no objective evidence.The complaint continues to allege violations of the Labor Code procedures for processing his claim for similar irregularities.
As the federal civil case proceeded in the U.S. District Court for the Northern District of California, State Farm asked the district court to pause the federal contract case until WCAB proceedings concluded, and the district court agreed. G&A appealed that stay order.
In the unpublished case of Grigsby & Associates, Inc. v. State Farm Fire and Casualty Co., No. 25-7219 (9th Cir., filed Sept. 8, 2026) (unpublished mem. disp.). A three-judge Ninth Circuit panel affirmed the district court's stay order, deciding the appeal without oral argument.
The panel first confirmed it had jurisdiction to hear the appeal at all. Ordinarily a stay order is not a final, appealable decision, but the panel found this stay was "lengthy and indefinite" and effectively put the litigants out of court, making it appealable as a final decision under Blue Cross & Blue Shield of Ala. v. Unity Outpatient Surgery Ctr., Inc. (2007) 490 F.3d 718, giving the court jurisdiction under 28 U.S.C. § 1291.
On the merits of the stay, the panel explained that district courts have discretion to stay a case pending resolution of independent proceedings that bear on it, citing Leyva v. Certified Grocers of Cal., Ltd. (1979) 593 F.2d 857, and that such a decision is evaluated against three non-exclusive factors drawn from Lockyer v. Mirant Corp. (2005) 398 F.3d 1098, as quoted in Ernest Bock, LLC v. Steelman (2023) 76 F.4th 827: the possible damage from granting a stay, the hardship or inequity a party would suffer if forced to proceed, and the orderly course of justice as measured by simplifying or complicating the issues, proof, and questions of law.
Applying those factors, the panel found no abuse of discretion. Because G&A seeks only money damages, any delay caused by the stay would not amount to irreparable harm weighing against it, citing In re PG&E Corp. Securities Litigation (2024) 100 F.4th 1076 and CMAX, Inc. v. Hall (1962) 300 F.2d 265. On hardship, the panel agreed that without a stay, State Farm could face pressure to waive attorney-client privilege over communications related to its defense before the WCAB in order to defend against G&A's punitive damages claim, since California law bars punitive damages against a party that acted in good faith on advice of counsel under Fox v. Aced (1957) 317 P.2d 608 — a result the panel found would be inequitable to State Farm. The panel also agreed that resolving the related WCAB issues first would clarify G&A's theory of damages in the federal case and promote efficient adjudication, again citing In re PG&E Corp.
Finally, the panel rejected any suggestion that the abstention framework from Colorado River Water Conservation Dist. v. United States (1976) 424 U.S. 800 governed the analysis, agreeing with the district court that Colorado River applies only where a federal court and a state court are contemporaneously exercising concurrent jurisdiction over the same dispute — a circumstance not present here, citing United States v. State Water Resources Control Board (2021) 988 F.3d 1194. - California CRD Subpoena Reach Extended in SpaceX FEHA Caseon September 10, 2026 at 9:42 AM
In April 2024, a former SpaceX employee filed an administrative complaint with California's Civil Rights Department (CRD), alleging the company violated the Fair Employment and Housing Act (FEHA) by paying her less than a male colleague hired around the same time, passing her over for a promotion in favor of a less experienced man, and firing her in retaliation for helping draft and circulate an open letter accusing the company and its CEO of fostering a hostile work environment and engaging in sexual harassment and gender discrimination. The employee listed a California address for SpaceX.
CRD served SpaceX with interrogatories and a subpoena seeking records related to the employee and her allegations. SpaceX objected on the ground that CRD lacked jurisdiction because the employee resided in Washington state and worked out of SpaceX's Redmond, Washington office, and FEHA does not apply outside California. CRD narrowed its request to fourteen items aimed at the jurisdictional question. Based on SpaceX's supplemental responses, CRD concluded it had jurisdiction over the retaliation claim but needed more information to assess jurisdiction over the discrimination claims. SpaceX declined to provide it, prompting CRD to go to court. In its filings, CRD pointed to a related lawsuit in which the employee alleged she reported to a SpaceX vice president based in California, her direct manager since 2021 was located in California, her pay statements were issued from and listed a California facility, and her new-hire paperwork referenced California employment law.
In April 2025, CRD petitioned the Los Angeles County Superior Court to compel SpaceX's compliance with the subpoena, both on the merits of the retaliation claim and on the jurisdictional question underlying the discrimination claims. SpaceX opposed, submitting a declaration from a Redmond-based HR director asserting that Washington-based managers made the relevant compensation, promotion, and termination decisions, and that the employee was hired, worked, and lived in Washington throughout. On May 23, 2025, Judge Maureen Duffy-Lewis granted CRD's petition without stating her reasons, and set a further hearing on the scope of the requests. SpaceX appealed.
In the partially published opinion of Civil Rights Department v. Space Exploration Technologies Corp., No. B346853 (Cal. Ct. App., 2d Dist., Div. 3, filed Aug. 11, 2026; certified for partial pub. Sept. 9, 2026). The Court of Appeal affirmed the order compelling SpaceX to comply with CRD's subpoena, and awarded CRD its costs on appeal.The Second Appellate District expressly excluded Part 2 of its Discussion section (the portion addressing SpaceX's federal constitutional arguments) from publication
The panel first addressed — in the unpublished portion of the opinion — SpaceX's argument that enforcing the subpoena violates the federal constitution. It found SpaceX's briefing on the commerce clause, due process, full faith and credit, and supremacy clause theories too cursory to preserve any of them, noting that "the most fundamental rule of appellate review is that the judgment or order challenged on appeal is presumed to be correct," placing the burden on the appellant to show error with reasoned legal argument (citing Argueta v. Worldwide Flight Services, Inc. (2023) 97 Cal.App.5th 822, and City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266). A "fishing expedition"/unreasonable-search theory raised for the first time in SpaceX's reply brief was forfeited on the same basis.
Turning to the published portion, the court addressed whether enforcing the subpoena violates the presumption against extraterritorial application of California law. Applying the California Supreme Court's framework in Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732, the panel explained that because SpaceX did not argue any extraterritorial effect categorically bars applying FEHA, the real question is what California connections are sufficient to trigger the statute — a question that must be answered separately for CRD's investigatory authority (Gov. Code §§ 12930, 12963.1, 12963.5) than for FEHA's substantive prohibitions, since a subpoena carries less risk of conflict with another state's law than an injunction would.
The court rejected SpaceX's proposed categorical rule, drawn from Kearney v. Salomon Smith Barney, Inc. (2006) 39 Cal.4th 95, that FEHA applies only if the adverse employment action itself occurred in California. It found SpaceX never explained where an "adverse employment action" occurs when employer and employee touch multiple states, and that the complaint's actual California connections — including allegations the employee's manager and reporting chain were based in California and her pay statements issued from California — undercut SpaceX's characterization that everything happened in Washington. The court likewise rejected a broader rule, urged at oral argument, that California labor and employment statutes never protect a worker who did not work in California, distinguishing Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, and Oman v. Delta Air Lines, Inc. (2020) 9 Cal.5th 762, as wage-and-hour decisions that left open the possibility of extraterritorial application and that, per Ward, must be read statute-by-statute rather than as announcing a blanket rule for all California employment law.
Finally, the court distinguished Campbell v. Arco Marine, Inc. (1996) 42 Cal.App.4th 1850, where FEHA was held inapplicable to a Washington-based employee's shipboard harassment claims, because there the relevant California connections were undisputed and absent, whereas here the very purpose of the subpoena was to determine whether sufficient California connections exist. The court added that SpaceX's reliance on earlier cases involving conduct that was not actionable under FEHA at all was misplaced, since it is undisputed the conduct the employee alleges — sex/gender discrimination and retaliation — is unlawful under FEHA; the only open question is whether the California nexus is sufficient, which is precisely what CRD's subpoena seeks to investigate. - California Hospital Association Challenges State Caps on Costson September 10, 2026 at 9:41 AM
A San Francisco judge has tentatively kept alive the California Hospital Association's (CHA) challenge to the state's caps on hospital spending growth, rejecting — at least for now — the state's argument that hospitals cannot sue over the caps until they are actually penalized for exceeding them. San Francisco County Superior Court Judge Joseph M. Quinn issued the tentative ruling ahead of a Wednesday, September 9, 2026 hearing on the state's demurrer to CHA's second amended complaint; because the ruling is tentative and Judge Quinn took the matter under submission after argument, it is not yet a final order, and this account of the court's reasoning is drawn from Courthouse News Service's report of the hearing rather than the tentative ruling itself, which was not independently available.
CHA, which represents roughly 400 California hospitals and health systems, sued the Office of Health Care Affordability (OHCA), its parent Department of Health Care Access and Information, Director Elizabeth Landsberg, and the Health Care Affordability Board on October 15, 2025, in a verified petition for writ of mandate and complaint for declaratory relief filed in San Francisco County Superior Court, Case No. CPF-25-519370.
The original filing challenges five OHCA actions: a statewide health care cost target starting at 3.5% annual growth in 2025 and 2026 and declining to 3.0% by 2029; the creation of a hospital-specific "sector" subject to that same statewide target; and a further, stricter target of 1.8% declining to 1.6% by 2029 for seven hospitals OHCA designated as "high-cost." OHCA was created by the Legislature in 2022 under the California Health Care Quality and Affordability Act, Health and Safety Code section 127500 et seq., and is tasked with slowing health care spending growth while maintaining access, quality, equity, and workforce stability.
CHA's petition argues the cost targets are inconsistent with that statutory mandate, arbitrary and capricious, and violate the takings and due process clauses of the state and federal constitutions; it separately argues the criteria OHCA used to identify "high-cost" hospitals amount to an underground regulation adopted without following the state's rulemaking procedures under the Administrative Procedure Act. CHA's petition states the targets are "arbitrary and irresponsible cost targets that single out hospitals" and projects that if the targets stand, more than 75% of California hospitals would operate at a loss, forcing layoffs and cuts to services including labor and delivery, mental health, and trauma care.
Enforcement of the 2026 targets technically began January 1, but the state has represented in court filings that actual monetary penalties are likely years away, since OHCA must first collect and analyze a full year of spending data and then work through a multi-step notice, waiver, and appeal process before any sanction could be imposed.
The state moved to dismiss the suit by demurrer, filed December 15, 2025 by the Attorney General's office on OHCA's behalf, arguing primarily that CHA's member hospitals lack the "beneficial interest" needed to sue because no hospital has been penalized, or shown it will be penalized, for exceeding a cost target; the state's brief called any such injury "too imaginary or speculative" to support standing.
The state separately argued CHA should not be permitted to sue on a "public interest" theory instead, and that the petition fails to plausibly allege the targets were arbitrary and capricious given OHCA's multi-year public rulemaking process. According to Courthouse News' account of Wednesday's hearing, Deputy Attorney General David Houska pressed the standing argument, telling the court that CHA's asserted harms remain hypothetical and that even a successful lawsuit might only produce a similar or higher target on remand. Judge Quinn reportedly rejected that framing, characterizing the harm CHA alleges not as the numerical targets themselves but as the product of an allegedly unlawful process for setting them — telling the state's counsel, as Courthouse News reported, that "the problem is not with the number 3.5" but with OHCA's alleged failure to weigh the factors the Legislature required, and that hospitals' operational impacts from that allegedly unauthorized rate do not depend on waiting for a formal enforcement action.
For employers in the health care and insurance industries, the litigation matters regardless of how the standing question is ultimately resolved: a ruling allowing the case to proceed keeps in play CHA's broader claims that OHCA's rate-setting methodology, and its process for designating "high-cost" hospitals, did not follow the statutory criteria the Legislature imposed — claims that, if successful, could force OHCA to redo target-setting work that commercial payers and providers have already begun building into contract negotiations. Judge Quinn gave no indication of when a final ruling will issue. - Russians Behind Largest $1.3B Healthcare Fraud in U.S. Historyon September 9, 2026 at 9:50 AM
A federal grand jury in Boston has indicted a 33-year-old Georgian national on a single count of conspiracy to launder money, in a case federal prosecutors say is tied to the largest health care fraud scheme the Department of Justice has ever prosecuted.
The U.S. Department of Justice announced that Erekle Gugava was charged in the District of Massachusetts in connection with Operation Gold Rush, the government's name for its investigation into a transnational fraud and money-laundering network that DOJ says targeted Medicare and other health insurers. According to a companion release from the U.S. Attorney's Office for the District of Massachusetts, Gugava fled the United States in July 2025, after the conduct alleged in the indictment.
Gugava served as a money launderer for a criminal organization based in Russia and elsewhere that prosecutors describe as responsible for the largest health care fraud case the department has ever brought. Gugava is alleged to have owned ND Medical Solutions LLC, a durable medical equipment supplier based in Pennsylvania, between February and July 2025. During that roughly five-month period, ND Medical is alleged to have submitted at least $1.3 billion in fraudulent equipment claims to Medicare, to private insurers that sell Medicare supplemental coverage, to employer-sponsored health plans, and to other insurers. DOJ states that insurers actually paid out approximately $6.5 million on those claims before the scheme was uncovered — a gap the department attributes to the claims being caught before most of the billed amount was paid.
The fraudulent billings relied in part on stolen identities of Medicare beneficiaries, including elderly and disabled Americans across New England and elsewhere in the country, some of whom reported concerns to Medicare after receiving explanation-of-benefit notices for equipment they say they never received, prescribed by doctors they say they never saw. Prosecutors allege Gugava opened several bank accounts in ND Medical's name, was the sole signatory on those accounts, deposited insurance reimbursement checks into them, and then moved the funds to overseas accounts for the benefit of the broader organization. DOJ's release notes that health care fraud proceeds are especially attractive to launderers because they originate from legitimate payors — Medicare and established private carriers — which gives the funds an initial appearance of legitimacy.
Assistant Attorney General Colin M. McDonald of DOJ's National Fraud Enforcement Division was quoted in the department's release saying deterring "facilitators is essential to safeguarding taxpayer resources," and that the indictment reflects the department's "resolve to hold all participants in fraud networks accountable." Those are characterizations from a DOJ official, not adjudicated findings, and the indictment itself remains only an accusation — DOJ's own release states that Gugava is presumed innocent unless and until the government proves the charge beyond a reasonable doubt.
Gugava is charged with one count of conspiracy to commit money laundering and faces a maximum of 20 years in prison if convicted. The case was announced jointly by the National Fraud Enforcement Division, the U.S. Attorney's Office for Massachusetts, and investigators from HHS's Office of Inspector General, the FBI, the U.S. Postal Inspection Service, IRS Criminal Investigation, Homeland Security Investigations, and the Department of Labor's Employee Benefits Security Administration. DOJ's release places the case in the context of its Health Care Fraud Strike Force Program, which it says has charged more than 6,200 defendants tied to over $45 billion in claims billed to federal health programs and private insurers since 2007, and notes that its fraud-enforcement work supports the White House's Task Force to Eliminate Fraud, chaired by Vice President J.D. Vance.
For employers and insurers, the case is a reminder that durable medical equipment billing — an area with comparatively light utilization review compared to other claim types — remains a favored vector for large-scale, organized fraud rings, and that fraudulent claims can flow not just to Medicare but directly into employer-sponsored plans and Medicare supplemental products. Claims and special-investigations units may want to revisit DME billing controls and identity-verification protocols for beneficiaries in light of the pattern DOJ describes. - DME CEO Pleads Guilty to $137M Health Care Fraudon September 9, 2026 at 9:50 AM
Sevindik Huseynov, a national of Azerbaijan, pleaded guilty in federal court to three counts of health care fraud in connection with a $137 million scheme targeting Medicare Advantage Programs.
Huseynov, 48, formerly of Sunnyvale, California and a national of Azerbaijan was indicted by a federal grand jury on September 25, 2025. Under the plea agreement, Huseynov pleaded guilty to three counts of health care fraud.
In pleading guilty, Huseynov, who was the Chief Executive Officer of a fraudulent durable medical equipment (DME) company, Vonyes Inc., admitted to aiding and abetting a scheme to submit thousands of fraudulent claims to Medicare Advantage Organizations (MAOs). The claims were submitted on behalf of unsuspecting beneficiaries and sought reimbursement for medical equipment such as wound dressing and orthotic braces. Beginning in January 2025 and continuing until Huseynov was arrested on June 17, 2025, he participated in the scheme with other individuals in the United States and abroad to submit large volumes of claims to MAOs offering Medicare Part C benefit plans.
In total, Huseynov, through Vonyes, sought reimbursements of at least $137 million from MAOs for medical equipment that was not provided, not needed by patients, and not authorized by a medical provider. Huseynov admitted to receiving reimbursement checks for $2.8 million and depositing those checks in Vonyes bank accounts he set up. After the money was deposited, Huseynov wired most of the money to bank accounts in Hong Kong.
Huseynov is currently in federal custody. Huseynov’s sentencing hearing is scheduled for February 2, 2027 at 1:30 PM before U.S. District Judge Noel Wise. Huseynov faces a maximum statutory penalty of 10 years in prison and a $250,000 fine for a violation of 18 U.S.C. § 1347, health care fraud. Any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by Assistant U.S. Attorney Maya Karwande with the assistance of Lynette Dixon, Ambereise McElrath, and Mimi Lam. The prosecution is the result of an investigation by the U.S. Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.
On April 7, 2026, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.