Category: Daily News

Alfredo Ayala and Juan Luis Ayala owned farm labor contracting businesses and shared business offices and office staff.

The Grand Jury of Tulare County returned an indictment charging them with workers’ compensation insurance and tax fraud by underreporting their payroll amounts.

Alfredo and Juan stipulated to a factual basis for their pleas based on police reports and grand jury proceedings, and Alfredo pleaded no contest to workers’ compensation insurance fraud and tax fraud, Juan to tax fraud, and both agreed to pay restitution to the Employment Development Department (EDD), and requested a restitution hearing to determine restitution owed to their workers’ compensation insurance companies.

After a hearing, the trial court awarded a total of $8,170,326 in restitution to the insurance companies measured by the amount of lost premiums caused by defendants’ false payroll reporting.

Defendants argue on appeal that the trial court erred in calculating restitution because (1) the prosecutor failed to present evidence that defendants’ criminal conduct caused payment of lowered premium amounts to the insurers and, even if the evidence was sufficient, that (2) the trial court should have calculated the premium owed on only the unreported payroll amount and the unreported payroll amount should have been calculated based upon only the voided payroll check amounts reflected in defendants’ computers.

The prosecutors responded that defendants “Harvey” waivers established they fraudulently underreported their businesses’ payroll to the insurers and the trial court properly determined the insurers’ economic losses by calculating the premiums that should have been paid to the insurers based upon the corrected payroll amounts. A “Harvey” waiver permits the sentencing court to consider the facts underlying dismissed counts and enhancements when determining the appropriate disposition for the offense or offenses of which the defendant stands convicted. (People v. Munoz (2007) 155 Cal.App.4th 160, 167.)

The Court of Appeal concluded that the trial court did not abuse its discretion in calculating $8,170,326 in restitution in this case and affirmed the judgments, but it vacated an erroneous $250 presentence investigation report fee imposed by the trial court in the unpublished case of People v Ayala -F083941 (March 2023).

The insurance companies involved in this case obtained records that the district attorney’s office had seized from defendants’ businesses and used them to conduct fraud audits. Representatives from each carrier testified at the restitution hearing. Daniel Harold was an IT technician who worked for JA Contracting, and testified for the Defendant. At the conclusion the trial court ordered a total of $8,170,326 in restitution to SCIF, SeaBright, Ullico, Liberty Mutual and Meadowbrook.

The trial court did not abuse its discretion in ordering defendants to pay restitution to their workers’ compensation insurance companies. California crime victims have a constitutional and statutory right to receive full restitution for economic losses suffered as a result of a defendant’s criminal conduct. (Cal. Const., art. I, § 28, subd. (b)(13); Pen. Code, § 1202.4, subds. (a)(1), (3)(B), (f).)

Defendants’ pleas of no contest and accompanying Harvey waivers establish that defendants intentionally and falsely underreported their monthly payroll to the insurers to pay lower premiums. Furthermore, the willful underpayment of insurance premiums constitutes an economic loss under section 1202.4.

Section 1203.1 “gives trial courts broad discretion to impose probation conditions to foster rehabilitation and to protect public safety.” (People v. Anderson (2010) 50 Cal.4th 19, 26.)

The methodology adopted by the trial court appears rational and did not produce an arbitrary result. (See Giordano, supra, 42 Cal.4th at p. 665.) Therefore, the court of appeal presumed the judgments are correct, and to set them aside defendants must affirmatively show error. (Id. at p. 666.)

At the conclusion of an exhaustive review of the evidence presented by each carrier, the Opinion concluded that “To the extent the scope and nature of defendants’ misconduct precludes an exact determination of the insurers’ losses, the equities favor the insurers as far as calculating the amount of restitution that is due. (See Prosser (2007) 157 Cal.App.4th 682, 691; People v. Baker, supra, 126 Cal.App.4th at p. 469.) After reviewing all the relevant considerations, we are satisfied there is a factual and rational basis for the trial court’s restitution order. No abuse of discretion or other ground for reversal has been shown.”

The International Association of Fire Fighters is a labor union representing paid full-time firefighters and emergency medical services personnel in the United States and Canada. The IAFF was formed in 1918 and is affiliated with the AFL-CIO in the United States and the Canadian Labour Congress in Canada. It represents more than 334,000 fire fighters across the United States and Canada.

The National Fire Protection Association (NFPA) is a global self-funded nonprofit organization, established in 1896, devoted to eliminating death, injury, property and economic loss due to fire, electrical and related hazards.

In what it calls “the next step in its fight to combat fire fighter cancer”, the International Association of Fire Fighters filed suit March 16 against the National Fire Protection Association (NFPA) for its role in imposing a testing standard that effectively requires the use of toxic forever chemicals known as PFAS, in fire fighter protective gear,

Section No. 8.62, a provision in NFPA Standard on Protective Ensembles for Structural Fire Fighting and Proximity Fire Fighting (Standard 1971), requires certain components of fire fighter bunker gear to pass the Ultraviolet Light Degradation Test. The test requires turnout gear to be exposed to UV light for 40 hours without degradation. The only substance that can pass the test for that long is PFAS.

A June 2020 study of bunker gear by researchers at the University of Notre Dame analyzed 30 new and used bunker jackets and pants originally marketed, distributed, and sold in 2008. 2014, and 2017, by six bunker gear makers, and found high levels of PFAS in bunker gear worn, used, or handled by fire fighters.

IAFF General President Edward Kelly said however that: “Even when presented with independent science on the health and safety risks, the NFPA has refused to help save our lives,”

The complaint, International Association of Fire Fighters v. National Fire Protection Association, Inc., seeks to hold the NFPA liable for not removing the dangerous test from its Standard 1971.

On March 6, 2023, President Joseph R. Biden, speaking to fire fighters in Washington, pledged, ,..We’re going after toxic exposure to PFAS, so-called ‘forever chemicals’ that for years have been in your gear, your equipment … that you depend on to be able to do your job.”

PFASs are human-made chemicals first invented in the 1930s. As of 2021, PFASs are defined as fluorinated substances that, with a few noted exceptions, any chemical with at least a perfluorinated methyl group or a perfluorinated methylene group is a PFAS.

PFAS are known as °’forever chemicals,” and per the Stockholm Convention on Persistent Organic Pollutants (to which the U S is a signatory) are defined as: Persistent- because they do not break down through organic processes or in the environment; Transboundary – as they migrate through surface and ground water, as well as in the atmosphere and through wildlife; and Bio-accumulative – as they concentrate within our bodies and are passed to the fetus within the womb and though breast milk. Exposure to PFAs in humans can occur through inhalation, ingestion and dermal contact. The two most widely known and studied PFAS are PFOA and PFOS.

According to the OECD, at least 4,730 distinct PFASs are known, which contain at least three perfluorinated carbon atoms. The United States Environmental Protection Agency (EPA) toxicity database, DSSTox, lists 14,735 unique PFAS chemical compounds. PubChem lists approximately 6 million.

Many PFASs were used in the mid-20th century in products and on materials due to their enhanced water-resistant properties, such as within Teflon or aqueous film forming foam. Only since the start of the 21st century has the environmental impact and toxicity to human and mammalian life been studied in depth. PFASs are commonly described as persistent organic pollutants because they remain in the environment for long periods of time, and are also known as “forever chemicals”.

Certain PFASs are no longer manufactured in the United States, as a result of phase-outs including the PFOA Stewardship Program (2010-2015), in which eight major chemical manufacturers agreed to eliminate the use of PFOA and PFOA-related chemicals in their products and as emissions from their facilities. Although PFOA and PFOS are no longer manufactured in the United States, they are still produced internationally and are imported into the US in consumer goods such as carpet, leather and apparel, textiles, paper and packaging, coatings, rubber and plastics.

An estimated 26,000 U.S. sites are contaminated with PFASs. At least six million Americans are estimated to have drinking water containing PFASs above the safe limit published prior to 2022 by the U.S. Environmental Protection Agency (EPA).

In 2021 California banned PFASs for use in food packaging and from infant and children’s products and also required PFAS cookware in the state to carry a warning label. In 2021, Maine became the first U.S. state to ban these compounds in all products by 2030, except for instances deemed “currently unavoidable.”

Much of the bunker gear worn by fire fighters is made by Lion who is is the fifth largest manufacturer of bunker gear in the United States. W. L. Gore & Associates markets these products. Neither of them are named as defendants in the complaint, but both are discussed as opposing efforts by the IAFF to change the NFPA standard mandating PFAS in bunker gear.

Plaintiffs allege that NFPA, Lion, Gore and others entered into agreements before an after adoption Section No. 8.62 of Standard 1971 which they claim to be an actionable “civil conspiracy” for which they seek “judgment in its favor against Defendant NFP A for compensatory damages in an amount to be determined by a jury, injunctive relief requiring NFPA to immediately rescind Section No. 8.62 of NFPA 1971, together with prejudgment interest, post-judgment interest, costs and expenses, attorneys’ fees and costs , and such other relief as this Court deems just and equitable.”

Gov. Gavin Newsom may have been prescient when he acknowledged free speech concerns as he signed California’s covid misinformation bill last fall. In a message to lawmakers, the governor warned of “the chilling effect other potential laws may have” on the ability of doctors to speak frankly with patients but expressed confidence that the one he was signing did not cross that line.

California’s covid misinformation law, which took effect Jan. 1, is being challenged by vaccine skeptics and civil liberties groups. Among those suing to get the law declared unconstitutional is a group founded by Robert F. Kennedy Jr., who has questioned the science and safety of vaccines for years.

According to Kaiser Health news. the law – meant to discipline doctors who give patients false information about covid-19 – is now in legal limbo after two federal judges issued conflicting rulings in recent lawsuits that say it violates free speech and is too vague for doctors to know what it bars them from telling patients.

In two of the lawsuits, Senior U.S. District Judge William Shubb in Sacramento issued a temporary halt on enforcing the law, but it applies only to the plaintiffs in those cases. Shubb said the law was “unconstitutionally vague,” in part because it “fails to provide a person of ordinary intelligence fair notice of what is prohibited.” His ruling last month clashed with one handed down in Santa Ana in December; in that case, U.S. District Judge Fred Slaughter refused to halt the law and said it was “likely to promote the health and safety of California covid-19 patients.”

Plaintiffs in the Santa Ana case, two doctors who have sometimes diverged from public health guidelines, appealed Slaughter’s ruling allowing the law to stand. The case has been combined in the 9th U.S. Circuit Court of Appeals with another case in which a San Diego judge declined to rule on a similar request to temporarily halt the law.

But doubts about the law are not confined to those who have battled the scientific mainstream.

Dr. Leana Wen, a health policy professor at George Washington University who previously served as president of Planned Parenthood and as Baltimore’s health commissioner, wrote in an op-ed a few weeks before Newsom signed the law that it would exert “a chilling effect on medical practice, with widespread repercussions that could paradoxically worsen patient care.”

The Northern California affiliate of the American Civil Liberties Union has weighed in against the law on free speech grounds, though the national organization has affirmed the constitutionality of covid vaccine mandates.

“If doctors are scared of losing their licenses for giving advice that they think is helpful and appropriate, but they don’t quite know what the law means, they will be less likely to speak openly and frankly with their patients,” said Hannah Kieschnick, an attorney with the ACLU of Northern California.

The law establishes that doctors who give false information about covid to patients are engaging in unprofessional conduct, which could subject them to discipline by the Medical Board of California or the Osteopathic Medical Board of California.

But the law lacks such specifics, defining misinformation only as “false information that is contradicted by contemporary scientific consensus contrary to the standard of care.”

Michelle Mello, a professor of law and health policy at Stanford University, said the wording is confusing. “On a matter like covid, science is changing all the time, so what does it mean to say there is scientific consensus?” she asked. “To me, there are lots of examples of statements that clearly, with no vagueness involved, meet the definition of the kind of conduct that the legislature was going after. The problem is that there are all kinds of other hypothetical things that people can say that don’t clearly violate it.”

Dr. Christine Cassel, a professor of medicine at the University of California-San Francisco, said she expects the law to be applied only in the most flagrant cases. “I trust scientists enough to know where there’s a legitimate dispute,” she said.

Cassel’s view mirrors Newsom’s rationale for signing the legislation despite his awareness of potential free speech concerns. “I am confident,” he wrote in his message to lawmakers, “that discussing emerging ideas or treatments including the subsequent risks and benefits does not constitute misinformation or disinformation under this bill’s criteria.”

General Insurance Company (GEICO) insurance policies require payment of actual cash value (“ACV”) upon the total loss of a covered auto and define ACV as the “replacement cost” of the auto, less depreciation.

A consolidated class action was filed in the United States District Court, Northern District of California, against GEICO alleging that it breached the terms of private passenger auto insurance policies issued to Plaintiffs, and similarly situated insureds, by failing to properly include or calculate sales tax (as to leased vehicles) and regulatory fees (as to all vehicles).

Plaintiffs argue that (1) the insurance policies require Defendant to include sales tax on the cost to purchase a replacement vehicle when paying leased-vehicle claims; and (2) under Cal. Ins. Code § 2695.8(b)(1), registration fees for the “remaining term of the loss vehicle’s current registration” should be calculated on an end-of-month (rather than, as Defendant contends, a beginning-of-month) basis or, alternatively, on a daily (not monthly) basis.

Over the course of two years, the parties engaged in motion practice, extensive production and review of documents and class-wide data, and multiple depositions, including the depositions of corporate representatives, class representatives, and expert witnesses.

After multiple mediation sessions the parties reached a settlement. The Court granted preliminary approval of the settlement on July 28, 2022, and final approval on March 15, 2023.

Approval of a class settlement is appropriate when plaintiffs must overcome significant barriers to make their case. The Court found in this case that the amount offered in settlement is reasonable in light of the substantial risk that Plaintiffs would face in litigating the case. According to Plaintiffs, litigation of these claims through trial presents significant challenges to prevailing on the merits since no California court, state or federal, has held that insureds who leased a vehicle are entitled, upon a total-loss determination, to full payment of sales tax.

They cite to unfavorable decisions regarding Defendant’s policy language, including three federal courts of appeal that have considered similar claims and ruled in favor of the insurers.

Although the Court expressed concerns at the preliminary approval stage regarding the claims-made structure of this settlement, the actual monetary benefit to the class has turned out to be substantial, even if less than anticipated. Defendant has conducted a preliminary audit of submitted claims, and the actual estimated cash benefit for the class is $6,200,000.

The settlement recovery is particularly compelling for the Sales Tax Class, where each class member will receive 100% of the sales tax (and thus 100% of the potential recovery). On average, class members with valid claims will receive more than $2,000. Plaintiffs estimate a total payout to the Sales Tax Class of approximately $5,800,000.

For the Regulatory Fees class, each class member will receive $6.88, which represents 50% of the potential recovery. Plaintiffs estimate a total payout to the Regulatory Fees Class of approximately $402,824.

The amount offered in the settlement is another factor that weighs in favor of approval. Based on the facts in the record and the parties’ arguments at the final fairness hearing, the Court found that the settlement amount falls “within the range of reasonableness” in light of the risks and costs of litigation.

Hanin Atalla and Erik Lund met in the “early fall” of 2017, during her last year of pharmacy school, when she did a six-week “business administrative rotation with Rite Aid.” The rotation entailed Atalla “shadow[ing]” Lund. Lund was Atalla’s “preceptor” for the rotation. Atalla did six other rotations besides the Rite Aid rotation as part of her pharmacy school requirements. When Atalla’s rotation with Rite Aid ended, Atalla celebrated at a dinner with Lund and his wife. Atalla stayed in close touch with Lund thereafter.

Starting from the time Atalla did her six-week rotation with Lund, she and Lund developed a social relationship. Over time, they became close friends. They were friends before Atalla started working at Rite Aid. Atalla also viewed Lund as a mentor.

Atalla and her husband celebrated a Friendsgiving at the home of Lund and his wife in 2017. Atalla and Lund texted frequently; they joked with one another in texts; they texted about personal matters; they texted about a wide range of things; and they sent multimedia messages to one another as well. They would go out to lunch together.

Atalla’s friendship with Lund continued after Atalla began working at Rite Aid in March 2018. They continued to text frequently about all kinds of things, including travel and vacations, exercise, weight loss, food, restaurants, getting together for meals, religious observances, family and relatives, their respective spouses, pets, social media, drinking and alcohol, birthdays, fashion, and work issues. They exchanged hundreds of texts. They would go out for coffee and meet up for lunch. In December 2018, Lund and his wife joined Atalla and her husband (and another couple) for dinner to celebrate Atalla’s birthday.

One month after Atalla and Lund dined together in celebration of her birthday, they engaged in their final text exchange, also on their personal cell phones. On January 4, 2019, a Friday night, Lund texted Atalla a “Live Photo” of him engaging in a sexual act by himself while he was drunk. The next morning, Lund texted Atalla, “Wanted to apologize I was embarrassing drunk last night.”

On Sunday, January 6, 2019, Atalla called her training pharmacist and said she was not feeling well and would not be able to work that week. On January 10, 2019, Atalla’s counsel, John Waterman sent a letter to Rite Aid asserting a claim of sexual harassment. Atalla’s counsel also advised that Atalla “will not be returning to work at Rite Aid.” Atalla’s counsel said he had already obtained a right-to-sue letter and would be filing a complaint that coming Monday, January 15, 2019.

Rite Aid interviewed Lund who admitted what he had done, and investigated whether there were any other complaints of sexual harassment against Lund; the investigation revealed none.

Rite Aid made the decision to terminate Lund on Monday, January 14, 2019. That same day, their counsel emailed a letter to Atalla’s counsel advising of Lund’s termination and assuring them, “Ms. Atalla remains an active employee in our system, and she is welcome to return to work.”

Rite aid concluded that Atalla had no intention of returning to work at Rite Aid and, rather, had decided to resign and pursue litigation. Accordingly, on January 21, 2019, Atalla’s status in Rite Aid’s system was changed to “resignation with the possibility of re-hire.” On January 22, 2019, Rite Aid sent Atalla a separation notice, along with her vacation payout.

Atalla filed a sexual harassment, failure to prevent sexual harassment, wrongful constructive termination, discrimination, and retaliation action against her former employer, Rite Aid Corporation and Thrifty Payless, Inc., dba Rite Aid.

The Rite Aid defendants brought a summary judgment motion. Rite Aid attached over 500 pages filled with text messages (along with images and photographs) exchanged between Atalla and Lund.

The trial court granted summary judgment noting that the “question is whether the harassment arose from a completely private relationship unconnected with the employment. I think defendants have met their burden of showing that this is the case. The Court of Appeal affirmed in the published case of Atalla v. Rite Aid Corporation -F082794 (March 2023).

The underlying goal of FEHA in this context is to provide effective measures to prevent workplace  harassment. (State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, at pp. 1046-1047.)  “‘Under the FEHA … there is a need to determine whether sexual conduct that occurs off the worksite or after working hours constitutes an “unlawful employment practice” within the ambit of the act.’ “ (Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, 1422, quoting § 12940 (italics added).)”

“We affirm the trial court’s conclusion that Atalla has not raised a triable issue of material fact with respect to the required showing that Lund was acting in the capacity of a supervisor in the text exchange in which he sent the inappropriate texts. Rather, as the trial court found, Lund and Atalla had ‘an extensive texting relationship’ and their January 4, 2019 late-night text exchange, which ‘occurred outside the workplace and outside of work hours,’ was ‘spawned from a personal exchange that arose from a friendship between [them].’ Summary judgment is therefore proper as to Atalla’s sexual harassment claims.”