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Lawyers Held to State Bar Ethics Civility Provisions in Pro-Per Cases

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Aziz Damak, representing himself, sued Satraj Hospitality LLC and Sangita and Sanjeev Khanna, who own and operate the Cozy Inn motel in Costa Mesa, alleging wage and hour, meal and rest period, retaliation, and wrongful discharge claims arising from his employment as a receptionist.

In July 2024, Damak served extensive discovery on each defendant, including interrogatories, requests for admission, and document production requests. After receiving no responses and no communication from defendants’ attorney, Hitendra Bhakta, despite repeated calls and a written 21-day notice warning that he would seek sanctions, Damak filed fifteen motions to compel in November 2024, each requesting monetary sanctions of “at least $1,000.” Defendants never opposed any of the motions, and neither Bhakta nor anyone from the defense side communicated with Damak about the outstanding discovery during the roughly ten months before the motions were heard.

The Court granted all of Damak’s motions to compel and the nonmonetary relief he requested, but denied monetary sanctions. The court recognized that the applicable Civil Discovery Act provisions made some sanction mandatory, but explained that such sanctions are limited to a party’s “reasonable expenses actually incurred.”

Because Damak was self-represented, had a fee waiver, and did not claim he had incurred any out-of-pocket expenses in bringing the motions, the court concluded it could not award any sanctions and denied that portion of his requests outright. Damak petitioned for a writ of mandate challenging that denial, arguing the court was required to award at least a nominal sanction and that the ruling undercut the deterrent purpose of the discovery sanctions scheme by letting represented parties stonewall self-represented opponents without consequence.

In the published case Damak v. Superior Court, No. G065583 (Cal. Ct. App., 4th Dist., Div. 3, July 2026) — the Court of Appeal granted Damak’s petition for writ of mandate in part and denied it in part, directing the trial court to vacate the portion of its order denying monetary sanctions and to reconsider that request.

The panel first agreed with the trial court that the Civil Discovery Act’s method-specific sanctions provisions — covering interrogatories, document production, and requests for admission — direct that sanctions be imposed under a companion provision authorizing “reasonable expenses, including attorney’s fees, incurred by anyone as a result” of the discovery misuse. Relying on the California Supreme Court’s decisions in Trope v. Katz (1995) 11 Cal.4th 274 and Musaelian v. Adams (2009) 45 Cal.4th 512, and the Court of Appeal’s own decision in Argaman v. Rutan (1999) 73 Cal.App.4th 1173, the court explained that a self-represented litigant, including a self-represented attorney, cannot “incur” attorney fees for his own time, and so cannot recover compensation for the hours he personally spent preparing the motions or for business opportunities forgone.

The court found Kravitz v. Superior Court (2001) 91 Cal.App.4th 1015 persuasive on this point, and acknowledged that court’s own description of the resulting rule as “wholly inadequate” for self-represented litigants facing discovery abuse, since a represented opponent who never incurs identifiable costs effectively gets, in that court’s words, one free bite at ignoring discovery obligations. Damak’s reliance on Appleton v. Superior Court (1988) 206 Cal.App.3d 632 did not change this outcome, the panel explained, because that case addressed only whether a sanction was mandatory in amount, not what the sanction could permissibly compensate.

The panel found, however, that the trial court’s analysis stopped short. A separate, more recently enacted provision of the Civil Discovery Act, Code of Civil Procedure section 2023.050, requires a court to impose a flat $1,000 sanction against a party or attorney — regardless of any expenses incurred by the other side — if it finds the party or attorney failed to respond in good faith to a document production request or failed to confer in a good faith attempt to resolve the dispute informally. The court explained that this provision, drawing on legislative history describing it as a “stronger . . . hammer on discovery abuse,” is aimed at deterring the offending party’s conduct rather than merely compensating the other side, and applies “notwithstanding any other law.”

Because Damak’s motions concerning document production requests were governed by a Discovery Act provision that in turn incorporates section 2023.050, and because the trial court’s order never mentioned that section or made any finding on whether defendants had responded in good faith or conferred with Damak, the panel held the trial court’s failure to even consider it was an abuse of discretion, citing City of Los Angeles v. PricewaterhouseCoopers, LLP (2024) 17 Cal.5th 46. The panel emphasized that nothing in the record suggested defendants had responded in good faith or conferred with Damak about the document requests, but declined to make those factual findings itself, remanding for the trial court to consider in the first instance whether a section 2023.050 sanction was warranted.

The court closed with an extended discussion of civility, noting that attorneys owe self-represented litigants the same dignity, courtesy, and integrity due to opposing counsel and the court itself, an obligation reflected in the civility oath every California attorney must now take and annually reaffirm under California Rules of Court, rule 9.7. Citing recent decisions admonishing incivility in litigation, including Masimo Corp. v. The Vanderpool Law Firm, Inc. (2024) 101 Cal.App.5th 902 and Karton v. Ari Design & Construction, Inc. (2021) 61 Cal.App.5th 734, the panel described defendants’ ten months of silence in response to Damak’s repeated, documented attempts to follow up on outstanding discovery as falling far short of that standard, regardless of any underlying intent. The court also noted, in a footnote, that defendants’ counsel made an unsupported factual assertion at oral argument about the record that the court could not verify, and reminded counsel of an attorney’s duty of candor to the court.

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9th Circuit Interprets the EFAA’s Application Timing Provisions

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Jessica Combs began working at Netflix, Inc. in May 2017 under an employment agreement containing a broad arbitration clause covering all employment-related disputes. She alleges that soon after starting, Netflix fostered a sexualized office culture, including one-on-one meetings that took on a flirtatious, dating-like tone and encouraged unwanted advances from male colleagues. At a September 2018 company offsite, Combs was required to participate in team-building exercises she considered sexualized, including exercises resembling “forced speed dating,” and she says a stairwell was used by male employees to look under female colleagues’ dresses. During an October 2018 work trip to Singapore, a male colleague made unwanted sexual advances toward her. Combs alleges that between 2017 and 2021 she repeatedly complained to her supervisors and to Netflix management about this sexually charged environment and about specific incidents, but that Netflix ignored her complaints and took no corrective action. In December 2021, Netflix fired Combs; the company cited her noncompliance with its COVID-19 vaccination policy, but Combs alleges the real reason was retaliation for her complaints.

In August 2023, Combs filed an administrative complaint with California’s Department of Fair Employment and Housing and received an immediate right-to-sue letter. In July 2024, she sued Netflix in California state court on various state-law discrimination, harassment, and hostile-work-environment theories. Netflix removed the case to federal court based on diversity of citizenship and moved to compel arbitration under the parties’ agreement. Combs did not dispute that a valid arbitration agreement existed or that her claims fell within it; instead, she argued that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA; 9 U.S.C. §401–402), which lets a person alleging sexual harassment elect to proceed in court despite a predispute arbitration agreement, exempted her case from arbitration.

The United States District Court for the Central District of California granted Netflix’s motion to compel arbitration. The court concluded that, even though Combs’s complaint alleged conduct constituting sexual harassment, her claims accrued and her dispute with Netflix arose before the EFAA’s March 3, 2022 effective date, so the statute’s timing provision took her case outside the Act’s reach and the parties’ arbitration agreement controlled.

In the published case of Combs v. Netflix, Inc., No. 25-3164 (9th Cir., July 2026) — the Ninth Circuit affirmed the district court’s order compelling arbitration.

The panel first agreed that Combs’s complaint alleged conduct constituting unlawful sexual harassment, so her claims presumptively fell within the EFAA. The dispositive question, one of first impression in the circuit, was how to interpret the EFAA’s timing provision, a statutory note stating that the Act applies to any “dispute or claim that arises or accrues” on or after its March 3, 2022 enactment date. The court held that this phrase describes two distinct concepts — “claims that accrue” and “disputes that arise” — agreeing with the Sixth Circuit’s reasoning in Memmer v. United Wholesale Mortgage, LLC (2025) 135 F.4th 398 that Congress used the disjunctive “or” to differentiate them.

On claim accrual, the court applied the settled common-law rule, drawn from Corner Post, Inc. v. Board of Governors of the Federal Reserve System (2024) 603 U.S. 799, which in turn cited Green v. Brennan (2016) 578 U.S. 547, that a claim accrues when a plaintiff has a complete and present cause of action allowing her to file suit and obtain relief. Under that standard, Combs’s claims accrued well before March 3, 2022, since she alleges harassment and a termination that occurred between 2017 and 2021.

The harder question was when a “dispute” arises. The court rejected Combs’s argument that no dispute arises until a formal external complaint is filed with a court or administrative agency, finding that reading too narrow. It also rejected the opposite extreme, urged in similar cases by other employers, that a dispute arises whenever the underlying harassing conduct occurs, since that would collapse the distinct concepts of “dispute” and “claim” into one and render Congress’s use of both terms superfluous. Instead, following the Third Circuit’s decision in Cornelius v. CVS Pharmacy Inc. (2025) 133 F.4th 240 and the Eighth Circuit’s decision in Famuyide v. Chipotle Mexican Grill, Inc. (2024) 111 F.4th 895, the panel held that a dispute arises under the EFAA when an employee registers disagreement with her employer, through an internal complaint, an external complaint, or otherwise, and the employer expressly or constructively opposes that position. The court noted this same formulation had already been adopted by a California appellate court applying the EFAA, in Kader v. Southern California Medical Center, Inc. (2024) 99 Cal.App.5th 214.

Applying that standard, the panel held that a dispute arose between Combs and Netflix well before the EFAA’s effective date. By the complaint’s own allegations, Combs repeatedly complained to Netflix between 2017 and 2021 about the sexualized culture and specific incidents, and Netflix consistently ignored those complaints and took no corrective action; that pattern of complaint met with inaction showed Netflix had, at minimum, constructively opposed her position. The court found the case closely analogous to Cornelius, where an employee’s repeated written complaints that her employer dismissed and failed to remedy were likewise sufficient to show a pre-2022 dispute. The panel further noted that Netflix’s alleged decision to fire Combs in December 2021 in retaliation for her complaints put the point beyond doubt, since firing an employee for raising a complaint is itself a clear act of opposition to her position. Because both Combs’s claims and her dispute with Netflix arose before March 3, 2022, the EFAA did not apply, and the panel affirmed the order compelling her case to arbitration.

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July 6, 2026 – News Podcast

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Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: WCAB En Banc Ruled Orders Suspending Action Requires Due Process. Ethics Slip Voids Lawyers’ Retainer in $374M Global Settlement. Manageability No Basis to Breakup Joinder of 440 Tesla Workers Cases. Unlicensed Contractor Rules for Homeowner Negligence Case Clarified. Court Backs Insurance Commissioner on FAIR Plan Surcharges. California AG Targets Illegal Corporate Practice of Medicine. NCCI Report Examines Relationship Between Payroll and Losses. No Surprises Act “Outrageous” Arbitration Awards Cost Carriers Billions.

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Federal Anti-Arbitration Law Applies to FEHA Sexual Orientation Case

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Trevor Joseph Decloedt worked for Radnet Management, Inc. and related entities (collectively, Radnet) alongside supervisor Joe Zambrano and coworker Susana Ceballos. According to Decloedt’s complaint, beginning in early 2022 Ceballos subjected him to repeated derogatory comments about his sexual orientation, telling him he “shouldn’t be gay” and that it was “sinning.” Decloedt alleged Ceballos also grew aggressive toward him at work, at one point saying she was so angry she could kill him and, on more than one occasion, pulling his hair — including a November 2022 incident in which she grabbed his hair with enough force that he fled to the restroom. Decloedt alleged he repeatedly reported Ceballos’s conduct to Zambrano and another lead employee, but no action was taken; when Ceballos later complained about him to human resources, he told HR about the harassment and said it had led him to contemplate suicide, but HR again took no action. Decloedt was terminated in February 2023.

In October 2024, Decloedt sued Radnet, Zambrano, and Ceballos, alleging eleven causes of action, including hostile work environment and sexual harassment under California’s Fair Employment and Housing Act (FEHA; Gov. Code, §12900 et seq.). Radnet moved to compel arbitration under an agreement Decloedt had signed at the start of his employment. The trial court denied the motion, holding that Decloedt had adequately pleaded a FEHA sexual harassment claim, which triggered an exemption from arbitration under the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA; 9 U.S.C. §401–402), a 2022 amendment to the Federal Arbitration Act (FAA; 9 U.S.C. §1 et seq.) that lets a person alleging sexual harassment opt their entire case out of a predispute arbitration agreement. Radnet appealed.

The trial court found Decloedt had alleged a viable FEHA sexual harassment claim and, on that basis, held the EFAA exempted his case from arbitration under the FAA. It did not resolve any disputed facts in reaching that conclusion, and it did not reach Decloedt’s separate argument that the arbitration agreement was independently unconscionable.

In the published case of Decloedt v. Radnet Management, Inc., No. B343963 (Cal. Ct. App., 2d Dist., Div. 1, July 2026) — the Court of Appeal affirmed the trial court’s order denying Radnet’s motion to compel arbitration.

Reviewing the question de novo because no disputed facts were before it, the panel first addressed whether harassment based on sexual orientation qualifies as sexual harassment under FEHA at all. Radnet argued that FEHA treats sexual orientation harassment as a separate category from sexual harassment, pointing to statutory language that defines “harassment because of sex” to include sexual harassment, gender harassment, and harassment related to pregnancy or childbirth, without separately listing sexual orientation.

The court rejected that reading, explaining that the word “include” in the statute is a term of enlargement, not an exhaustive list, and it declined to infer that omitting sexual orientation from that illustrative list meant harassment based on sexual orientation falls outside FEHA’s prohibition on harassment “because of sex.” Drawing on the U.S. Supreme Court’s reasoning in Bostock v. Clayton County (2020) 590 U.S. 644, which held that firing someone for being gay or transgender necessarily involves discrimination based on sex under Title VII, the court held that the same logic applies to FEHA’s parallel “because of . . . sex” language, since California courts routinely look to federal Title VII case law when interpreting FEHA’s antidiscrimination provisions, citing Hall v. County of Los Angeles (2007) 148 Cal.App.4th 318. The court found this conclusion reinforced by a recent sister-panel decision, Quilala v. Securitas Security Services USA, Inc. (2025) 117 Cal.App.5th 75, which had treated a plaintiff’s allegations of harassment based on his perceived sexual orientation as stating a sexual harassment claim under FEHA.

The court then considered whether Decloedt’s specific allegations were severe or pervasive enough to state a hostile work environment claim, assuming without deciding that the federal pleading standard governing motions to dismiss applied. The panel rejected Radnet’s argument that Decloedt’s complaint drew a sharp line between Ceballos’s verbal comments about his sexual orientation and her separate outbursts of anger and hair-pulling, holding that the complaint could reasonably be read as alleging both forms of conduct were part of the same pattern of harassment motivated by her disapproval of his sexual orientation.

The court explained that a hostile work environment claim does not require every incident to include an explicit anti-gay remark, citing Miller v. Department of Corrections (2005) 36 Cal.4th 446, and that Decloedt’s allegation that Ceballos “continually” made such comments was a factual assertion the court had to accept as true at the pleading stage, not an impermissible legal conclusion. Because Decloedt alleged the harassment caused him to flee for his safety and to contemplate suicide, the court held these allegations plausibly showed conduct that disrupted his emotional tranquility and interfered with his ability to do his job.

Having concluded Decloedt adequately alleged a FEHA sexual harassment claim, the panel held the EFAA’s exemption applied and affirmed the order denying arbitration, following the reasoning of Liu v. Miniso Depot CA, Inc. (2024) 105 Cal.App.5th 791 that the statute’s plain language exempts a plaintiff’s entire case, not just the individual harassment claim. The court did not reach Decloedt’s alternative argument that the arbitration agreement was independently unconscionable.

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Intense Opposition Kills Proposed Law Limiting Athletes’ Claims

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California Senate Bill (SB) 795, introduced by Senator Laura Richardson, was a 2026 legislative proposal aimed at restricting professional athletes’ access to workers’ compensation benefits in the state.

Proposed SB 795 would have revised the Labor Code to state that the workers’ compensation system does not apply to the claim of a professional athlete involving occupational disease or cumulative trauma if that athlete was exempt, as specified, and, during the last 365 days of their career as a professional athlete, was not hired as a professional athlete in California, unless over the course of their entire career as a professional athlete, (1) the athlete worked for 2 or more seasons for a California-based team or teams, as defined, or worked 20% or more of their duty days in California or for a California-based team, and (2) worked for fewer than 7 seasons for any team other than a California-based team during their professional athletic career. The bill would state that the team’s principal place of business is not relevant to whether a team is based in California. As most recently amended, the proposed law would provide that these changes apply to claims for benefits filed on or after September 30, 2026.

Reports indicated the push came largely from the business/team side rather than a broad public concern: the NFL teams headquartered in California – the Rams, Chargers, and 49ers – reportedly supported the bill, with Richardson indicating in a bill summary that the NFL and these three California teams back it, though none of them confirmed this in public statements.

Issues related to workers’ compensation costs reportedly have historically influenced league and team decisions about where to locate – for example, the UFL has no California teams, and workers’ comp costs contributed to the end of one iteration of the Arena Football League. This suggests part of the impetus was making California a more attractive/affordable state for professional athletic franchises relative to others with less generous athlete workers’ comp exposure.

The legislation immediately faced fierce pushback from major sports organizations, including the National Football League Players Association (NFLPA) and the San Francisco 49ers players who publicly argued the bill unfairly singled out high-risk jobs.

NFLPA, the lead opponent, called it “anti-player legislation,” stating it strips players of “the constitutional rights and legal protections afforded to every other worker in the state” and accused California’s pro sports teams of “seeking to evade that system for financial gain, denying injured athletes the care they are owed.” They closed with a call to “reject SB 795 and stand with the players who make the game possible.”

The National Hockey League Players’ Association – NHLPA – joining in solidarity: posted that “All workers deserve workers’ compensation protection,” joining the NFLPA “and other players’ associations in asking lawmakers to reject this bill.”

The Major League Soccer Players Association – MLSPA – stated it stands with the NFLPA in strongly opposing SB 795, calling workers’ compensation “a critically important and hard-earned protection for all workers who take part in high-risk jobs,” and urged lawmakers to reject the bill.

The 49ers players – the full 90-man roster – signed a joint statement with the NFLPA, saying “Football takes a real toll on our bodies, and workers’ compensation was built for high-risk jobs like ours.” They added that the bill “singles out professional athletes and tells us we deserve fewer protections than every other worker in the state.”

The bill passed the State Senate in January 2026 but underwent major amendments in the Assembly by May. Following intense union opposition, the bill died in late June 2026 when its first Assembly Insurance Committee hearing was canceled at the author’s request, entirely pulling the bill from consideration.

“California SB 795, a bill that would have significantly restricted professional athletes’ access to workers’ compensation benefits, has been pulled from consideration and will not move forward for a vote,” the NFLPA said in an email to agents. “This is a meaningful win for your clients and helps keep critical protections in place for injuries sustained during their careers. Protecting the health, safety and legal rights of active and former players remains a top priority, and we will continue to fight against efforts that threaten those protections.”

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June 29, 2026 – News Podcast

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Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Appellate Court Rules Cal/OSHA May Investigate Like a Grand Jury. Class Certification Denied in Carrier “Hidden Premium” Case. Court Rules 500 S.F. Municipal Attorneys Remain At-Will Employees. UPS Mechanic Sentenced for Workers Compensation Fraud. Healthcare Fraud Takedown Results in 10 SoCal Defendants Charged. Incarcerated Prisoner Charged in $9.5M Medicare Fraud Scheme. ACOEM Releases New Workplace Lifestyle Medicine Guide. AI Beats Physicians in Diagnoses of Joint Replacement Infections.

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Workplace Restraining Order Affirmed Against School Board Member

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Michael Krause served as Chief Business Officer and then superintendent of the Adelanto Elementary School District (District) from 2022 until his June 2024 termination. Over roughly two years, three of his subordinates — executive assistants identified as S.A., X.L., and I.P. — experienced what the trial court later found to be a course of harassing conduct. Krause was prone to angry outbursts at meetings, including one in which he slammed his fists on a table and screamed at staff until several people cried. He also sent the three women a steady stream of unsettling text messages and photos: pictures he had secretly taken of them at a Chipotle, outside their homes at night, and near a family member’s workplace; comments suggesting he was watching them on office cameras or following them around town; and after-hours messages with a romantic or proprietary tone, such as telling one assistant he did not “love her anymore” when she was slow to reply.

On separate occasions he physically poked two of the women hard enough to startle and hurt them. After the women reported his conduct in 2024, Krause was placed on leave, filed an unsubstantiated sexual harassment complaint against one of them, and was later seen parked outside a coffee shop watching two of the women through his car window. The District terminated him and the parties signed a separation agreement releasing the District’s claims against Krause arising from his employment. Krause was then elected to the District’s own Board of Trustees, and during the campaign each woman found one of his yard signs planted near her home.

In October 2024, the District petitioned for a workplace violence restraining order (WVRO) against Krause on behalf of the three women under Code of Civil Procedure section 527.8, and the San Bernardino County Superior Court issued a temporary restraining order. Following a four-day evidentiary hearing spread across January and March 2025, at which the three women and Krause testified at length, the trial court granted a permanent WVRO. The court found Krause’s course of conduct met the statutory definition of harassment, rejected his shifting and sometimes “strained” explanations for the texts and photos, and found his lack of remorse supported a reasonable probability that the harassment would continue, particularly given that his election to the Board placed him back in regular contact with the women. The order barred Krause from contacting the women, required him to stay 100 yards from them and their workplace (five yards during Board meetings, where a District-funded security guard was required), barred him from commenting on the WVRO or the underlying proceedings at any regular Board meeting, and ran for four years.

In the published opinion in Adelanto Elementary School District v. Krause, No. D086337 (Cal. Ct. App., 4th Dist., Div. 1, July 2026) — the Court of Appeal affirmed the WVRO as modified, striking the provision barring Krause from commenting on the order at Board meetings and shortening the order’s duration from four years to the statutory maximum of three.

Writing for a unanimous panel, Justice Buchanan first rejected Krause’s argument that the District had waived its right to seek a WVRO by signing a separation agreement releasing claims against him. The court held that an employer’s statutory right to prosecute a WVRO on an employee’s behalf is unwaivable under Civil Code section 3513, which bars private contracts from contravening a law enacted for a public reason. Drawing on Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 and Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, the court reasoned that section 527.8 was enacted to combat workplace violence and harassment as a matter of public concern, not solely for individual employers’ benefit, citing legislative history describing rising threats against school employees, health workers, and election workers. Because the public benefit of the WVRO statute is a primary purpose rather than a merely incidental one — a policy the court traced through Scripps Health v. Marin (1999) 72 Cal.App.4th 324 and a case it referred to as Franklin v. The Monadnock Co. (2007) 151 Cal.App.4th 252 — the release could not extinguish the District’s right to seek the order.

Second, the court found sufficient evidence of a future threat to support the WVRO. It held that the older “reasonable probability of future unlawful violence” standard from Scripps Health no longer controls, because the Legislature amended section 527.8 in 2023 to reach harassment as well as violence, effective January 2025, precisely so employers would not have to wait until a threat escalated into violence. Under the amended statute, a reasonable probability of continued harassment suffices, and the panel found that standard met given the two-year pattern of conduct, Krause’s continued contact after being placed on leave, and his consistent refusal to acknowledge that any of it was inappropriate.

Third, the court held Krause forfeited his argument that the WVRO improperly burdened his parental rights, since he raised no evidence or objection on that point below despite adequate notice of the order’s terms.

Fourth, the court agreed with Krause that the provision barring him from commenting on the WVRO or its proceedings at Board meetings was an overbroad restriction on his First Amendment rights as an elected official. Applying Balboa Island Village Inn, Inc. v. Lemen (2007) 40 Cal.4th 1141 and Madsen v. Women’s Health Center, Inc. (1994) 512 U.S. 753, the court explained that an injunction touching speech must be no broader than necessary to serve its purpose, and this provision swept in legitimate Board business — such as evaluating the performance of the law firm that handled the case — that had nothing to do with harassing the protected women. The panel struck that provision alone, while leaving intact the WVRO’s other bars on harassment or contact during Board meetings.

Finally, the court held the trial court exceeded its authority by setting the WVRO’s duration at four years, since section 527.8, subdivision (l)(1), caps such orders at three years subject to early termination. The panel modified the order accordingly and affirmed it as modified.

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OSHA Citation Extends to Hospital’s Management Company

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Cedar Springs Hospital, Inc. operates a psychiatric hospital in Colorado. UHS of Delaware, Inc. is a management company that, under a services agreement with Cedar Springs, agreed to assign several of its own employees to serve as the hospital’s top executives and to provide oversight on workplace safety matters. Both Cedar Springs and UHS of Delaware are wholly owned, through an intermediary holding company, by the same ultimate parent, Universal Health Services, Inc.

Following an OSHA investigation into patient-on-staff violence at the hospital, the Secretary of Labor cited both Cedar Springs and UHS of Delaware for violating the Occupational Safety and Health Act’s general duty clause (29 U.S.C. section 654(a)(1)) by failing to provide adequate safety measures against workplace violence. UHS of Delaware contested the citation, arguing it was merely a management company for Cedar Springs and should not itself be treated as an employer subject to OSHA liability at the hospital.

An administrative law judge upheld the citations, and UHS of Delaware sought discretionary review before the full Occupational Safety and Health Review Commission (Review Commission). Applying a three-part test the parties agreed governed the analysis, the Review Commission asked whether Cedar Springs and UHS of Delaware (1) shared a common worksite, (2) had integrated operations on matters of safety and health, and (3) shared a common president, management, supervision, or ownership. The Review Commission answered yes to all three questions and found that UHS of Delaware had acted as an employer for some of the employees working at the hospital, making it independently liable alongside Cedar Springs.

UHS of Delaware then petitioned the Tenth Circuit for review of that order under 29 U.S.C. section 660(a), which required the court to treat the Review Commission’s factual findings as conclusive if supported by substantial evidence. Cedar Springs joined UHS of Delaware’s arguments in a companion petition. In the published case of UHS of Delaware, Inc. v. Occupational Health and Safety Review Commission, No. 24-9521 (10th Cir., Feb. 2026) — the Tenth Circuit denied UHS of Delaware’s petition for review, upholding the Review Commission’s order.

The panel,addressed each of the three questions in turn, in each instance asking only whether the record could reasonably support the Review Commission’s finding, not whether the court would have weighed the evidence the same way in the first instance.

On the worksite question, the court rejected UHS of Delaware’s argument that the psychiatric hospital was solely a worksite of Cedar Springs because UHS of Delaware’s headquarters were in Pennsylvania. The proper focus, the court explained, is where employees face workplace hazards, not where the employer’s headquarters sit — a principle it drew from the Eleventh Circuit’s recent decision in a closely related dispute involving the same management company and a different psychiatric hospital, UHS of Delaware, Inc. v. Secretary of Labor (2025) 140 F.4th 1329, as well as the First Circuit’s decision in A.C. Castle Construction Co. v. Acosta (2018) 882 F.3d 34. The parties had stipulated that UHS of Delaware’s employees were exposed to the hazard of workplace violence at the hospital, and the court held it could not disregard a stipulated fact, citing the ordinary meaning of “worksite” as the place where an employee works under Harbert v. Healthcare Services Group, Inc. (2004) 391 F.3d 1140. Testimony that UHS of Delaware’s chief financial officer regularly interacted with patients, along with evidence that other UHS of Delaware employees made repeated visits to the hospital, further supported the finding.

On the integration question, the court held that sharing resources and providing oversight of safety matters — including requiring workplace-violence training, supplying incident-report forms, compiling injury data, and reviewing the hospital’s violence-prevention plan — was sufficient evidence of integrated safety operations, even though UHS of Delaware itself did not provide direct patient care. The court found this consistent with both the Eleventh Circuit’s 2025 decision and A.C. Castle, which had found integration based on similar funding of training and preparation of safety policies for another company.

On the common-ownership question, the court found it unnecessary to resolve whether the companies shared a president, management, or supervision, since the statutory test is disjunctive and common ownership alone suffices. Both companies acknowledged they were wholly owned subsidiaries of the same ultimate parent, Universal Health Services, Inc., with an intermediary holding company sitting between the parent and Cedar Springs. The court held that an intervening tier in the ownership chain does not defeat common ownership so long as the companies share the same ultimate parent, again following the Eleventh Circuit’s 2025 decision, which had reached the identical conclusion on a nearly identical corporate structure involving the same intermediary entities.

Because substantial evidence supported the Review Commission’s findings on all three questions, the court denied UHS of Delaware’s petition for review without reaching whether the three-question test itself was the correct legal standard, noting the parties’ agreement on that point and the court’s practice of assuming without deciding a test’s correctness when it is not contested.

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Cal Supreme Court Clarifies Federal Court Two-Dismissal Rule

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John HR Doe and six other plaintiffs (Does) allege that William Babcock, a counselor at Kynoch Elementary School, sexually assaulted them between 1993 and 2001, including during counseling sessions, while the school operated within Marysville Joint Unified School District (the District). Before filing the lawsuit at issue here, Does twice filed and then voluntarily dismissed nearly identical claims against the District and Babcock. The first two rounds were filed in Yuba County Superior Court in 2020 and voluntarily dismissed without prejudice that November. The same day, Does filed a new action in the U.S. District Court for the Eastern District of California realleging their state-law claims and adding federal claims under Title IX, 42 U.S.C. section 1983, and the No Child Left Behind Act. After the District moved to dismiss on Eleventh Amendment sovereign-immunity and other grounds, Does voluntarily dismissed the federal action “without prejudice” under rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure. Weeks later, Does filed the present action in state court (later transferred to Yuba County), alleging only state-law tort claims arising from the same abuse.

The District demurred, arguing that Does’ claims were barred by claim preclusion under the so-called “two-dismissal rule” of rule 41(a)(1)(B), which provides that a second voluntary dismissal of an action based on the same claim “operates as an adjudication on the merits.” Because Does had already dismissed the same claims twice before — once in state court and once in federal court — the District argued the federal dismissal triggered the rule and barred the state action outright. Does countered that the federal dismissal could not carry claim-preclusive weight because the District’s invocation of Eleventh Amendment immunity had stripped the district court of subject-matter jurisdiction over their state-law claims. The Yuba County Superior Court agreed with the District, ruling that the federal dismissal operated as an adjudication on the merits and sustained the demurrer without leave to amend, entering judgment for the District.

In a split decision, the Court of Appeal affirmed, holding that state courts must apply the Federal Rules of Civil Procedure to determine the preclusive effect of a federal voluntary dismissal, and that rule 41(a)(1)(B) rendered the second dismissal claim preclusive as a matter of federal law. (Doe v. Marysville Joint Unified School Dist. (2023) 98 Cal.App.5th 95, 110.) The dissent, following the reasoning of Gray v. La Salle Bank, N.A. (2023) 95 Cal.App.5th 932 — a Sixth District decision issued while the appeal was pending — would have held that state claim-preclusion law, under which a voluntary dismissal without prejudice has no preclusive effect, governed the state-law claims because the federal court’s jurisdiction over them had been supplemental rather than original.

In the case of Doe v. Marysville Joint Unified School District, No. S283639 (Cal. Sup. Ct., July 2026) — the California Supreme Court reversed the judgment of the Court of Appeal and remanded the case for further proceedings.

The Court of Appeal majority had misread Semtek Int’l Inc. v. Lockheed Martin Corp. (2001) 531 U.S. 497, the U.S. Supreme Court decision that both sides treated as controlling. In Semtek, the high court held that rule 41(b)’s phrase “adjudication upon the merits” does not mean a dismissal automatically carries claim-preclusive effect in other courts; it means only that the same claim cannot be refiled in the same court. The Supreme Court explained that treating the rule as a freestanding rule of claim preclusion would be an odd place to bury such a rule, would risk exceeding the Rules Enabling Act’s bar on altering substantive rights, and would produce forum-shopping problems under Erie Railroad Co. v. Tompkins (1938) 304 U.S. 64. Because rule 41(a)(1)(B) uses the identical “adjudication on the merits” language, the court reasoned, Semtek’s interpretation applies equally: a second voluntary dismissal under the two-dismissal rule bars refiling the same claims in the same federal court, but it does not, by itself, preclude a later suit in a different court — including a state court.

The court rejected the District’s argument that Semtek’s holding was limited to diversity cases and left federal-question dismissals subject to a different rule. It reasoned that Semtek’s interpretation of the rule itself did not turn on the basis for jurisdiction; only the separate question of which body of law’s preclusion rules apply (a uniform federal rule for federal-question cases, versus the forum state’s rule in diversity cases, per Taylor v. Sturgell (2008) 553 U.S. 880) depends on the jurisdictional source. Since rule 41(a)(1)(B) is not itself a rule of claim preclusion under either body of law, the court found it unnecessary to decide which preclusion rule would apply to Does’ state-law claims, because the outcome was the same either way: California law does not treat a voluntary dismissal without prejudice as a judgment on the merits, and no persuasive authority establishes that federal common law treats a two-dismissal-rule dismissal as barring a subsequent state-court suit on state-law claims. The court found support in Gray v. La Salle Bank, N.A., which had reached the same conclusion on similar facts, and distinguished the out-of-circuit authority the District cited as either predating Semtek or addressing a different question — whether two suits raised the “same claim” for purposes of applying the rule within the federal courts, not whether the rule itself extends preclusive force into state court.

The court added that even if the federal dismissal were treated as a final adjudication of Does’ federal claims, there would be no basis to extend that finality to the supplemental state-law claims, since federal courts routinely allow such claims to be refiled in state court after a discretionary dismissal without prejudice, and there is no comparable federal interest in barring purely state-law claims from state court. Having resolved the case on this ground, the court declined to reach Does’ alternative argument that the District’s invocation of sovereign immunity in the federal action deprived that court of subject-matter jurisdiction over the state-law claims in the first place.

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3rd DCA Adopts 2nd DCA Cook Decision on Overbroad Arbitration Agmts

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Michelle Phan worked intermittently between 2022 and 2024 for two car dealerships owned by Knight Sacramento SU Inc. and affiliated entities (Knight) — Elk Grove Volkswagen and Elk Grove Subaru. During her employment she signed several arbitration agreements at each dealership, including a standalone agreement at each that superseded the others. The two standalone agreements were identical. They required Phan to arbitrate “any and all claims” arising from her employment “or any other interaction/relationship” with Knight, past, present, or future, and extended that duty to a long list of third-party beneficiaries — Knight’s owners, officers, employees, agents, sister companies, subsidiaries, and more. The agreements barred class arbitration, carved out a handful of specific claims (workers’ compensation, unemployment benefits, NLRA claims, and, at Phan’s option, sexual harassment or assault claims), and included a severability clause.

In August 2024, Phan sued Knight individually and on behalf of a class, alleging eight wage-and-hour violations: unfair competition (Bus. & Prof. Code, §17200) and failures to pay minimum wages (Lab. Code, §1194, §1197, §1197.1), overtime (§510), meal and rest periods (§226.7, §512), itemized wage statements (§226), timely wages (§201, §202, §203), and expense reimbursement (§2802). She demanded a jury trial and separately filed a PAGA notice with the state labor agency. When Knight asked her to arbitrate, she refused, calling the agreements unconscionable.

Knight moved to compel arbitration of Phan’s individual claims and to strike the class claims. Phan opposed, arguing the agreements were procedurally unconscionable adhesion contracts and substantively unconscionable because their scope reached far beyond the employment relationship and bound only her — not Knight’s many affiliated third parties — to arbitrate. Knight countered that any procedural unconscionability was low because the arbitration terms were presented in a standalone document, and it submitted a declaration from its HR manager explaining that the broad language was meant to “capture” the many types of claims employees might bring.

The Sacramento County Superior Court found the agreements procedurally unconscionable, but only mildly so, since the arbitration terms were clearly written and stood alone rather than being buried in a longer document. On the merits, however, the court found a high degree of substantive unconscionability. Relying on Cook v. University of Southern California (2024) 102 Cal.App.5th 312, the court held that Knight’s explanation did not amount to the kind of factually established or contractually explained “business realities” needed to justify an arbitration clause reaching claims unrelated to employment, and that the agreements lacked mutuality because Phan, but not Knight’s third-party beneficiaries, was bound to arbitrate. Because these defects went to the core of the agreements, the court declined to sever them and denied Knight’s motion outright.

In the published case of Phan v. Knight Sacramento SU Inc., No. C103401 (Certified for publication July 2026) – the Court of Appeal affirmed the trial court’s order denying Knight’s motion to compel arbitration.

The panel first took up Knight’s invitation to depart from Cook, a decision of a sister district that is not binding but that California courts ordinarily follow absent good reason to disagree. The court found Knight had misread Cook: that decision did not hold that all broadly worded arbitration clauses are automatically unconscionable, and a separate Court of Appeal decision, Ayala-Ventura v. Superior Court (2026) 119 Cal.App.5th 241, had already confirmed as much. Rather, Cook condemned agreements that reach claims unconnected to employment without any justification, and that impose arbitration on the employee alone while leaving the employer’s affiliates free to sue in court. Seeing no material difference between Knight’s agreements and the one in Cook, and no good reason to part ways with that precedent, the court applied it here.

Turning to the merits, the panel agreed the agreements were substantively unconscionable for two independent reasons. First, their language covering any claim connected to “any other interaction/relationship” Phan had or would have with Knight went well beyond the employment relationship, distinguishing them from the narrower, employment-tied language in Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, which Knight had urged as the better analogy. Employers may draft a somewhat broader-than-literal “margin of safety” into an arbitration clause if a legitimate commercial need for the breadth is either spelled out in the contract or proven with evidence, citing Civil Code, §1670.5, and the framework of Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. Knight’s stated desire to sweep in any conceivably related claim did not meet that bar, since the actual contract language covered claims with no tie to employment at all. Second, the agreements lacked mutuality: they bound Phan to arbitrate against a sweeping list of Knight-affiliated third parties without requiring those parties to do the same for any claims they might bring against her. The court rejected Knight’s argument that mutuality arose after the fact when some third parties later sought to compel arbitration, explaining that unconscionability is assessed as of the time the contract was signed, and that other listed third parties named in the suit had still not agreed to arbitrate anything.

Because these two defects – unjustified overbreadth and one-sided treatment of third-party claims – went to the central purpose of the agreements, the court held the trial court acted within its discretion under Civil Code §1670.5 and Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, in declining to sever the offending terms and enforce what remained. Having resolved the case on unconscionability grounds, the panel did not reach Knight’s remaining arguments about PAGA waivers or jury-trial waivers in the agreements.

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