Tag: 2023 News

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.”

In 2019, the California Legislature enacted Assembly Bill No. 5, which established a new test for distinguishing between employees and independent contractors for the purposes of the Labor Code and Unemployment Insurance Code.

In response, Davis White and Keith Yandell, supported by a group called Protect App-Based Drivers and Services proposed Proposition 22. Among the supporters of Protect Drivers and Proposition 22 were rideshare and delivery network companies such as Uber Technologies, Inc., Lyft, Inc., and DoorDash, Inc.

The voters approved Proposition 22 in November 2020, with 58.6 percent of voters in favor and 41.4 percent opposed. It added sections 7448 to 7467 to the Business and Professions Code.

Shortly afterwards, Hector Castellanos, Joseph Delgado, Saori Okawa, Michael Robinson, Service Employees International Union California State Council, and Service Employees International Union filed a petition for writ of mandate seeking a declaration that Proposition 22 is invalid because it violates the California Constitution.

The trial court granted the petition, ruling that the proposition (1) is invalid in its entirety because it intrudes on the Legislature’s exclusive authority to create workers’ compensation laws; (2) is invalid to the extent that it limits the Legislature’s authority to enact legislation that would not constitute an amendment to Proposition 22, and (3) is invalid in its entirety because it violates the single-subject rule for initiative statutes.

It issued a judgment ordering Katie Hagen, as director of the Department of Industrial Relations, not to enforce any of Proposition 22’s provisions.

Proposition 22’s proponents and the state appealed, arguing the trial court was mistaken on all three points.

The Court of Appeal agreed that Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule. But it concluded that the initiative’s definition of what constitutes an amendment violates separation of powers principles. Because the unconstitutional provisions can be severed from the rest of the initiative, it affirmed the judgment insofar as it declares those provisions invalid and to the extent the trial court retained jurisdiction to consider an award of attorney’s fees, and otherwise reversed in the published case of Castellanos v. State of California – A163655 (March 2023).

By placing the eligibility of app-based drivers for workers’ compensation benefits off-limits to amendment by the Legislature, Proposition 22 seeks to override constitutional responsibility delegated to the Legislature.

Thus the Court of Appeal concluded that sections 7465(c)(3) and (4) are facially invalid on separation of powers grounds because they intrude on the judiciary’s authority to determine what constitutes an amendment to Proposition 22, and section 7465(c)(4) fails for the additional reason that it intrudes on the Legislature’s authority by artificially expanding Proposition 22’s article II, section 10(c) shadow.

However, the proper remedy for the separation of powers violation is to sever section 7465(c)(3) and (4) and allow the rest of Proposition 22 to remain in effect, as the voters indicated they wished. (§ 7467, subd. (a).) rather than strike Proposition 22 in its entirety.

“The judgment is affirmed to the extent it declared sections 7465(c)(3) and (c)(4) invalid and to the extent the trial court retained jurisdiction to consider a motion for attorney fees under Code of Civil Procedure section 1021.5. In all other respects, the judgment is reversed. The matter is remanded to the trial court with instructions to enter a new judgment not inconsistent with this opinion.”

Disgraced plaintiff personal injury lawyer Tom Girardi, once among the most successful and powerful plaintiff’s attorneys in the country, gave more than $1 million in gifts and payments to a state bar investigator and his wife, according to a corruption probe released Friday by the State Bar of California .

Throughout his more than 50-year career, Girardi had two claims to fame: he played a key role in winning a $333 million settlement for residents of Hinkley, California, in their lawsuit against Pacific Gas & Electric, a case that later became the basis for the film “Erin Brockovich.” Decades later, he and his wife Erika Jayne were cast on the reality show “Real Housewives of Beverly Hills.”

For years, Girardi faced accusations that he’d stolen money from clients and other lawyers. He was forced into bankruptcy in 2021, disbarred in 2022, and last month was finally indicted by two different federal grand juries, one in California and one in Illinois, on charges of embezzling more than $18 million of his clients’ money.

The State Bar decided to release the reports in furtherance of the agency’s public protection mission and its commitment to transparency and accountability. In releasing these reports, the State Bar has redacted information that is protected under the law, including California Business and Professions Code section 6086.1, and the right to privacy.

The first report was prepared by attorney Alyse Lazar, who in 2021 was retained by the State Bar to review 115 files of past complaints against Girardi. Her review, limited to documents in investigative files, identified numerous instances in which complaints were closed without complete investigations or despite the development of facts warranting discipline.

The second report was completed by Halpern May Ybarra Gelberg LLP, an outside law firm hired by the State Bar to conduct a wide-ranging investigation that was not limited to file review and included interviews of 74 witnesses and extensive evidence gathering. The May report details instances where Girardi’s efforts to buy relationships and exercise influence at the State Bar – at all levels – likely impacted the handling of some complaints against him, causing those complaints to be closed improperly.

During a 16-month investigation, May and his team reviewed over 950,000 documents, issued 23 subpoenas, and interviewed, either voluntarily or under compulsion, 74 witnesses. The May report indicates that Girardi intentionally cultivated relationships at many levels in the State Bar to increase his influence in the agency. The report outlines several instances of past State Bar staff exercising poor judgment, ignoring or poorly handling conflicts of interest, and otherwise behaving unethically. None of the individuals identified as engaging in unethical conduct remain affiliated with or employed by the State Bar.

“We found that Girardi maintained an extensive network of connections at all levels of the state bar,” the report reads. “As one witness told us, ‘[i]t’s almost like Girardi became part of the fabric at the State Bar.‘”

Other examples include:

– – Former State Bar employee Tom Layton, who was terminated in 2015, (and his wife) received gifts and payments estimated at over $1 million from Girardi, through his firm, while Layton was employed at the State Bar. Those payments and gifts were never properly disclosed.
– – Other State Bar employees and Board members accepted and failed to report gifts and other items of value from Girardi.
– – Relatives of staff members were employed by Girardi’s firm.
– – Staff in the Office of Chief Trial Counsel (OCTC) were improperly involved in matters assigned to outside conflict counsel.
– – Eight Girardi cases were closed by individuals who May determined had conflicts of interest at the time they worked on the cases. The report found that their conflicts tainted their decisions to close the cases.
– – Interim Executive Director Bob Hawley ghostwrote decisions in matters assigned to outside conflict counsel without disclosing that fact, including a decision to recommend closure of a complaint against Girardi.
– – Between 2013 and 2015, both the Executive Director’s Office and Office of General Counsel received reports about Girardi’s influence at the State Bar and connection to Layton and others but failed to investigate.
– – Former Executive Director Joe Dunn, who was terminated in 2014, and Hawley made questionable terminations of two OCTC attorneys who were advocating for disciplinary actions against Girardi.
– – On at least one occasion, Girardi successfully deployed his connections at the State Bar to discourage people from making complaints against him.

Murray Greenberg, who worked at the bar’s Office of Chief Trial Counsel for three decades and “was personally involved in the state bar’s handling of multiple Girardi cases that were closed without any public discipline to Girardi.” Among other things, Greenberg attended parties thrown by Girardi, and received concert tickets from him without disclosing them.

“When we deposed Greenberg,” the May report reads, “he invoked his Fifth Amendment right against self-incrimination and refused to answer any questions about his relationship with Girardi or work at the state bar.”

Girardi has been diagnosed with late-onset Alzheimer’s disease, has been under his brother’s conservatorship for two years, and is now living in an assisted living facility in Orange County. Last month, a federal judge in Los Angeles ordered a mental competency hearing to determine whether Girardi is fit to stand trial.

Matthew Jesse Ware played college football at UCLA, and also played for a number of professional teams. His career history according to public records included the Philadelphia Eagles (2004-2005). Arizona Cardinals (2006-2010). Virginia Destroyers (2012), and the Toronto Argonauts (2014).

He filed an Application for Adjudication of Claim against the Arizona Cardinals Football Club LLC which is currently pending trial and a disposition.

The Cardinals compete in the National Football League as a member of the National Football Conference West division, and play their home games at State Farm Stadium in Glendale, a suburb northwest of Phoenix.

The defendant “specially appeared” in this case for the purpose of contesting jurisdiction. A special appearance is for the purpose of objecting to the jurisdiction of the court over defendant without submitting to such jurisdiction. A general appearance is made where the defendant waives defects of service or jurisdiction and submits to the jurisdiction of court.

On July 15, 2022, defendant filed a Declaration of Readiness to Proceed requesting a Mandatory Settlement Conference on the issue of jurisdiction. Defendant averred it was specially appearing and requested a “bifurcated trial regarding jurisdiction and exemptions/exceptions to jurisdiction.”

Applicant objected to the DOR, asserting California retained subject matter jurisdiction over the claim, that discovery was ongoing, and requesting a status conference. Applicant asserted that, “[t]rial is premature in that at the current time discovery is still ongoing and a trial at this early stage in the litigation process would be a waste of the Court’s time and resources.”

On August 31, 2022, the parties proceeded to Mandatory Settlement Conference. The minutes of hearing state: “The defense attorney filed DOR requesting bifurcated trial on jurisdiction. Applicant attorney wants to proceed on all issues. The WCJ continues the present MSC, set on only DOR for bifurcated trial, to another MSC where applicant requests trial on all issues.The WCJ ordered that the matter be continued to another MSC on October 26, 2022 over defendant’s objection.”

Defendant’s Petition for Removal was granted by the WCAB in the case of Ware v Arizona Cardinals Football Club LLC ADJ13302605-ADJ15813943 (March 2023), and the case was returned to the trial level with instructions that the matter be set for MSC forthwith, and that the matter thereafter be set for trial on issues of California subject matter and personal jurisdiction.

In the Petition for Removal, the defendant asserts that setting this matter for an MSC “on all issues” is premature pending a determination of whether California has jurisdiction over this claim.

Defendant observes that the WCJ is empowered to bifurcate and try separate issues upon a showing of good cause, and thus contends that “without the ability to obtain a bifurcated trial on a critical threshold issue such as subject matter jurisdiction and/or personal jurisdiction, Defendant will be exposed to unreasonable and unnecessary litigation costs and medical expenses which they would otherwise be able to avoid altogether if they prevail at a bifurcated trial.”

The WCJ’s Report observes that bifurcated proceedings on jurisdiction would require the expenditure of time and judicial resources for separate proceedings, and may also require parties to travel to California from locations possibly outside the state.The WCJ asserts that the trial judge will be in the best position to evaluate defendant’s request for bifurcated proceedings following a review of the evidence, and that the defendant has not demonstrated it will suffer irreparable harm or prejudice by having the issue of jurisdiction considered at the time of trial with all other issues.

The WCAB panel observed that defendant is specially appearing in this matter for the purpose of contesting jurisdiction. Defendant’s July 15, 2022 DOR reiterates that it is specially appearing, and requests bifurcated trial proceedings limited to jurisdiction and possible exemptions and/or exceptions thereto.

The WCAB when on to conclude that while the parties to a matter are generally expected to “submit for decision all matters properly in issue at a single trial,” the WCJ may also order that the issues in a case be “bifurcated and tried separately upon a showing of good cause.” (Cal. Code Regs., tit. 8, § 10787(a).)

“Here, we believe there is good cause to bifurcate and decide the issues of subject matter and personal jurisdiction. Applicant has indicated he is ready to proceed on all issues including jurisdiction, while defendant has indicated readiness to proceed on jurisdictional issues only.”

“If defendant prevails, there will be no need for further discovery or proceedings. If applicant prevails, the parties will then be able to develop the record on the merits of applicant’s claim, and if there is a determination that injury arose out of and in the course of employment, the defendant will no longer require a judicial determination of California jurisdiction prior to delivering any benefits due the applicant.”

“Here, we conclude that bifurcation and trial on threshold jurisdictional issues best meets the requirements for expedited resolution of threshold issues in furtherance of the prompt delivery of reasonable benefits.”