Tag: 2024 News

When Jose Emilio Ronderos applied to work for USF Reddaway, Inc. as a line haul manager, Reddaway required him to sign a document titled “Candidate’s Statement,” which is a pre-printed document that contains the arbitration agreement. Reddaway presented that pre-printed document to Ronderos on a take-it-or-leave-it basis.

Ronderos was hired and worked for Reddaway for two and a half years. Ronderos alleges that, shortly after he was diagnosed with cancer and took a medical leave of absence, Reddaway terminated him. Ronderos filed claims in California state court against Reddaway for age and disability discrimination, retaliation, and failure to accommodate his disability under California’s Fair Employment and Housing Act (FEHA), California Government Code §§ 12900 et. seq., and failure to pay unpaid wages in violation of California state law, among other claims.

After Reddaway removed the case to federal court, it filed a motion to compel arbitration. Ronderos opposed the motion, contending that the arbitration agreement is procedurally and substantively unconscionable under California law and, therefore, unenforceable.

Reddaway conceded that the arbitration agreement is a contract of adhesion – that is, it is a pre-printed form that Reddaway presented to Ronderos on a take-it-or-leave-it basis, with no opportunity for Ronderos to negotiate its terms. Reddaway also conceded that two of the agreement’s provisions – the one-year statute of limitations for filing claims and the preliminary injunction carve-out – are unenforceable under California law. Reddaway argued, however, that the court should sever those provisions and enforce the remainder of the agreement by compelling arbitration.

The district court concluded that the agreement is procedurally unconscionable to a moderate degree. The district court also concluded that the agreement contains multiple substantively unconscionable provisions, and that it lacks mutuality to a substantial degree. Finally, the district court declined to sever the unconscionable provisions.

The 9th Circuit Court of Appeal affirmed the trial court in the published case of Ronderos v USF Reddaway, Inc – 5:21-cv-00639-MWF-KK – (August 2024).

After agreeing with the trial court that the agreement contains multiple procedurally and substantively unconscionable provisions, the 9th Circuit reviewed the district court’s decision not to sever the unconscionable provisions for abuse of discretion. In doing so, the 9th Circuit was mindful of the July 2024 California Supreme Court decision in Ramirez v. Charter Communications, Inc clarifying that no bright line rule requires a court to refuse enforcement if a contract has more than one unconscionable term.

Reddaway argued that the district court should have found that the unconscionable provisions are merely “collateral” to the main purpose of the contract, and that it erred by instead finding that the multiple unconscionable provisions show that the central purpose of the agreement is tainted with illegality.

Nonetheless, the 9th Circuit concluded that the district court did not abuse its discretion by declining to sever the unconscionable provisions and enforce the remainder of the agreement. In doing so, it noted that while case law does “not establish bright lines, they shed some light on the outer bounds of a trial court’s range of discretion. Our understanding of the trial court’s range of discretion is confirmed by our review of cases in which appellate courts have held that the trial court acted within its discretion.”

It reviewed several appellate cases on this issue and concluded that like the California Supreme Court in Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669 (Cal. 2000)) it conclude that, “given the multiple unlawful provisions, the [district] court did not abuse its discretion in concluding that the arbitration agreement is permeated by an unlawful purpose.”

Dissenting Judge Bennett wrote that “Not once has the California Supreme Court, nor any of the California Courts of Appeal, affirmed a trial court’s refusal to sever easily excisable collateral provisions from an arbitration agreement that includes a severability clause. Nor have we – until today.”

“The district court abused its discretion because it misapplied California law in declining to sever the collateral provisions here. It should have severed those provisions and granted Reddaway’s motion to compel arbitration. Both its decision and the majority’s evince the type of ‘judicial hostility to arbitration’ that led Congress to pass the Federal Arbitration Act.”

Los Angeles area vocational school owner, Guillermo (William) Frias, 65, of Paramount, and accounting manager for the same school, Yesid Colon, 54, of Baldwin Park, were arraigned after a California Department of Insurance investigation revealed they allegedly submitted fraudulent claims to receive money from insurance companies for services their vocational school did not provide.

They also allegedly received illegal kickback payments from vocational counselors that paid for referrals of students, which is a labor code violation. Four vocational counselors have also been arraigned for their involvement in the illegal referrals and kickback scheme.

The investigation began after the department received referrals from multiple insurance companies alleging the vocational school, Caledonian, had committed workers’ compensation fraud. The school was misusing Supplemental Job Displacement Benefit Vouchers, which provide injured workers with up to $6,000 for retraining at a post-secondary educational institution. The training helps the injured worker become more competitive in the job market when they are unable to return to their former vocation field due to being on total or temporary disability.

During the course of the investigation, the department served a search warrant upon Caledonian and seized evidence consistent with the speculation that the school offering courses outside of which they were approved, as mandated by the Employment Development Department’s Eligible Training Provider List and Bureau for Private Postsecondary Education’s course approval.

The search warrant also provided additional evidence that the school did not offer full instruction hours for courses, instructed students through third party vocational institutions, provided distance learning when not approved, and instructed students in languages outside of the approved language.

Additionally, evidence found Caledonian paid vocational counselors and employees to refer students, which is a labor code violation. Caledonian paid $496,147 to vocational counselors for those illegal referrals. Accepting payment for referrals is also a violation and the evidence showed multiple vocational counselors accepted and received a total of $489,530 for their illegal referrals.

The investigation determined Caledonian was not only depriving students of their education, they were also receiving money from insurance companies for the services not rendered.

Further, vocational counselors received illegal kickbacks payments from Caledonian for student referrals. The vocational counselors allegedly involved in the scheme are Jenny Villegas, Friends for Injured Workers CEO, Laura Wilson, CEO of Laura Wilsons and Associates, Jesus (Jessie) Garibay, Gordy’s Legal Service Director, and Hazel Ortega, CEO of Ortega Counseling Center.

All six defendants have been charged with violating Penal Code 550(a)(1), Labor Code 3215, and Insurance Code 750.5. As Insurance Code 705.5 stipulates it is unlawful to receive or accept money for referrals, the chargeable fraud amount is $985,677.

Frias, Colon, Villegas, Wilson, and Ortega were arraigned August 19, 2024. Garibay was arraigned June 7, 2024. The defendants are scheduled to return to court on October 7, 2024. The Los Angeles County District Attorney’s Office is prosecuting this case.

Legal documents are notoriously difficult to understand, even for lawyers. This raises the question: Why are these documents written in a style that makes them so impenetrable?

MIT cognitive scientists believe they have uncovered the answer to that question. Just as “magic spells” use special rhymes and archaic terms to signal their power, the convoluted language of legalese acts to convey a sense of authority, they conclude.

In a study appearing this week in the journal of the Proceedings of the National Academy of Sciences, the researchers found that even non-lawyers use this type of language when asked to write laws.

“People seem to understand that there’s an implicit rule that this is how laws should sound, and they write them that way,” says Edward Gibson, an MIT professor of brain and cognitive sciences and the senior author of the study. Eric Martinez PhD ’24 is the lead author of the study. Francis Mollica, a lecturer at the University of Melbourne, is also an author of the paper.

Gibson’s research group has been studying the unique characteristics of legalese since 2020, when Martinez came to MIT after earning a law degree from Harvard Law School. In a 2022 study, Gibson, Martinez, and Mollica analyzed legal contracts totaling about 3.5 million words, comparing them with other types of writing, including movie scripts, newspaper articles, and academic papers.

That analysis revealed that legal documents frequently have long definitions inserted in the middle of sentences – a feature known as “center-embedding.” Linguists have previously found that this kind of structure can make text much more difficult to understand. “Legalese somehow has developed this tendency to put structures inside other structures, in a way which is not typical of human languages,” Gibson says.

In a follow-up study published in 2023, the researchers found that legalese also makes documents more difficult for lawyers to understand. Lawyers tended to prefer plain English versions of documents, and they rated those versions to be just as enforceable as traditional legal documents. “Lawyers also find legalese to be unwieldy and complicated,” Gibson says. “Lawyers don’t like it, laypeople don’t like it, so the point of this current paper was to try and figure out why they write documents this way.”

The researchers had a couple of hypotheses for why legalese is so prevalent. One was the “copy and edit hypothesis,” which suggests that legal documents begin with a simple premise, and then additional information and definitions are inserted into already existing sentences, creating complex center-embedded clauses.

“We thought it was plausible that what happens is you start with an initial draft that’s simple, and then later you think of all these other conditions that you want to include. And the idea is that once you’ve started, it’s much easier to center-embed that into the existing provision,” says Martinez, who is now a fellow and instructor at the University of Chicago Law School.

However, the findings ended up pointing toward a different hypothesis, the so-called “magic spell hypothesis.” Just as magic spells are written with a distinctive style that sets them apart from everyday language, the convoluted style of legal language appears to signal a special kind of authority, the researchers say. “In English culture, if you want to write something that’s a magic spell, people know that the way to do that is you put a lot of old-fashioned rhymes in there. We think maybe center-embedding is signaling legalese in the same way,” Gibson says.

In this study, the researchers asked about 200 non-lawyers (native speakers of English living in the United States, who were recruited through a crowdsourcing site called Prolific), to write two types of texts. In the first task, people were told to write laws prohibiting crimes such as drunk driving, burglary, arson, and drug trafficking. In the second task, they were asked to write stories about those crimes.

To test the copy and edit hypothesis, half of the participants were asked to add additional information after they wrote their initial law or story. The researchers found that all of the subjects wrote laws with center-embedded clauses, regardless of whether they wrote the law all at once or were told to write a draft and then add to it later. And, when they wrote stories related to those laws, they wrote in much plainer English, regardless of whether they had to add information later.

“When writing laws, they did a lot of center-embedding regardless of whether or not they had to edit it or write it from scratch. And in that narrative text, they did not use center-embedding in either case,” Martinez says.

In another set of experiments, about 80 participants were asked to write laws, as well as descriptions that would explain those laws to visitors from another country. In these experiments, participants again used center-embedding for their laws, but not for the descriptions of those laws.

Gibson’s lab is now investigating the origins of center-embedding in legal documents. Early American laws were based on British law, so the researchers plan to analyze British laws to see if they feature the same kind of grammatical construction. And going back much farther, they plan to analyze whether center-embedding is found in the Hammurabi Code, the earliest known set of laws, which dates to around 1750 BC.

“There may be just a stylistic way of writing from back then, and if it was seen as successful, people would use that style in other languages,” Gibson says. “I would guess that it’s an accidental property of how the laws were written the first time, but we don’t know that yet.”

The researchers hope that their work, which has identified specific aspects of legal language that make it more difficult to understand, will motivate lawmakers to try to make laws more comprehensible. Efforts to write legal documents in plainer language date to at least the 1970s, when President Richard Nixon declared that federal regulations should be written in “layman’s terms.” However, legal language has changed very little since that time. “We have learned only very recently what it is that makes legal language so complicated, and therefore I am optimistic about being able to change it,” Gibson says.

In a groundbreaking medical achievement, the first fully mechanical heart developed by Huntington Beach based BiVACOR®, has been successfully implanted in a human patient. This milestone marks a significant advancement in the field of cardiac care, offering new hope for those awaiting heart transplants.

The Texas Heart Institute and BiVACOR®, a clinical-stage medical device company, announced the successful first-in-human implantation of the BiVACOR Total Artificial Heart (TAH) as part of the U.S. Food and Drug Administration (FDA) Early Feasibility Study (EFS).

BiVACOR’s TAH is a titanium-constructed biventricular rotary blood pump with a single moving part that utilizes a magnetically levitated rotor that pumps the blood and replaces both ventricles of a failing heart. The non-contact suspension of the rotor via maglev is designed to eliminate the potential for mechanical wear and provide large blood gaps that minimize blood trauma, offering a durable, reliable, and biocompatible heart replacement. With activity, the device is auto-regulated to provide up to 12 liters of blood flow per minute, which is similar to that pumped by a healthy human heart.

The first-in-human clinical study aims to evaluate the safety and performance of the BiVACOR TAH as a bridge-to-transplant solution for patients with severe biventricular heart failure or univentricular heart failure in which left ventricular assist device support is not recommended. Following this first implantation completed at Baylor St. Luke’s Medical Center in the Texas Medical Center into a critically ill 57-year-old man who was in cardiogenic shock and awaiting a heart transplant. Four additional patients are to be enrolled in the study.

The nearly six-hour operation allowed the patient to be liberated from the vent on post-operative day three, and sit in a chair that same day. On post-op day seven, he could ambulate 150 meters. On July 17, eight days after the implant, a donor heart became available. The patient celebrated his 58th birthday and he is reported to be continuing to recover from the transplant in the hospital.

“The Texas Heart Institute is enthused about the groundbreaking first implantation of BiVACOR’s TAH. With heart failure remaining a leading cause of mortality globally, the BiVACOR TAH offers a beacon of hope for countless patients awaiting a heart transplant,” said Dr. Joseph Rogers, President and Chief Executive Officer of The Texas Heart Institute and National Principal Investigator on the research. “We are proud to be at the forefront of this medical breakthrough, working alongside the dedicated teams at BiVACOR, Baylor College of Medicine, and Baylor St. Luke’s Medical Center to transform the future of heart failure therapy for this vulnerable population.”

Daniel Timms, PhD, Founder and Chief Technology Officer of BiVACOR said, “I’m incredibly proud to witness the successful first-in-human implant of our TAH. This achievement would not have been possible without the courage of our first patient and their family, the dedication of our team, and our expert collaborators at The Texas Heart Institute. Utilizing advanced MAGLEV technology, our TAH brings us one step closer to providing a desperately needed option for people with end-stage heart failure who require support while waiting for a heart transplant. I look forward to continuing the next phase of our clinical trial.”

Heart failure is a global epidemic affecting at least 26 million people worldwide, 6.2 million adults in the U.S., and is increasing in prevalence. Heart transplantations are reserved for those with severe heart failure and are limited to fewer than 6,000 procedures per year globally. Consequently, the U.S. National Institutes of Health estimated that up to 100,000 patients could immediately benefit from mechanical circulatory support (MCS), and the European market is similarly sized.

The successful implantation of BiVACOR’s TAH highlights the potential of innovative technologies to address critical challenges in cardiac care, such as long transplantation waitlists. BiVACOR and The Texas Heart Institute remain committed to advancing the field of cardiac medicine and improving outcomes for patients worldwide.

The California Insurance Commissioner announced several appointments including naming Timothy Hyamn as the newest member of the California Insurance Guarantee Advisory (CIGA) Board of Directors, Bryan Little as the newest member of the Workers’ Compensation Insurance Rating Bureau (WCIRB) Governing Committee, Michael Golden and Nona Tirre Mirande as reappointed members to the California Automobile Assigned Risk Plan (CAARP) Advisory Board, and Ophir Bruck, Stephanie Chan, and Thomas Connell Wilson as reappointed members to the California Organized Investment Network (COIN) Advisory Board.

The Governor and California State Legislature created CAARP to provide auto insurance for motorists unable to obtain coverage in the private market due to their driving records or other extraordinary circumstances. One program within the plan — the California Low Cost Auto Program — aims to provide affordable liability insurance to income-eligible good drivers by assigning them to private insurers based upon the companies’ share of the auto insurance market. The CAARP Advisory Committee provides policy advice to Commissioner Lara on matters affecting the operation of its programs.

The CIGA Board of Governors oversees the guarantee association’s general operations and management in order to protect policyholders in the event of an insurance company insolvency. Established in 1969 by the Governor and California State Legislature, CIGA comprises all insurance companies admitted to sell homeowners, workers’ compensation, automobile, and other specified property and casualty lines of insurance in California.

The California Organized Investment Network (COIN) was established in 1996 within the Department of Insurance to guide insurers on making financially sound investments that yield environmental benefits throughout California and social benefits within the State’s underserved communities. Commissioner Lara has prioritized COIN investments which drive affordable housing, support small businesses, combat climate change, and encourage investors to utilize diverse investment managers more. The COIN Advisory Board provides guidance to the Commissioner and the COIN program to meet its mission and chief priorities.

The WCIRB Governing Committee sets policy, oversees WCIRB management, and reviews all issues involving pure premium rates, classifications, rating plans, rating systems, manual rules and policy, and endorsement forms. The WCIRB is a private organization licensed by the Department for the purpose of collecting, analyzing, and compiling rating data, with funding coming from assessments of its insurance company members. All workers’ compensation insurance companies in California are required by law to be members of the WCIRB.  

The next CAARP Advisory Committee meeting is August 20 and August 21, 2024, the next CIGA Board of Governors meeting is August 13 and August 14, 2024, the next COIN Advisory Board meeting is November 7, 2024, and the next WCIRB Governing Committee meeting is September 25, 2024.

More details are available at: www.insurance.ca.gov/boards. Public members of the CAARP Advisory Committee receive $250 per meeting. All other positions are uncompensated.