Ten Significant Civil Cases for The California Supreme Court’s September 2020 Term

August 3, 2020

The California Supreme Court’s September 2020 Term promises to address civil law issues related to anti-SLAPP motions, construction, employment, environment and water, insurance coverage, and real estate.  This article summarizes ten significant cases accepted for review in the Court’s upcoming term. 

The Court resumes oral arguments on September 1, 2020.  Webcasts of the Court’s live and archived oral arguments can be found here,[i] the parties’ briefs can be found here,[ii] and the Court’s oral argument calendar is located here.[iii] 

The California Supreme Court

The California Supreme Court issues between 85 and 115 opinions each term.[iv]  5 percent or fewer petitions for review are granted each year.[v]  In the fiscal year 2017-2018, the Court issued 85 written opinions out of 6,812 total filings,[vi] 14 of 750 civil appeals were granted review (3%), and 4 of 2019 civil writs were granted review (4%).[vii] 

The Court consists of a Chief Justice and six associate justices.[viii]  The current members include Chief Justice Tani Gorre Cantil-Sakauye (sworn in January 3, 2011)[ix] and Associate Justices Ming W. Chin (sworn in March 1, 1996),[x] Carol A. Corrigan (sworn in January 4, 2006),[xi] Goodwin H. Liu (sworn in September 1, 2011),[xii] Mariano-Florentino Cuéllar (sworn in January 5, 2015),[xiii] Leondra R. Kruger (sworn in December 22, 2014),[xiv] and Joshua P. Groban (sworn in January 3, 2019).[xv]

The Court files it written opinion within 90 days after oral argument and the opinions are normally made available on the Court’s website on Mondays and Thursdays at 10:00 a.m.[xvi]

Anti-SLAPP

1.  Serova v. Sony Music Entertainment, Case No. S260736 

This case involves the extent the commercial nature of speech is relevant in determining if the speech merits protection under California’s Anti-SLAPP statute. 

Section 425.16 provides for a special [Anti-SLAPP] motion to strike when a plaintiff asserts claims against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue.  Such claims must be stricken unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.[xvii] 

Ruling on an anti-SLAPP motion involves a two-step procedure.  First, the moving defendant must show that the challenged claims arise from protected activity.  Second, if the defendant makes such a showing, the burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated.  Without resolving evidentiary conflicts, the court determines whether the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment. 

In Serova, the plaintiff claimed defendants misleadingly marketed the posthumous Michael Jackson album “Michael” on the album cover and a promotional video by wrongly representing that Jackson was the lead singer on three of the album’s ten tracks.  The plaintiff alleged claims under the unfair competition law (“UCL”)[xviii] and the consumers legal remedies act (“CLRA”)[xix] as well as fraud for knowingly mispresenting the Jackson was the lead singer on the three disputed tracks.  The trial court granted defendants anti-SLAPP motion, in part, but denied as to the album cover and promotional video. 

In a prior holding, California’s Second District Court of Appeal[xx] held that the challenged representation did not simply promote sale of the album, but also stated a position on a disputed issue of public interest (i.e. whether Jackson sang the three disputed songs).  The statements about the identity of the artist therefore were not simply commercial speech, but were subject to full First Amendment protection and outside the scope of the UCL and CLRA claims. 

California’s Supreme Court reviewed the Appellate Court’s prior decision and remanded for reconsideration in light of its decision in FilmOn.com Inc. v. Double Verify Inc.  Specifically, the context of a statement—including the identity of the speaker, the audience, and the purpose of the speech—is relevant, though not dispositive, in analyzing whether the statement was made in furtherance of’ free speech in connection with a public issue.[xxi]

On second review, the Appellate Court again affirmed dismissal and held[xxii] that the challenged statements were therefore sufficiently connected to an issue of public interest to warrant anti-SLAPP protection. 

California’s Supreme Court is presented with the following issues:

(1)       Do representations a seller made about a creative product on the product packaging and in advertisements during an ongoing controversy constitute speech in connection with an issue of public interest within the meaning of the anti-SLAPP statute?[xxiii]

(2)       For purposes of liability under the Unfair Competition Law[xxiv] and the Consumer Legal Remedies Act,[xxv] do the seller’s marketing representations constitute commercial speech, and does it matter if the seller lacked personal knowledge that the representations were false?[xxvi] 

2.  Bonni v. St. Joseph Health System, Case No. S244148 

This case involves a surgeon filing a retaliation claim against medical hospital defendants, having been suspended after raising complaints about safety issues, and defendants responding with an anti-SLAPP motion.  Defendants argued that the motion was based on the fact that plaintiff’s claims arose from the peer review process, which was a protected activity.

When evaluating an anti-SLAPP motion, a court conducts a two-step inquiry (also known as the anti-SLAPP test).[xxvii]  First, “the court must decide whether the defendant has made a threshold showing that the plaintiff's claim arises from protected activity.”[xxviii] To meet its burden under the first prong, a defendant must demonstrate that its act underlying the plaintiff's claim fits one of the categories spelled out in subsection (e) of the anti-SLAPP statute.[xxix]  One category of protected activity includes “any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other proceeding authorized by law.”[xxx]  Should the defendant meet the burden of showing that all or part of its activity was protected, then the court proceeds to the second prong of the anti-SLAPP test, asking whether the plaintiff has demonstrated a probability of prevailing on the claim.[xxxi]

Plaintiff Aram Bonni, a surgeon, sued St. Joseph Hospital of Orange, Mission Hospital Regional Medical Center, and other defendants for retaliation under the whistleblower statute, California Health and Safety Code § 1278.5.[xxxii]  He claimed that in response to his reporting “suspected unsafe and substandard conditions and services” at the defendants’ hospitals, the defendants suspended and ultimately denied him his medical staff privileges, after subjecting him to a humiliating peer review process.[xxxiii] 

Defendants filed an anti-SLAPP motion in response to plaintiff’s First Amended Complaint.  They claimed that plaintiff’s poor judgment and surgical complications led to him being suspended, not his complaints, that the retaliation claim arose from the peer review process, which was a protected activity pursuant to California Code of Civil Procedure § 425.16(e), and that plaintiff could not show a probability of success on his retaliation claim because he lacked admissible evidence that defendants retaliated against him. 

The trial court granted defendants’ anti-SLAPP motion, finding that plaintiff’s retaliation claim was based on defendants’ peer review process, which was a protected activity, and therefore met the first prong of the anti-SLAPP test.  The trial court then looked at the second prong and found that plaintiff failed to meet his burden of demonstrating a probability of prevailing on his retaliation claim.  Plaintiff appealed the ruling.

The California Fourth District Court of Appeal found that the defendants’ motion failed on the first prong of the anti-SLAPP test.  Plaintiff’s cause of action for retaliation under the whistleblower statute was not a SLAPP because a peer review process is not a protected activity when employed for potentially retaliatory motives.  It was not the statements made during the process that were the basis of liability, but rather the motive behind the statements.[xxxiv]  Since the anti-SLAPP motion failed to meet the first prong, the Court of Appeal did analyze the second prong, whether plaintiff had demonstrated a probability of prevailing.  The Court concluded: “Discrimination and retaliation claims are rarely, if ever, good candidates for the filing of an anti-SLAPP motion.”

California’s Supreme Court granted review on November 1, 2017.  On July 22, 2019, the Supreme Court issued a ruling on Wilson v. Cable News Network, Inc. (2019) 7 Cal. 5th 871, which cited the Bonni case with disapproval, finding that the anti-SLAPP statute also applied to discrimination and retaliation claims.[xxxv] 

The Supreme Court is presented with the following issue:

To what extent, if any, is the initiation and conduct of medical peer review proceedings protected activity under the anti-SLAPP statute? 

Construction/Employment

3.  Gonzalez v. Mathis, Case No. S247677 

This case involves the employee of an independent contractor suing a homeowner in tort for failing to warn him about the condition of his roof, leading to the employee’s fall and injury.

Under the common law doctrine of “peculiar risk,” an individual who hires an independent contractor to do inherently dangerous work can be held liable for tort damages when the contractor causes injury to others by negligently performing the work.[xxxvi]  The California Supreme Court limited the breadth of the peculiar risk doctrine in Privette v. Superior Court (1993) 5 Cal.4th 689, finding that it did not extend to the hired contractor’s employees since workers compensation already shielded independent contractors from the tort liability of its employees, so applying the peculiar risk doctrine to the hiring party would be unfair—that person did not create the risk that led to the injury, and therefore did not deserve to be subject to greater liability than the contractor.[xxxvii]  This became known as the “Privette Doctrine.”

There are two exceptions to the Privette Doctrine: (1) when the hirer exercised control over the contractor’s work in a manner that had contributed to the injury, as discussed in  Hooker v. Department of Transportation (2002) 27 Cal. 4th 198 (Hooker), and (2) when the hirer failed to warn the contractor of a concealed hazard on the premises, as discussed in Kinsman v. Unocal Corp. (2005) 37 Cal. 4th 659 (Kinsman).

Defendant homeowner John Mathis had an indoor pool with a skylight overhead.  Defendant’s housekeeper routinely hired plaintiff Luis Gonzalez’s company to clean the skylight.  One day, two of his employees were on the roof cleaning the skylight when the housekeeper informed Gonzalez that water from the roof was leaking into the house.  She instructed plaintiff to go onto the roof and tell them to use less water.  Plaintiff climbed onto the roof using the affixed ladder and walked along the roof ledge to speak to his employees.  As he was walking back to the ladder, he slipped and fell off of the roof.

Plaintiff sued defendant for negligence, claiming that loose rocks, pebbles and sand on the roof constituted a dangerous condition that led to his injury.  Specifically plaintiff claimed that the construction of the parapet wall forced people who wanted to access the skylight to walk along an exposed two-foot ledge with no safety railing, that the roof shingles were dilapidated and loose, and that the roof lacked a tie-off that would enable those on the roof to secure themselves with ropes.

Defendant filed a motion for summary judgment, claiming that under Privette, plaintiff’s claims were precluded, and that plaintiff’s case did not meet the Hooker/Kinsman exceptions.  Plaintiff had admitted that he was not told how to clean the skylight, and that he was aware of the dangerous conditions on the roof.  The trial court granted summary judgment in defendant’s favor and plaintiff appealed.

California’s Second District Court of Appeal reversed the trial court’s decision.  The Court found that while the Hooker exception did not apply—as there was insufficient evidence to show that defendant retained control of roof area, and thus no triable issue of fact—the Kinsman exception could apply.  The evidence presented did not conclusively establish that plaintiff could have reasonably remedied dangerous conditions in walkway by skylight, thereby creating material issue of fact.

California’s Supreme Court is presented with the following issue:

Can a homeowner who hires an independent contractor be held liable in tort for injury sustained by the contractor’s employee when the homeowner does not retain control over the worksite and the hazard causing the injury was known to the contractor?

4.  Sandoval v. Qualcomm Inc., Case No. S252796

This case involves interpretation of the retained control exception to the Privette[xxxviii] bar on a contractor's employee from suing a hirer on either a direct or vicarious liability theory. 

A hirer of an independent contractor is not liable to an employee of the contractor merely because the hirer retained control over safety conditions at a worksite, but is liable to such an employee insofar as its exercise of retained control affirmatively contributed to the employee's injuries.[xxxix]  In such cases, the liability of the hirer is not vicarious or derivative in the sense that it derives from the act or omission of the hired contractor, but is direct.[xl] 

Affirmative contribution, however, could also be by omission.[xli]

In Sandoval, an independent contractor’s employee was injured by an arc flash from a live circuit breaker.  The jury found that the property owner retained control over the safety conditions at the jobsite; that it negligently exercised such control; and that its negligence was a substantial factor in causing the injury. 

California’s Fourth District Court of Appeal affirmed the trial court’s finding of retained control by the property owner and held[xlii] that the property owner’s proposed jury instruction regarding affirmative contribution was somewhat misleading by suggesting the property owner must have engaged in “active conduct” for liability. 

California’s Supreme Court is presented with the following issue:

Can a company that hires an independent contractor be liable in tort for injuries sustained by the contractor’s employee based solely on the company’s negligent failure to undertake safety measures or is more affirmative action required to implicate Hooker v. Department of Transportation (2002) 27 Cal.4th 198?

Employment 

5.  Ferra v. Loews Hollywood Hotel, LLC, Case No. S259172 

This case involves a lawsuit by employees of a hotel for failure to pay for missed meals and rest periods at a rate that included any incentive compensation.

California Labor Code § 226.7 states that “[n]o employer shall require any employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission.” [xliii]  Should “an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.”[xliv]

California Labor Code § 510(a) states that work “in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee.”

Plaintiff Jessica Ferra sued Loews Hollywood Hotel, LLC (“Loews) as a representative of three alleged classes of hourly Loews employees for wage and hour violations.  Plaintiff claimed that Loews improperly calculated her premium pay when it failed to provide her with statutorily required meal and rest breaks, violating Labor Code § 226.7.  During the two years she worked as a bartender, Loews paid meal and rest period premiums to hourly employees at their base rate of compensation, without including an additional amount based on incentive compensation.  The trial court ruled that the “regular rate of compensation” and “regular rate of pay” were not interchangeable, that “regular rate of compensation” under § 226.7 meant that meal and rest periods need only be paid at the employee’s base salary.  Plaintiff appealed the ruling.

California’s Second District Court of Appeal examined both statutes, the applicable Wage Orders,[xlv] legislative history, and the statutes’ plain language.  The Court noted with regard to § 510(a) that, in the overtime context, “an employee's ‘regular rate of pay’ . . . is not the same as the employee’s straight time rate (i.e., his or her normal hourly wage rate). Regular rate of pay, which can change from pay period to pay period, includes adjustments to the straight time rate, reflecting, among other things, shift differentials and the per-hour value of any non-hourly compensation the employee has earned.”[xlvi]

The Court rejected plaintiff’s claim that “pay” and “compensation” were interchangeable, stating that this disregarded the Legislature’s choice to use a different word for meal and rest breaks from the one used for overtime.  Moreover, a number of federal district court cases concluded that § 226.7 meant the base (hourly) rate of compensation.[xlvii]  The Court ultimately concluded that equating “regular rate of pay” and “regular rate of compensation” would omit the difference between requiring an employer to pay for time spent working over 40 hours a week and paying an employee a premium for a missed meal or rest break, which compensates for the loss of a benefit.[xlviii]

California’s Supreme Court is presented with the following issue:

Did the Legislature intend the term “regular rate of compensation” in Labor Code section 226.7, which requires employers to pay a wage premium if they fail to provide a legally compliant meal period or rest break, to have the same meaning and require the same calculations as the term “regular rate of pay” in Labor Code section 510(a), which requires employers to pay a wage premium for each overtime hour? 

6.  Oman v. Delta Air Lines, Inc., Case No. S248726 

This case involves flight attendants, two living out of state, suing their employer for failure to abide by California wage law, despite the flight attendants spending less than a day at a time working in California.

California Labor Code § 204 states that all wages “earned by any person in any employment are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays” and “all wages earned for labor in excess of the normal work period shall be paid no later than the payday for the next regular payroll period.”[xlix]

California Labor Code § 226 states that “[e]very employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee s wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing.”

Meanwhile, Armenta v. Osmose, Inc. (2005) 135 Cal. App. 4th 314 and Gonzalez v. Downtown LA Motors, LP (2013) 215 Cal. App. 4th 36 (Armenta/Gonzalez) premised their holdings on the principle that “all hours must be paid at the statutory or agreed rate and no part of this rate may be used as a credit against a minimum wage obligation.”[l]

Four flight attendants sued their employer, Delta Air Lines, Inc. (“Delta”) for alleged violations of California labor law.  Only two of the four flight attendants lived in California: of the other two, one resided in New York and was based out of John F. Kennedy Airport, while another lived in Nevada and was based out of California’s San Francisco International Airport.  During a sample of the time period at issue, the plaintiffs spent at most 14% of their “flight-related working hours” in California, with one spending as little as 3%.  Delta paid the flight attendants by pay formula that calculated pay by “rotation,” a set of flights that could include layovers.[li]  While the pay formula sometimes failed to award credit for all hours on duty, it never resulted in an hourly rate below California’s minimum wage. 

Plaintiffs filed suit in federal court, claiming the flight pay calculation violated California minimum wage law by Armenta/Gonzalez.  They also claimed that Delta failed to pay their wages on time, in violation of California Labor Code § 204, and failed to issue wage statements that complied with Labor Code § 226.  They argued that even if their work lasted hours or minutes, any time in California was covered by California wage law.  The Northern District of California granted summary judgment to Delta and denied it to plaintiffs in two orders.  Plaintiffs appealed both orders.

The Ninth Circuit Court of Appeals heard oral argument for this case and certified state law questions to the California Supreme Court.  It noted that there was no controlling California precedent on the question of whether California labor law applies to an employee who works for an out-of-state employer and does not work primarily in California.  Nor was there any directly controlling California precedent that determined whether Delta’s pay formula was barred by California’s bar on averaging wages.  

California’s Supreme Court is presented with the following issues:

(1)       Do California Labor Code sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2)       Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time?[lii]

(3)       Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty?[liii]  

Environment, Water, and Toxic Tort

7.  County of Butte v. Department of Water Resources, Case No. S258574

This case involves federal preemption of California environmental law and the lack of standing to challenge a federal hydroelectric dam license in state court. 

The state’s authority to impose more stringent rules under the California Environmental Quality Act (“CEQA”) is an exception to federal preemption.  However, the jurisdiction to review the matter lies with the Federal Energy Regulatory Commission (“FERC”) and the counties failed to seek federal review. 

In County of Butte, the California Department of Water Resources (“DWR”) applied to extend its federal license to operate the Oroville Dam.  California counties challenged the sufficiency of the DWR’s environmental impact report (“EIR”) submitted under CEQA to the FERC and sought to enjoin the federal license. 

California’s Third District Court of Appeal dismissed with directions and held[liv] that the trial court did not have jurisdiction for counties’ challenge to the environmental sufficiency of the Oroville Dam’s mitigation program where the counties did not agree to a federal license to operate a dam, but they failed to request a review by FERC, which has final authority to establish license conditions regarding wildlife. 

In addition, the Appellate Court found that the Federal Power Act (“FPA”) occupies the field of hydroelectric dam licensing and preempts environmental review of federal licensing procedures in the state courts under CEQA. 

The Supreme Court is presented with the following issues:

(1)       To what extent does the FPA[lv] preempt application of CEQA[lvi] when the state is acting on its own behalf and exercising its discretion in deciding to pursue licensing for a hydroelectric dam project?

(2)       Does the FPA preempt state court challenges to an environmental impact report prepared under CEQA in order to comply with the federal water quality certification under the federal Clean Water Act? 

8.  Protecting Our Water & Environ. Resources v. Stanislaus County, Case No. S251709 

This case involves a challenge to county ordinance exemptions for the California Environmental Quality Act (“CEQA”) environmental review for certain water well construction. 

CEQA applies to discretionary projects,[lvii] but not to ministerial projects.[lviii]

In Protecting Our Water, Stanislaus County’s Department of Environmental Resources (“DER”) established a two-step system for water well construction permits, including DER review under the county ordinances for (1) unsustainable water extraction and export outside the county (“groundwater ordinance”), and (2) water well construction, repair, and demolition. 

The ground water ordinance exempted CEQA review for certain water management practices, including de minimis water extractions of two-acre feet or less per year. 

Water and sportfishing groups challenged the exemption for failing to apply CEQA’s environmental review. 

California’s Fifth District Court of Appeal reversed the trial court and held[lix] that the county’s water well procedure was discretionary (rather than ministerial), which required CEQA environmental review.  The Appellate Court acknowledged the costly, time-consuming, and commonly unnecessary review process for well construction, but conceded legislators have the choice of relieving the potentially high burdens imposed by CEQA, not the courts. 

The Supreme Court is presented with the following issue:

Is the issuance of a well permit pursuant to state groundwater well-drilling standards a discretionary decision subject to review under the California Environmental Quality Act[lx] or a ministerial action not subject to review? 

Insurance Coverage

9.  Yahoo! Inc. v. National Union Fire Ins. Co., Case No. S253593 

This case involves insurance for violations of the right to privacy covers alleged violation of the federal Telephone Consumer Protection Act of 1991 (“TCPA”). 

The right to privacy is generally understood to encompass both a right to be free from unwanted intrusions (“Right to Seclusion”) and a right to keep personal information confidential (“Right to Secrecy”). 

Courts are divided as to whether commercial general liability policy language covering injury arising out of oral or written publication of material that violates a person’s right of privacy covers injury solely to the Right to Seclusion (with no violation of the Right to Secrecy). 

Two California appellate courts have differed on this question.[lxi]

The TCPA generally prohibits the use of any device to send, to a telephone facsimile machine, an unsolicited advertisement and its purpose is to the protect the Right to Seclusion. 

In Yahoo!, an insurer sold policies to its insured with personal and advertising injury coverage, including oral or written publication, in any matter, of material that violates a person’s right of privacy.  The insured was sued for alleged TCPA violations in five putative class actions.  The insurer denied the insured’s tenders of defense. 

The United States District Court for Northern California granted the insurer a dismissal and held[lxii] that there must be publication of material for privacy to be violated when looking at the entire disputed provision in the subject policies.  The underlying litigation text message did not violate the Right to Secrecy and were therefore not covered. 

On appeal, the United States Court of Appeals for the Ninth Circuit certified the following issue to California’s Supreme Court:[lxiii] 

Does a commercial general liability insurance policy that provides coverage for personal injury, defined as injury arising out of oral or written publication, in any manner, of material that violates a person’s right of privacy, and that has been modified by endorsement with regard to advertising injuries, trigger the insurer’s duty to defend the insured against a claim that the insured violated the Telephone Consumer Protection Act by sending unsolicited text message advertisements that did not reveal any private information?

Real Estate

10.  Orchard Estate Homes, Inc. v. Orchard Homeowner Alliance, Case No. S255031 

This case looks at the issue of a community association seeking to amend its covenants, conditions and restrictions (“CC&Rs”) with less than the percentage of affirmative votes required by association’s bylaws. 

California Civil Code § 4275(a) states:

If in order to amend a declaration, the declaration requires members having more than 50 percent of the votes in the association, in a single class voting structure, or members having more than 50 percent of the votes in more than one class in a voting structure with more than one class, to vote in favor of the amendment, the association, or any member, may petition the superior court of the county in which the common interest development is located for an order reducing the percentage of the affirmative votes necessary for such an amendment. The petition shall describe the effort that has been made to solicit approval of the association members in the manner provided in the declaration, the number of affirmative and negative votes actually received, the number or percentage of affirmative votes required to effect the amendment in accordance with the existing declaration, and other matters the petitioner considers relevant to the court’s determination.

Subsection (c) then lists the six factors that the petition must comply with in order for a court to grant the petition.  If the court finds that these factors were met, then pursuant to subsection (d), the court order may confirm the amendment as being validly approved on the basis of affirmative votes actually received during the balloting period, or the order may dispense with any requirement relating to quorums or to the number or percentage of votes needed for approval.[lxiv]

Orchard Estate Homes, Inc. (“Orchard”) was the homeowners association for a 93-unit planned development[lxv] in Indio, California that had sought to enforce a rule against short-term rentals of less than 30 days.  Because the rule was not contained in Orchard’s CC&Rs, a lower court found it to be unenforceable. 

Orchard sought to remedy the issue by amending its CC&Rs to include the rule, which meant putting the amendment up for a vote of approval by the membership.  Orchard’s bylaws required that 67 percent of all eligible voting members approve of any amendment to the CC&Rs.  However, the vote only achieved 62 percent approval, with 85 of the 93 units voting, 58 voting in favor.  Pursuant to California Civil Code § 4275, Orchard petitioned the court to reduce the percentage of affirmative votes necessary for adopting an amendment.  Orchard’s efforts were opposed by the Orchard Homeowners Alliance (“Alliance”), an unincorporated association of owner-members who had purchased units for short-term rental purposes.  The trial court granted Orchard’s petition, and Alliance appealed.   

California’s Fourth District Court of Appeal noted that Civil Code § 4275 required the following elements to be established to authorize a reduction in the required voting percentage for amending the governing CC&Rs: (1) that the trial court find adequate notice was given; (2) that balloting on the proposed amendment was conducted in accordance with the governing documents as well as provisions of the Davis-Stirling Common Interest Development Act;[lxvi] (3) that a reasonably diligent effort was made to permit all eligible members to vote on the proposed amendment; (4) members having more than 50 percent of the votes voted in favor of the amendment; (5) the amendment was reasonable, and (6) granting the petition was not improper.  The Court of Appeal found that in the absence of ambiguity, the statute’s plain meaning controlled.  Orchard was not required to plead or establish voter apathy when the statute did not require it to do so.  Therefore, the trial court did not abuse its discretion by granting the petition.     

California’s Supreme Court is presented with the following issue:

When a trial court rules on a petition to reduce the votes required to pass an amendment to a homeowners association’s covenants, conditions, and restrictions, what, if any, role should voter non-participation play in the court’s decision?

Ericksen Arbuthnot is celebrating its 70th year of service to clients throughout California and its experienced litigators have extensive knowledge and skill handling matters in appellate, public entity defense, and many other practice areas. 

Andrew J. Chan is a Senior Counsel in Ericksen Arbuthnot’s Oakland/East Bay office, a member of the firm’s Appellate Practice Group, a California licensed real estate broker, and registered to practice before the United States Patent and Trademark Office.  Mr. Chan can be reached at (510) 832-7770 or achan@ericksenarbuthnot.com.   

Kara L. Wild is a Senior Counsel in Ericksen Arbuthnot’s Oakland/East Bay office, co-chair of the firm’s Real Estate Practice Group, a member of the firm’s Appellate Practice Group, and a board member and Amicus Committee co-chair for the Queen’s Bench Bar Association.  Ms. Wild can be reached at (510) 832-7770 or kwild@ericksenarbuthnot.com

 

[vi] Judicial Council of California, 2019 Court Statistics Report: Statewide Caseload Trends: 2008-09 through 2017-2018, available at https://www.courts.ca.gov/documents/2019-Court-Statistics-Report.pdf (accessed June 19, 2020) (“2019 CSR”), p. xiii; see also 2019 CRS, pp. 25-38 (statistical data from 2008-2018).  

[vii] 2019 CSR, p. 30. 

[xvi] https://www.courts.ca.gov/documents/The_Supreme_Court_of_California_Booklet.pdf at p. 30; see also https://www.courts.ca.gov/opinions.htm.  A decision does not become final, however, until 30 days after filing.  Up to 15 days after filing, the parties are allowed to petition for rehearing.  The court may extend the 30-day finality period by up to 60 additional days to consider, on its own motion or a party’s motion, whether to grant a rehearing or modify its decision.  https://www.courts.ca.gov/documents/The_Supreme_Court_of_California_Booklet.pdf at p. 30. 

[xvii] C.C.P. § 425.16, subd. (b)(1). 

[xviii] Cal. Bus. & Prof. Code §§ 17200, et seq.

[xix] Cal. Civ. Code §§ 1750, et seq.

[xx] Serova v. Sony Music Entertainment (2018) 26 Cal. App. 5th 759. 

[xxi] FilmOn.com Inc. v. DoubleVerify Inc. (2019) 7 Cal. 5th 133, 140; C.C.P. § 425.16, subd. (e)(4). 

[xxii] Serova v. Sony Music Entertainment (2020) 44 Cal. App. 5th 103. 

[xxiii] C.C.P. § 425.16.

[xxiv] Cal. Bus. & Prof. Code §§ 17200, et seq.

[xxv] Cal. Civ. Code §§ 1750, et seq.

[xxvi] Kasky v. Nike, Inc. (2002) 27 Cal.4th 939. 

[xxvii] Bonni v. St. Joseph Health System (2017) 13 Cal. 5th 851, 859-860 (citations omitted).

[xxviii] Id. (emphasis in original) (citations omitted).

[xxix] Id. (citations omitted).

[xxx] Id. (quoting C.C.P. § 425.16(e)(2)).

[xxxi] Id. (citations omitted).

[xxxii] Section 1278.5(b)(1)(A) of the Health and Safety Code states: “A health facility shall not discriminate or retaliate, in any manner, against a patient, employee, member of the medical staff, or other health care worker of the health facility because that person has done either of the following: (A) Presented a grievance, complaint, or report to the facility, to an entity or agency responsible for accrediting or evaluating the facility, or the medical staff of the facility, or to any other governmental entity.”

[xxxiii] Bonni, supra, 13 Cal. 5th at 854-855.

[xxxiv] The Court argued that though the anti-SLAPP statute protected “any written or oral statement or writing made in connection with an issue under consideration or review by [an] official proceeding authorized by law,” C.C.P. § 425.16(e)(2), plaintiff did not allege any specific written or oral statement or writing was the basis of the retaliation claim, but rather the peer review process was abusive. Id. at 863.

[xxxv] Wilson v. Cable News Network, Inc. (2019) 7 Cal. 5th 871, 892 (“In sum, we conclude that for anti-SLAPP purposes discrimination and retaliation claims arise from the adverse actions allegedly taken, notwithstanding the plaintiff’s allegation that the actions were taken for an improper purpose.  If conduct that supplies a necessary element of a claim is protected, the defendant’s burden at the first step of the anti-SLAPP analysis has been carried, regardless of any alleged motivations that supply other elements of the claim.  We disapprove Bonni v. St. Joseph Health System, supra, 13 Cal.App.5th 851, review granted, and Nam v. Regents of University of California, supra, 1 Cal.App.5th 1176, to the extent they are inconsistent with this conclusion.”)

[xxxvi] Gonzalez v. Mathis (2018) 20 Cal. App. 5th 257, 266 (citing Hooker v. Department of Transportation (2002) 27 Cal. 4th 198, 204).

[xxxvii] Id. (citing Hooker, supra, 27 Cal. 4th at 204).

[xxxviii] Privette v. Superior Court (1993) 5 Cal.4th 689. 

[xxxix] Hooker v. Department of Transportation (2002) 27 Cal. 4th 198, 202. 

[xl] Regalado v. Callaghan (2016) 3 Cal. App. 5th 582, 590. 

[xli] Hooker, 27 Cal. 4th at 212, n. 3 (failure to undertake a promised safety measure); Regalado, 3 Cal. App. 5th at 590 (liability where principal employer directs that the contracted work be done by use of a certain mode or otherwise interferes with the means and methods by which the work is to be accomplished). 

[xlii] Sandoval v. Qualcomm Inc. (2018) 28 Cal. App. 5th 381. 

[xliii][xliii] Cal. Labor Code § 226.7(a).

[xliv] Cal. Labor Code § 226.7(b).

[xlv] Wage Order No. 5-2001.

[xlvi] Ferra v. Loews Hollywood Hotel, LLC (2019) 40 Cal. App. 5th 1239, 1246 (quoting Alvarado v. Dart Container Corp. of California (2018) 4 Cal. 5th 542, 550, 554).

[xlvii] See Bradescu v. Hillstone Restaurant Group, Inc., 2014 U.S. Dist. Lexis 150978 (C.D. Cal. Sept. 18, 2014); Wert v. United States Bancorp, 2014 U.S. Dist. Lexis 175735 (S.D. Cal. Dec. 18, 2014); Brum v. Marketsource, Inc., 2017 U.S. Dist. Lexis 94079 (E.D. Cal. June 19, 2017); Frausto v. Bank of America, 2018 U.S. Dist. Lexis 130220 (N.D. Cal. Aug 2., 2018); Ibarra v. Wells Fargo Bank, NA, 2018 U.S. Dist. Lexis 78513 (C.D. Cal. May 8, 2018); Valdez v. Fairway Independent Mortgage Corp., 2019 U.S. Dist. Lexis 126013 (S.D. Cal. July 26, 2019).

[xlviii] The Court of Appeal also addressed a separate issue regarding employer automatically rounding time entries up or down to the nearest quarter hour.  It found the rounding policy lawful and that there was no showing that it “systematically undercompensated employees over time.” Ferra, supra, 40 Cal. App. 5th at 1253-1255.

[xlix] Cal. Labor Code § 204(a)-(b).

[l] Oman v. Delta Air Lines, Inc., 889 F.3d 1075, 1081 (9th Cir. 2018).  Armenta held that the federal Fair Labor Standards Act model of averaging all hours worked in any work week to compute an employer’s minimum wage obligation under California law was inappropriate, and that the minimum wage standard applied to each hour worked by the employees for which they were not paid. Armenta, 135 Cal. App. 4th at 324.  Gonzalez applied Armenta’s reasoning and held that “class members were entitled to separate hourly compensation for time spent waiting for repair work or performing other nonrepair tasks directed by the employer during their workshifts, as well as penalties under Labor Code section 203, subdivision (a).” Gonzalez, 215 Cal. App. 4th at 40-41.

[li] The Ninth Circuit further described the formula as follows: “The pay formula incorporates four different credit calculations. The credit calculations award credits based on different criteria. For example, the Flight Pay calculation awards one credit per hour flown or scheduled to be flown, while the Duty Period Credit calculation awards one credit per two hours on duty. The pay formula compares the result of the four credit calculations to determine which yields the most credits per rotation. Delta then multiplies the highest number of credits by the flight attendant's hourly wage rate (plus additions not relevant here) to determine the flight attendant's pay.” Oman, 889 F.3d at 1077-1078.

[lii] See Cal. Labor Code §§ 1182.12, 1194; Cal. Code Regs. § 11090(4).

[liii] See Gonzalez, 215 Cal. App. 4th 36; Armenta, 135 Cal. App. 4th 314.

[liv] County of Butte v. Department of Water Resources (2019) 39 Cal. App. 5th 708; see also https://www.courts.ca.gov/opinions/revpub/C071785A.PDF

[lv] 16 U.S.C. §§ 791a et seq.

[lvi] Cal. Pub. Resources Code §§ 21000 et seq.

[lvii] Cal. Pub. Resources Code § 21080, subd. (a).  Discretionary project means a project which requires the exercise of judgment or deliberation when the public agency or body decides to approve or disapprove a particular activity, as distinguished from situations where the public agency or body merely has to determine whether there has been conformity with applicable statutes, ordinances, or regulations.  Protecting Our Water, 2018 Cal. App. Unpub. LEXIS 5791, *10. 

[lviii] Cal. Pub. Resources Code § 21080, subd. (b)(1).  Ministerial describes a governmental decision involving little or no personal judgment by the public official as to the wisdom or manner of carrying out the project.  The public official merely applies the law to the facts as presented but uses no special discretion or judgment in reaching a decision.  A ministerial decision involves only the use of fixed standards or objective measurements, and the public official cannot use personal, subjective judgment in deciding whether or how the project should be carried out.  Common examples of ministerial permits include automobile registrations, dog licenses, and marriage licenses. A building permit is ministerial if the ordinance requiring the permit limits the public official to determining whether the zoning allows the structure to be built in the requested location, the structure would meet the strength requirements in the Uniform Building Code, and the applicant has paid his fee.  Protecting Our Water, 2018 Cal. App. Unpub. LEXIS 5791, *10-11. 

[lix] Protecting Our Water & Envtl. Res. v. Stanislaus Cty. (2018) 2018 Cal. App. Unpub. LEXIS 5791; see also https://www.courts.ca.gov/opinions/revnppub/F073634.PDF

[lx] Cal. Pub. Resources Code §§ 21000 et seq.

[lxi] See ACS Sys., Inc. v. St. Paul Fire & Marine Ins. (2007) 53 Cal. Rptr. 3d 786 (providing coverage for violation of the Right to Seclusion only); compare State Farm Gen. Ins. v. JT’s Frames, Inc. (2010) 104 Cal. Rptr. 3d 573 (denying coverage for violation of the Right to Seclusion only). 

[lxii] Yahoo! Inc. v. Nat'l Union Fire Ins. Co., 255 F. Supp. 3d 970 (N.D. Cal. June 2, 2017). 

[lxiii] Yahoo! Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 913 F.3d 923 (9th Cir. Jan. 16, 2019); see also https://cdn.ca9.uscourts.gov/datastore/opinions/2019/01/16/17-16452.pdf

[lxiv] See Cal. Civ. Code § 4275(c)-(d).

[lxv] A “planned development” is defined by California Civil Code § 4175 as “a real property development other than a community apartment project, a condominium project, or a stock cooperative, having either or both of the following features: (a) Common area that is owned either by an association or in common by the owners of the separate interests who possess appurtenant rights to the beneficial use and enjoyment of the common area. (b) Common area and an association that maintains the common area with the power to levy assessments that may become a lien upon the separate interests in accordance with Article 2 (commencing with Section 5650) of Chapter 8.”

[lxvi] Cal. Civ. Code §§ 4000—6150.