California Law Update – March 2016

March 31, 2016Law Updates
  1. (Offers to Compromise) Defense judgment affirmed except as to award of expert witness fees under Code of Civil Procedure Section 998 for fees incurred before offer to compromise. Toste v. CalPortland Construction. (2d Civil No. B256946, Super. Ct. No. 1392249, Santa Barbara County, California Courts of Appeal, Second Appellate District, Division Six, March 2, 2016).
  2. (Product Liability) Pharmaceutical manufacturer may be liable in negligence to minors allegedly injured in utero by mother’s ingestion of generic drug years after manufacturer divested itself of medication. T.H. v. Novartis Pharmaceuticals Corp. (No. D067839, Super. Ct. No. 37-2013-00070440-CU-MM-CTL, California Courts of Appeal, Fourth Appellate District, Division One, March 9, 2016).
  3. (Prevailing Party) Party who agreed to dismiss claims in exchange for monetary settlement is prevailing party for purposes of awarding mandatory costs under California Code of Civil Procedure Section 1032 (a) (4). DeSaulles v. Community Hospital of the Monterey Peninsula. (No. S219236, Ct.App. 6 H038184, Monterey County, Super. Ct. No. M85528, Supreme Court of California, March 10, 2016).
  4. (Arbitration) Internet purchaser cannot be compelled to arbitrate dispute contained in inconspicuous ‘Terms of Use’ hyperlink on company’s website. Long v. Provide Commerce, Inc. (No. B257910, Los Angeles County Super. Ct. No. BC513925, California Courts of Appeal, Second Appellate District, Division Three, March 17, 2016).
  5. (Medical Board) Medical Board cannot compel production of patient’s treatment records in investigating psychiatrist accused of engaging in inappropriate sexual relations with patient. Kirchmeyer v. Phillips. (No. G051594, Super. Ct. No. 30-2014-00735437, California Courts of Appeal, Fourth Appellate District, Division Three, March 28, 2016).
  6. (Elder Abuse) Judgment sustaining demurrer in favor of hospital reversed where plaintiffs state viable theory of elder abuse based on recklessness. Fenimore v. The Regents of the University of California. (No. B262186, Los Angeles County Super. Ct. No. SC121657, California Courts of Appeal, Second Appellate District, Division Eight, March 28, 2016).

The above referenced matters have come to our attention during this past month. We thought you might be interested in a brief summary of these matters. Please let us know if you would like to receive a copy of any of these recently reported court decisions.

  1. (Offers to Compromise) Defense judgment affirmed except as to award of expert witness fees under Code of Civil Procedure Section 998 for fees incurred before offer to compromise. Toste v. CalPortland Construction. (2d Civil No. B256946, Super. Ct. No. 1392249, Santa Barbara County, California Courts of Appeal, Second Appellate District, Division Six, March 2, 2016).
  2. In this wrongful death action, plaintiff appealed a defense judgment entered following trial of a personal injury case. Among a number of issues, plaintiff appealed the defendants’ award of expert fees as a cost item based on their pretrial offers to compromise pursuant to California Code of Civil Procedure section 998.

    The appeals court reversed the cost award for expert fees under California Code of Civil Procedure § 998 in light of the newly amended Section 998 which now provides that a plaintiff is only responsible for covering expert witness fees costs arising post statutory offer.

    This case is the first reported case dealing with the amendment to Section 998 which now limits pretrial expert costs to those incurred post statutory offer.

  3. (Product Liability) Pharmaceutical manufacturer may be liable in negligence to minors allegedly injured in utero by mother’s ingestion of generic drug years after manufacturer divested itself of medication. T.H. v. Novartis Pharmaceuticals Corp. (No. D067839, Super. Ct. No. 37-2013-00070440-CU-MM-CTL, California Courts of Appeal, Fourth Appellate District, Division One, March 9, 2016).
  4. Plaintiffs are twins that were born in 2007 and whose mother prescribed a generic of version terbutaline, for the off-label purpose of preventing or inhibiting preterm labor. The twins suffer from developmental delays and autism. They sued defendant pharmaceutical company and others alleging negligence, negligent misrepresentation and other claims. The pharmaceutical company demurred arguing, in part, that it had no duty to the minors because it sold the rights to terbutaline six years before their mother had taken the medication. The court sustained the demurrer without leave to amend.

    The appeals court reversed and remanded the matter back to the trial court. Under Conte v. Wyeth, the appeals court found that a brand name prescription drug manufactures duty of care “when providing product warnings extends not only to consumers of its own product, but also to those whose doctors foreseeably rely on the [brand-name] manufacturer’s product information when prescribing a medication” even when the generic version of the drug is prescribed. Here, the minors asserted that they could amend their complaint to contend that if the pharmaceutical company had provided warnings of potential fetal harm from use of terbutaline as a medication, it was probable those warnings would have remained in effect until the time of their birth. They also asserted that it was more likely than not that their mother’s physician would not have prescribed terbutaline if there had been such warnings. Thus, the appeals court found a sufficient connection to establish foreseeability between the alleged injuries and the harm.

  5. (Prevailing Party) Party who agreed to dismiss claims in exchange for monetary settlement is prevailing party for purposes of awarding mandatory costs under California Code of Civil Procedure Section 1032 (a) (4). DeSaulles v. Community Hospital of the Monterey Peninsula. (No. S219236, Ct.App. 6 H038184, Monterey County, Super. Ct. No. M85528, Supreme Court of California, March 10, 2016).
  6. The California Supreme Court ruled that a plaintiff that obtains a settlement payment in a civil lawsuit is entitled to recovery of legal costs from the defendant if the settlement is silent on costs. In this case, a settlement was placed on the record where the parties agreed to settle claims “with prejudice” in exchange for a monetary sum. The settlement was silent on costs. After the judgment became final, both sides requested mandatory costs as the “prevailing party” under Code of Civil Procedures section 1032. The trial court granted the hospital’s request and awarded it costs. The Court of Appeal reversed, concluding that plaintiff was the prevailing party for obtaining a “net monetary recovery.”

    The California Supreme Court affirmed the Court of Appeal’s ruling pursuant to subsection (a)(4), a “prevailing party” includes “the party with a net monetary recovery [and] a defendant in whose favor a dismissal is entered.” Though the hospital obtained the dismissal, it was not the prevailing party as a matter of right under the circumstances of the case. Rather, the Court of Appeals determined the plaintiff the party with a “net monetary recovery” was the prevailing party.

    Justice Liu writing for the California Supreme Court noted “[a]lthough not required by law, it is advisable at trial that courts inquire into whether the parties in a given case have resolved the allocation of costs in their settlement agreement, or whether they wish to the court resolve the issue.”

  7. (Arbitration) Internet purchaser cannot be compelled to arbitrate dispute contained in inconspicuous ‘Terms of Use’ hyperlink on company’s website. Long v. Provide Commerce, Inc. (No. B257910, Los Angeles County Super. Ct. No. BC513925, California Courts of Appeal, Second Appellate District, Division Three, March 17, 2016).
  8. Defendant appealed from an order denying its petition to compel arbitration of certain consumer fraud claims brought by the plaintiff on behalf of himself and a putative class of California consumers who purchased flower arrangements through defendant’s website. Defendant sought to compel arbitration based on a provision contained in the company’s “Terms of Use” which were reviewable via a hyperlink and displayed at the bottom of each page of the website. The Terms of Use on the defendant’s website fall into a category of internet contracts commonly referred to as “browsewrap” agreements. Unlike the other common form of Internet contract known as “clickwrap” agreements – browsewrap agreements do not require users to affirmatively click a button to confirm their assent to the agreement’s terms; instead, a user’s assent is inferred from his or her use of the website. Because assent must be inferred, the determination of whether a binding browsewrap agreement has been formed depends on whether the user had actual or constructive knowledge of the website’s terms and conditions. Plaintiff opposed the petition to compel arbitration on the grounds that he was never prompted to assent to the Terms of Use, nor did he actually read them, prior to placing his order. The trial court concluded that the Terms of Use hyperlinks were too inconspicuous to impose constructive knowledge on plaintiff, and denied the petition.

    The appeals court also found the hyperlinks and overall design of the defendant’s website would not have put a reasonably prudent Internet user on notice of same, and plaintiff therefore did not unambiguously assent to the subject arbitration provision simply by placing an order with defendant’s company. Hence, the appeals court affirmed the trial court’s ruling.

  9. (Medical Board) Medical Board cannot compel production of patient’s treatment records in investigating psychiatrist accused of engaging in inappropriate sexual relations with patient. Kirchmeyer v. Phillips. (No. G051594, Super. Ct. No. 30-2014-00735437, California Courts of Appeal, Fourth Appellate District, Division Three, March 28, 2016).
  10. The California Medical Board launched an investigation of defendant physician, a licensed psychiatrist, based on a complaint that the defendant had carried on a sexual relationship with a patient. As part of the investigation, an investigatory subpoena for the production of specified medical records of the patient was served on the defendant. After both he and the patient objected to the subpoena, and he failed to produce the medical records, the California Medical Board brought a petition in trial court to compel their production. The trial court denied the petition and dismissed it. The California Medical Board appealed from the judgment dismissing the petition.

    The Court of Appeal affirmed the trial court’s ruling. The appeals court found that the medical records sought by the investigatory subpoena were protected by the psychotherapist-patient privilege of Evidence Code section 1014. Because the psychotherapist-patient privilege is grounded in patient’s constitutional right of privacy, the Medical Board had to show a compelling interest justifying production of the medical records sought. The Medical Board failed to show a compelling interest and had not established an exception to the psychotherapist-patient privilege applied to the medical records sought by the investigatory subpoena.

  11. (Elder Abuse) Judgment sustaining demurrer in favor of hospital reversed where plaintiffs state viable theory of elder abuse based on recklessness. Fenimore v. The Regents of the University of California. (No. B262186, Los Angeles County Super. Ct. No. SC121657, California Courts of Appeal, Second Appellate District, Division Eight, March 28, 2016).

Plaintiff was a patient at defendant’s facility where he suffered a hip injury from which he never recovered. Plaintiffs, individually and as successors-in-interest, sued the defendant for elder abuse, negligence, negligent hiring and supervision, and wrongful death. The plaintiffs appealed from a judgment entered after the court sustained the demurrer of the defendant to the causes of action for elder abuse and negligent hiring and supervision. The subject appeal related only to the elder abuse cause of action.

The trial court held that the elder abuse allegations did not qualify as reckless. Therefore, it sustained the hospital’s demurrer without leave to amend as to that cause of action.

The appeals court reversed the trial court’s ruling. The appeals court found that plaintiffs alleged that the defendant hospital’s violation of California Code of Regulations, Title 22, § 71225(c) constituted elder abuse. Similar to other cases, the violation of staffing regulations may provide a basis for finding neglect. Under the Elder Abuse and Dependent Adult Civil Protection Act (Welfare and Institutions Code § 15600 et seq.), abuse of an elder may include neglect. Additionally, plaintiffs also supplied allegations that they may have shown reckless neglect based on the defendant hospital’s pattern of understaffing. Thus, because plaintiffs stated a viable theory of elder abuse based upon recklessness, the order sustaining the demurrer on that claim was vacated.

Should you have any questions concerning these court decisions or desire a copy of any of them, please do not hesitate to contact our office.
Sincerely,

DUMMIT, BUCHHOLZ & TRAPP
Scott D. Buchholz