I am very pleased to have Doug join us here at HCPC. He brings a wealth of knowledge and experience, and trial chops, to our expanding group of trust/estate and business litigators here at the firm. Doug’s particular experience in intellectual property disputes and “Soft IP” battles, and his trial readiness, will further enhance our business and IP litigation expertise and expand our trial capacity. I hope to work closely with Doug on a variety of matters and on further expanding our litigation practice group.
Doug is the real deal! He has held an AV Preeminent Martindale-Hubbell Peer Review Rating for ten years, and has been recognized as a Top Lawyer in Business & Intellectual Property Litigation in San Diego Magazine. For over 20 years, Doug has enforced and defended the rights of businesses and individuals in state and federal courts, including disputes concerning trademarks, copyrights, trade secrets, domain names, and other types of intellectual property; disputes involving media and advertising, internet marketing and commerce, privacy rights, defamation, and unfair competition; disputes arising from contracts, fiduciary duties, business relationships and separations, and fraud; and matters concerning real property rights. Doug has authored numerous articles appearing in national and local publications, including ALM’s Law Journal Newsletters – The Intellectual Property Strategist and Product Liability Law & Strategy, the Los Angeles Daily Journal, the San Diego Business Journal, and the Association of Business Trial Lawyers Report. He is an active member of the San Diego County Bar Association, the International Trademark Association, the Federal Bar Association and the California State Bar Intellectual Property Section.
On top of all this, Doug is just a great guy. And his wife, Maureen, is wonderful. We welcome them and their beautiful daughters, Grace and Katie, to our HCPC family!
Yesterday, I moderated a San Diego County Bar Association Roundtable Discussion on Generational Divide in the legal community. Interesting discussion with three veteran attorneys (Radmila Fulton, Thomas Warwick and me) and three young attorneys (Jeremy Evans, Hali Anderson and Anton Vialtsin) which will be reported in the Nov/Dec edition of San Diego Lawyer. Work/Life balance was a major topic of discussion, and a clear point of difference – but, not necessarily division – between the veteran and the emerging attorneys.
A newly published study on Integrating Work and Life (http://bit.ly/1LnWVkG) validates much of what was discussed yesterday on this topic. Young professionals, both men and women, are no longer focused only on career trajectory – they want “rich, multidimensional lives”. And companies, including law firms, can no longer afford to ignore or minimize this desire for multidimensional lives or invest in it solely as a “woman’s issue.” Both men and women, including lawyers, will be choosing educational and career paths that enable them to be successful in work and in life.
Law firms would do well to acknowledge and embrace this new reality!
Obergefell v. Hodges – Justice Kennedy, Majority Opinion
No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law. The Constitution grants them that right. The judgment of the Court of Appeals for the Sixth Circuit is reversed. It is so ordered.
In an opinion filled with passages that law students will be reading 50 years from now, this concluding passage of the majority opinion was, for me, the most profound.
A stunning opinion, a long-overdue result, a great day!
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”
This concluding passage of the ACA opinion – the key passage in the whole opinion – cannot be seriously disputed. We hear a lot about the evils of activist courts. It would have been the ultimate in Supreme Court activism to judicially kill what Congress passed and clearly intended. The ACA helped millions of people and will help millions more. It’s a good thing. It’s a good opinion. It’s a good day. Next, marriage equality!
In David v. Medtronic, Inc., 2015 WL 3645254, the Second District Court of Appeal in California recognized a “nominal defendant” exception to the general rule that a moving defendant on motion for forum non conveniens must establish that all defendants are subject to jurisdiction in the proposed alternative forum. What remains unclear from the decision is exactly what or who is a “nominal defendant” for the purpose of the exception?
In California, when a defendant moves to dismiss a multi-defendant action for forum non conveniens, the moving defendant is required to establish that an alternative forum exists in which the action could be brought against all defendants. Thus, the rule has been that a moving defendant seeking to establish an alternative forum is suitable must show that all defendants are subject to jurisdiction in that proposed alternative forum. American Cemwood Corp. v. American Home Assurance Co. (2001) 87 Cal.App.4th 431, 433. The question posed to the Second District Court of Appeal in David v. Medtronic was whether the presence of a so-called “nominal defendant” could prevent the remaining defendants from obtaining a forum non conveniens dismissal when, in the absence of the nominal defendant, the action should be pursued in alternative forums. The court answered this question, No, concluding the presence of a “nominal defendant” cannot defeat a forum non conveniens dismissal which should otherwise be granted
David v. Medtronic was a products liability case concerning a medical device approved for use by the FDA in spinal fusion surgeries. Plaintiffs were patients who alleged injuries from implantation of Infuse in off-label uses not approved by the FDA. One plaintiff, David, was a California resident. The other plaintiffs lived in different states. Plaintiffs sued Medtronic, the corporation which sold and manufactured Infuse, and Wyeth, a corporation alleged to have developed and sold a protein used in Infuse to Medtronic. Plaintiffs alleged that Medtronic/ Wyeth were liable because they were aware of the dangers of off-label use of Infuse, but nonetheless widely promoted such use. Plaintiffs also named a doctor alleged to have invented part of Infuse, the so-called “nominal defendant” in the forum non conveniens analysis.
Medtronic/Wyeth sought orders requiring each plaintiff to litigate against them in his or her home state. A smart tactical move – litigating the claims in a number of home states as opposed to litigating them all in California would substantially increase the cost and burden of the litigation on the plaintiffs and their attorneys. Fair, who knows? But, tactically smart, absolutely!
Medtronic/Wyeth filed a (1) a motion to sever each plaintiff’s case from that of the other plaintiffs; (2) a motion to dismiss the case of each plaintiff, except David (the California plaintiff), on the grounds of forum non conveniens; and (3) a motion to transfer venue of David’s case to Sacramento. In order to establish the plaintiffs’ home states were available forums, Medtronic/Wyeth consented to jurisdiction in each plaintiff’s home state and tolled statutes of limitation. But, the defendant doctor did not consent to jurisdiction in the home states. Medtronic/Wyeth made no effort to establish that jurisdiction could be established over the defendant doctor in plaintiff home states thus making them available forums. Instead, they argued the other states were available forums even if they had no jurisdiction over the defendant doctor because he was a “nominal defendant” whose presence should make no difference to the available forum analysis. They proffered evidence the defendant doctor had no involvement in the creation, design, promotion or marketing of Infuse.
In opposition, plaintiffs argued Medtronic/Wyeth had not met their burden to establish that alternative forums existed because they failed to establish that any alternative forum had jurisdiction over all defendants, including the defendant doctor. Significantly, plaintiffs did not make any argument, or introduce any evidence, to establish the doctor was not, in fact, a “nominal defendant”.
Simply put, plaintiffs argued the general rule and Medtronic/Wyeth proffered a “nominal defendant” exception to the rule. Classic showdown – the rule vs. the exception to the rule!
The trial court granted all three Medtronic/Wyeth motions. The court granted a forum non conveniens dismissal, finding that each plaintiff’s home state was an available alternative forum. As to the doctor, whose presence as a defendant would have compelled denial of the motion under the general rule, the court concluded the claims against him were “nominal” and did not preclude forum non-conveniens dismissal.
Plaintiffs appealed, challenging only whether alternative forums existed because, under the general rule, all defendants, including nominal ones, must be subject to jurisdiction in an alternative forum in order for it to be available. Medtronic/Wyeth argued there is an exception when one of the defendants is a nominal defendant. In such a case, Medtronic/Wyeth argued, it is unnecessary to establish jurisdiction over the nominal defendant in the alternative forum in order to obtain a dismissal for forum non conveniens. Again, plaintiffs – the rule vs. Medtronic/Wyeth – the “nominal defendant” exception to the rule!
Citing analogous federal case-law, the Second District agreed with Medtronic/Wyeth, recognizing a “nominal defendant” exception to the general rule that a moving defendant on motion for forum non conveniens must establish that all defendants are subject to jurisdiction in the proposed alternative forum. The court noted that if the general rule were enforced without exception “an enterprising plaintiff could preclude a forum non conveniens dismissal by naming an additional defendant over whom the alternative forum could not exercise jurisdiction”. But, the court also held the trial court erred in its treatment of the nominal defendant. Rather than dismissing the defendant doctor, the trial court should have dismissed the action against Medtronic/Wyeth on forum non conveniens grounds but severed the action against the “nominal defendant” doctor allowing it to proceed in California. Were it otherwise, the court noted, “the nominal defendant – who may, in fact, be liable – would escape liability on nothing more than the moving defendant’s showing that he is at best only peripherally liable, but is not subject to suit in a more convenient forum for pursuit of the main action.”
The Unanswered Question – Who Or What Is A “Nominal Defendant”?
Conceptually, the David v. Medtronic “nominal defendant” exception makes a good deal of sense. A plaintiff should not be able to address an expected forum non conveniens motion simply by joining a defendant whom he, at the end of the day, does not really intend to proceed against. That is reasonable and, in my view, appropriate. But, the opinion leaves open significant practical questions relating to burdens and proof. Exactly who or what is a “nominal defendant” for the purpose of applying the exception? What is the burden that a defendant must meet to establish another defendant is a “nominal defendant”? What must a plaintiff show to overcome a “nominal defendant” showing and defeat a forum non conveniens motion? The court is largely silent on these topics, noting the issue of whether defendant doctor was a “nominal defendant” was not before it. But, the court noted the following:
Also, the issue of whether Dr. Michelson was, in fact, a nominal defendant is not before us. Although plaintiffs make some argument on this issue on appeal, they made no such argument before the trial court, content to argue only the legal issue that all defendants, including nominal ones, must be subject to jurisdiction in an alternative forum in order for it to be available. More to the point, no one contends that Dr. Michelson is a primary defendant in this case. Medtronic introduced evidence that Dr. Michelson was not involved in the creation, design, promotion or marketing of Infuse. On appeal, defendants do not argue that Dr. Michelson was directly involved with Infuse, but suggest that Dr. Michelson may have indirectly endorsed or promoted Infuse, in that Medtronic’s website states that Infuse incorporates technology developed by Dr. Michelson. Under certain circumstances, an endorser may, in fact, be liable. (Hanberry v. Hearst Corp. (1969) 276 Cal.App.2d 680, 683 [one who endorses a product for economic gain and for the purpose of inducing the public to buy it is liable to a purchaser who acts in reliance on the endorsement and is injured because the product is not as represented].) However, it is apparent that establishing liability against Dr. Michelson on this theory will be something of an uphill battle for plaintiffs and, more importantly, it will be a battle ancillary to the main war of whether Medronic is liable for plaintiffs’ Infuse-related injuries.
What can be drawn from this passage as to what needs to be shown to establish or refute the “nominal defendant” exception is unclear. Should a trial court be able to find a defendant to be “nominal” for forum non conveniens analysis because he is not a “primary defendant” or because establishing liability against that defendant “will be something of an uphill battle for plaintiffs” or “ancillary to the main war” against other defendants? Clearly, such statements are not appropriate or useable evidentiary standards of proof. Nor, I presume, were they intended to be. The issue of what exactly is a “nominal defendant” in forum non conveniens analysis was not before the court in David v. Medtronic.
But, what should be the “nominal defendant” standard? Should the moving defendant have to show the case against the “nominal defendant” is completely frivolous and without any merit? Or without tenable basis? Or without substantial merit? Or lacking in triable issues of fact thus shifting the burden to plaintiff to raise triable issues? Or lacking in a prima facie showing thus shifting the burden to plaintiff to show same? Should the “nominal defendant” burden shift to plaintiff on a simple showing by the moving defendant that but for the presence of the alleged “nominal defendant” forum non conveniens dismissal would otherwise be appropriate? Should a plaintiff be allowed some limited discovery when faced with a “nominal defendant” motion for forum non conveniens to develop evidence to meet that motion?
These questions, unanswered by David v. Medtronic, will surely be fleshed out in cases to come. What is clear from David v. Medtronic is that plaintiffs, in multi-defendant cases where forum non conveniens challenges can be expected, better have solid evidence against possible “nominal defendants” because that evidence will be tested, in some form or fashion, under some yet-to-be-determined standard, at the outset of a case by a now-available “nominal defendant” motion for forum non conveniens!
Recently, I was walking to my car after an Inn of Court program and talking with a newly admitted attorney about trials. I truthfully told him, as I always do in these situations, that trials are the best part of this business. They really are. He asked why, and I told him – competition, need to think on your feet, creativity, great when you win, interaction with jurors, ….., you know, the standard stuff! Driving home, I started thinking about exactly what it is about a trial that makes it so special – what are the best things about a trial, the best moments in a trial? And, you know, we live in a “10 Best Things” world these days – 10 best cities, 10 best colleges, 10 best movies, 10 best lattes, 10 best phones, laptops, vacation spots, diet foods, cocktails, songs, celebrity facelifts/mugshots, Kardashian selfies, . . . , 10 best anything! So, here goes, and not in any particular ranking, my ten best things at trial. (Note, while some do, not all these things happen at every trial. But, when they do, they are the best! Also, I have not included winning as a best thing. It is, for any trial lawyer, the best possible thing at any trial. After all, it is all about the winning, isn’t it? But, winning is too easy and too obvious to list. So, disregarding the absolute best possible thing at any trial, winning, here’s my list.)
- That precise moment when you stand up to give opening statement. What I like about that moment when you stand to give opening statement is that it all comes back to you. It’s a very singular moment. No matter who was involved in trial preparation, no matter how many lawyers handled the case, no matter who argued the motions and took the depositions, no matter how many lawyers are sitting with you at counsels table, no matter what happened in the case before that moment, when you stand to give opening, it is all on you, it’s on your shoulders, you are all alone. All the talking, thinking, arguing and worrying about the case over the last year or two is over – it’s time to go. All eyes are on you – this is important, you have to be prepared, you have to be ready, you have to perform. Trials are a collective effort. Even the smallest of trials involves a number of people working together to pull the whole thing off. But, opening statement is a uniquely singular and solo moment in that process and, at least for me, standing up to start opening is always a best part of any trial.
- When direct examination of your client or witness goes as intended. Like many trial lawyers, I find direct examination more difficult than cross. Getting the needed testimony from a client or witness without leading, in a persuasive manner, without inviting objections through poorly worded or argumentative questions, and without boring a jury, can be difficult. When critical testimony comes in smoothly on direct, in a clear and concise manner, and the jury is paying attention, it’s a good moment.
- When your opponent asks your client one question too many. Not much to say here. Ego and hubris can get the best of any trial lawyer. You are killing the cross, controlling the witness, the pace and rhythm of the questioning is perfect, you own the witness, you own the courtroom, you own the case, Gerry Spence and David Boies have nothing on you; then, you go too far, you break the cardinal rule on cross, you ask that one question too many and, worse yet, you ask that dangerous open-ended question. The witness sees the opening, steps in and kills you with a long, well-rehearsed answer, wiping out all your previous good work on cross. The jury, immediately wide awake, sees the misstep, and listens. We’ve all been there – hopefully, not very often. It’s not good. But, it’s qualifies as a best thing at trial when it happens to the other side!
- When the jury concludes your opponent is largely wasting their time. I think jurors punish lawyers who waste their time. My experience is that most people don’t want to serve and will do most anything to avoid jury service. But, when picked for a jury, most people take their obligations seriously and will do their best. But, they want to be there only as long as is necessary to get the evidence, hear the arguments, and make a decision, and not a minute longer! If you are prepared and ready to go with each phase of the case, make your arguments and examinations clear and concise, and diligently move your case along, jurors will like it. It will reflect preparedness, credibility, and confidence in your case and client. Conversely, if you are unprepared, unfocused, and just generally slow and meandering in your actions at trial, jurors will hate it. You will be wasting, or at least perceived as wasting, their time at a job they didn’t want in the first place. I have seen it a number of times where an attorney does a long, slow, meandering, seemingly unprepared examination, asking the same question, or making the same point, a number of times as if the jury didn’t hear or understand the first, second or third time he hit the topic. At some point, you can almost feel it – the jury will collectively just get fed up with the whole thing. You can see it in their expressions, movements and body language. At that point, your opponent has lost something in the jury’s eyes that is hard to regain – credibility. When that happens to your opponent, it is a best thing at trial.
- When your impeachment actually works. We often think, often more than we should, that the impeachment of a witness with a prior inconsistent statement will be a watershed moment at trial. The witness says one thing at trial, you immediately show his deposition video where he says something completely different. Witness is a liar – it’s on tape – case closed! But, I find it’s rarely that clean, that effective. The prior statement is a bit unclear, or it does not directly contradict the court statement, or the jury is just not as impressed with the inconsistency as you are, or the witness artfully explains away the inconsistency to the satisfaction of the jury. Clear, effective, meaningful impeachment of a witness is a rare thing at trial. When it happens during your cross, it’s a best thing at trial.
- When the objection tide turns. Objections in front of a jury are a ticklish thing. You don’t want to object too much, as you may be perceived as wasting the jury’s time, or attempting to hide the truth, or attempting to unfairly obstruct your opponent’s case. My view – jurors don’t like objections. This is especially true if your objections are not well-taken and not sustained. But, sometimes the converse will happen. Well-timed, well-taken, objections will not only keep evidence and improper argument away from the jury, they will also reflect preparation, confidence and credibility. When you are regularly lodging objections and winning, the jury will see it, and it will imprint upon you and your client a degree of preparation, confidence and, perhaps, insight they will start to see as lacking in your opponent. The tide turns and starts to flow in your direction. At times, it will get to the point the jury seems to expect your winning objection as soon as a question is asked. When we try cases, we wrap our own credibility around that of our clients. If you are continually winning the small skirmishes and evidentiary objections in front of the jury, it will serve to enhance your credibility and, in turn, that of your client.
- When your opponent’s tech fails. The video doesn’t work, the PowerPoint freezes, the wrong document shows on the screen, the hard drive freezes, etc. May be a bit callous to say, but this is always entertaining to watch when it’s not happening to you!
- When the jury files back into court after reaching a verdict. No matter the case, this is always a dramatic moment. What are they thinking? Are they looking at us? Are they looking at the other side? Smiling, frowning, happy, sad, pissed off? Here goes, what is going to happen? Always great drama – always a great moment.
- The look on your client’s face when the verdict is read and it’s a win. It’s awful when the verdict is bad – the absolute worst! All trial lawyers have been there. But, when it is good, there is nothing better than the look on your client’s face. Joy, release, affirmation, exhaustion, gratitude – all played out in an instance across your client’s face. Truly, a best thing at trial.
- When you speak with jurors after the trial. Talking to jurors after a trial, win or lose, is a must in my book. You have shared a unique experience with them, and they usually want to talk. And it is, almost always, interesting, fascinating and fun. They are usually not shy to critique your performance, or that of your opponent. They most always have based their decision on things you did not deem significant, and they are quick to assess credibility. Much can be learned about your conduct in court and, more broadly, about the dynamics of juries in general. Plus, it is usually quite fun to speak with jurors, especially when they have given your client a victory. Post-trial chats with jury members – always a best thing at trial!
** Had to add one more! When the trial is over, and you are having drinks with opposing counsel. When this happens, it’s the best thing. We are not enemies – this is not, or at least it should not be, personal between the lawyers. We are professionals, advocates fighting for our clients in a case. When the fighting is done and the case is over, we are still lawyers practicing together in a community and will surely see each other in the court hallways, if not in court, again. There is always another case, always another client. But, professional relationships and reputations are long-term deals. We shouldn’t lose sight of that perspective in the heat of any particular case. Some of my best professional friends are past opponents, and those friendships are bolstered by our stories, over drinks or dinner, of our past battles – as it should be!
I could have gone for 20. There are great moments in any trial, win, lose or draw. But, these 10 stand out for me. Coming soon – 10 worst things about trial!
In Agam V. Gavra, 2015 WL 1843009, the Sixth District Court of Appeals recognized a “losing contract” limitation on reliance damages in California breach of contract cases, and laid out the respective burdens of the parties in such cases. For its discussion of reliance damages alone, this case will be useful to any California attorney litigating contract cases. And, its recognition of a “losing contract” limitation on reliance damages provides an opening to breaching parties to limit exposure for their own breaches.
The case involved a partnership agreement for the purchase and development of land in Los Altos Hills. The deal apparently spoiled with the collapse of the housing market and the Great Recession, leading to litigation. The losing side on breach claims appealed, contending, in part, the trial court misallocated the burden of proof on breach of contract reliance damages.
In its opinion, the Sixth District first noted the traditional definition of reliance damages in California:
One proper “measure of damages for breach of contract is the amount expended [by the nonbreaching party] on the faith of the contract.” (Mendoyoma, Inc. v. County of Mendocino (1970) 8 Cal.App.3d 873, 879 (Mendoyoma ); 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 883, p. 970 [“[One] measure of contract damages is the amount of the plaintiff’s expenditures, together with the reasonable value of his or her own services, in preparation and performance in reliance on the contract.”].) As our Supreme Court explained in Buxbom v. Smith (1944) 23 Cal.2d 535, 541, “ ‘[w]here, without fault on his part, one party to a contract who is willing to perform it is prevented from doing so by the other party, the primary measure of damages’ “ includes “ ‘his reasonable outlay or expenditure toward performance.’ “ That the nonbreaching party’s damages include his or her “outlay incurred in making preparations for the contract” has been the law in California for over a century. (Cederberg v. Robison (1893) 100 Cal. 93, 99 (Cederberg ); see also United States v. Behan (1884) 110 U.S. 338, 345–346 (Behan ) [nonbreaching party’s damages include “actual outlay and expenditure”].)
The court described the well-recognized burdens on the parties in the context of reliance damages. The burden is initially on the non-breaching plaintiff to establish the amount which he was induced to expend in reliance on the breached contract. The burden then shifts to the breaching defendant to show the plaintiff’s expenses were unnecessary, such that his recovery of reliance damages should be reduced. Standard breach of contract stuff!
But, the Court then discussed a second limitation on reliance damages – the “losing contract” limitation – which allows the defendant to reduce or eliminate plaintiff’s reliance damages with proof the plaintiff would have suffered a loss even if the defendant had fully performed. The court noted no California court appears to have addressed the “losing contract” limitation upon awards of reliance damages. Citing a variety of out-of-state cases, the court discussed the “losing contract” limitation as follows:
Courts also have recognized a second limitation on reliance damages awards (aside from proof of unnecessary expenditures)—proof that the plaintiff would have suffered a loss even if the defendant had fully performed. “[I]n such a case the plaintiff should not be permitted to escape the consequences of a bad bargain by falling back on his reliance interest.” (Dialist Co. v. Pulford (Md.Ct.Spec.App.1979) 399 A.2d 1374, 1380.) Put differently, the plaintiff should not be put “ ‘in a better position than he would have occupied had the contract been fully performed.’ “ (Bausch & Lomb Inc. v. Bressler (2nd Cir.1992) 977 F.2d 720, 729 (Bausch & Lomb ).) Thus, much like courts allow the breaching party to prove the nonbreaching party’s expenditures were unnecessary, courts allow the breaching party “to reduce [the nonbreaching party’s recovery] by as much as he can show that the [nonbreaching party] would have lost, if the contract had been performed.” (L. Albert & Son v. Armstrong Rubber Co. (2nd Cir.1949) 178 F.2d 182, 189 (L.Albert ); (Holt v. United Sec. Life Ins. & Trust Co. (1909) 76 N.J.L. 585, 597 (Holt ) [“if he who, by repudiation, has prevented performance, asserts that the other party would not even have regained his outlay, the wrong-doer ought at least to be put upon his proof”]; Westfed Holdings, Inc. v. United States (Fed.Cl.2002) 52 Fed.Cl. 135, 155 (Westfed Holdings ) rev’d in part on other grounds, 407 F.3d 1352 (Fed.Cir.2005) [plaintiff “must show that the expenses submitted as reliance damages were incurred in reliance on the contract … while defendant may prove, in diminution of the amount of losses proved by plaintiff, any losses that plaintiff would have incurred in the event of full performance of the contract”]; Bausch & Lomb, supra, at p. 729 [“a reliance recovery will be offset by the amount of ‘any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been fully performed.’ “].)
The court’s holding laid out the respective burdens of the parties in the context of reliance damages to include the “losing contract” limitation.
Accordingly, we hold that, in the context of reliance damages, the plaintiff bears the burden to establish the amount he or she expended in reliance on the contract. The burden then shifts to the defendant to show (1) the amount of plaintiff’s expenses that were unnecessary and/or (2) how much the plaintiff would have lost had the defendant fully performed (i.e., absent the breach). The plaintiff’s recovery must be reduced by those amounts.
Agam v. Gavra is significant because it opens up a new avenue for defendants, in breach of contract cases where reliance damages are sought, to argue, if the facts so warrant, that plaintiff should not be able to recover some or all his claimed reliance damages because he would have done worse if the contract had been fully performed. As the court stated, under such circumstances, the plaintiff “should not be permitted to escape the consequences of a bad bargain by falling back on his reliance interest.” So, at trial, plaintiff proves he spent $1M in reliance on the now-breached contract and wants judgment in that amount for breach. To negate those claimed reliance damages, defendant can then attempt to prove that if he had not breached, plaintiff would have lost more than $1M on the contract and plaintiff should not be put in a better position upon breach than he would have been in the absence of breach. In effect, defendant puts on a “this is what would have happened to plaintiff if I hadn’t breached – I did him a favor” case! Interesting.
Agam v. Gavra – a must read for any California attorney litigating contract cases.
Referrals are the lifeblood of law practices – they are the “coin of the realm” for most attorneys. There are attorneys with large loyal clients providing cases year after year. But, for most attorneys, it’s not 20 cases from one client, its 20 cases from 20 different referral sources. Yet, despite the significance of referrals as a source of business, attorneys often mishandle referrals and torch referral sources. So, as a public service to the “referral-source-torchers” out there, I offer The Referral Rules! (Click this link – The Referral Rules ). This article originally appeared in the January/February 2015 edition of San Diego Lawyer from the San Diego County Bar Association.
In a case of first impression, the First District Court of Appeal in Gonsalvez v. Li (Case No A140284), 2015 Daily Journal D.A.R. 472, has held that denials or qualified denials of requests for admissions (RFAs) are not admissible evidence “in an ordinary case, i.e., a case where a party’s litigation conduct is not directly at issue”.
In this auto accident case brought by an injured passenger against the driver, plaintiff propounded RFAs requesting defendant to admit, among other things, that he was driving too fast for the conditions at the time of the accident and that his pressure on the gas pedal was a substantial factor in the accident. Defendant responded with standard denials for lack of information and belief. At trial, plaintiff’s counsel asked defendant on the stand to confirm his RFA responses and that they were made under oath. He then proceeded to question defendant, over objections, about his qualified denials of the RFAs. At the conclusion of the testimony, the court, again over objection, admitted the RFAs and responses.
In closing, plaintiff’s counsel urged the jury to look at the RFAs and the responses, and then cleverly argued they showed that defendant, through “a bunch of double talk” (i.e., the lawyer-drafted qualified denials for lack of information and belief), was failing to take responsibility for his actions. The closing argument passage quoted in the opinion is very clever and was likely quite compelling to the jury.
“I encourage you to look at … the Requests for Admissions that we sent to Ran Li asking him to admit some very basic facts about this crash. His responses are there as well. Let’s just look at a few of them…. [¶] … [¶] This is a simple question, ladies and gentlemen. ‘How much did you push on the accelerator.’ [His response] is a bunch of double speak[,] … a bunch of ‘I’m sorry I’m not taking responsibility and not only am I doing it, I’m doing it in a way that makes no sense.’ [¶] … [¶] … [I]t’s been more than four and a half years since this crash, and he will not in any way take any responsibility for it…. And that’s why we need to impanel a jury like you.”
Very good stuff! The jury apparently thought so, too. The jury found that defendant Li was negligent, that plaintiff Gonsalves was not comparatively negligent, and awarded plaintiff more than $1.2 million in damages for significant back injuries.
Defendant appealed, arguing the trial court erred in permitting plaintiff’s counsel to examine defendant on his negative responses to RFAs and admitting those responses into evidence. The First District Court of Appeal agreed, vacated the judgment and remanded the case to the trial court for new trial.
In the opinion, the court first undertook some statutory interpretation, noting defendant’s arguments that the applicable discovery statutes expressly allow any part of a deposition or interrogatory to be introduced at trial, whereas they only provide that admissions in response to RFAs are binding on the party at trial (Code Civ. Proc., §§ 2025.620 re depositions, 2030.410 re interrogatories and 2033.410 re RFAs). The court further noted the statutory scheme provides for monetary sanctions (i.e., reasonable expenses including attorney fees) when a party unreasonably fails to admit a matter in response to RFAs, but does not expressly permit a denial, objection or failure to respond to RFAs to be used against the party at trial. (Code Civ. Proc., § 2033.420, subd. (a)).
The court then drew a parallel to Rifkind v. Superior Court (1994) 22 Cal.App.4th 1255, a well-known opinion which condemned the use of “legal contention questions” at deposition (i.e. asking a deponent to state all facts or identify all documents which support an affirmative defense). Rifkind held that “legal contention questions” unfairly require the deponent to make a “law-to-fact application that is beyond the competence of most lay persons” and “to sort out the factual material in the case according to specific legal contentions and to do this by memory and on the spot.” Likewise, in Gonsalves, the court noted that defendant “Li was asked to explain “by memory and on the spot” and without the ability to consult with his attorney why he took the legal position that he could not admit or deny certain RFA’s without further inquiry. And he was asked to do this not in a deposition, as in Rifkind, but in front of the jury.”
The court then noted, citing cases from Massachusetts, Florida, Missouri and Texas, that the weight of authority from other jurisdictions supports the position that denials or qualified denials of requests for admissions are not admissible evidence.
Finally, the court rejected the argument the RFA denials were admissible to impeach defendant’s credibility by showing his attitude toward the action in which he testifies under Evidence Code § 780(j). The court found no support for plaintiff’s attempt to make a party’s litigation conduct a legitimate subject for inquiry under Evidence Code section 780(j).
The court held that “denials of RFA’s are not admissible evidence in an ordinary case, i.e., a case where a party’s litigation conduct is not directly in issue” and, thus, “the trial court permitted examination of Li that was unfair and prejudicial to him, and erred in admitting those responses in evidence”.
There are takeaways from this case for both sides:
1. For the Propounding Party – Propound your RFAs early in discovery so there will be sufficient time to bring motions to compel admissions and to, through orders and sanctions, narrow issues for trial. If only RFA admissions have evidentiary value at trial, leave time in your discovery plan to get the admissions you need to narrow trial issues and streamline your trial. Unchallenged RFA denials have no worth at trial. Also, draft your RFAs as clearly as possible so you can get the compelling orders you want or need.
2. For the Responding Party – Under Gonsalves, the trial risk of serving denials or qualified denials is gone. Denials and qualified denials to RFAs cannot be used to impeach a witness, or to question witness veracity, or as fodder for closing argument as so cleverly done by plaintiff’s counsel in the case. And this is appropriate. Given the likely significance of an admission, counsel should be free, without risk of adverse consequences or unfair arguments at trial, to carefully and meticulously scrutinize the wording of RFAs to insure that what will be admitted is crystal-clear and not subject to misconstruction, misinterpretation or misunderstanding by the parties, the court or the jury.
But, while the trial risk of RFA denials and qualified denials is gone under Gonsalvez, the monetary risk is not. Under Code Civ. Proc., §2033.420, if a party fails to admit the genuineness of any document or the truth of any matter when requested to do so, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the court, upon motion and subject to certain conditions, may require the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney’s fees. Thus, you will not lose a jury and a trial as a result of your RFA denials. But, you or your client may end up writing a big check after it is all done if your denials were unreasonable under §2033.420(b)(1)-(4).
This coming year, I will litigate cases like a professional athlete . . . . . .
When I win a MSJ at oral argument, I will stop, look to the heavens momentarily, then look down and kiss both of my biceps.
When I lose a MSJ at oral argument, I will hold my arms out, look at the Judge for a few seconds with the “are you kidding me” look, look away, slowly shake my head in disbelief, and flash the “you’re a f…ing idiot” look.
When I win a significant motion in limine, I will throw my arms down, flex my biceps, run around the counsel tables, looking sideways and yelling.
When I lose a significant motion in limine, I will look at the Judge and slap my forearm repeatedly with the disbelieving “where’s the foul” look.
When my trial objection is sustained, I will walk over and chest-bump opposing counsel, wag my finger at him, shake my head, and yell “don’t try me again”!
When my trial objection is overruled, I will look at my second chair co-counsel with the questioning “where were you” look.
When the jury returns a favorable verdict, I will jump up, stand, throw out my chest, throw my pen down to the floor, slide sideways two steps and spin around, drop to one knee, bow my head, cross my chest, look to the heavens, say a few words, stand up, butt foreheads with my second chair co-counsel, and slowly walk out.
When the jury returns an unfavorable verdict, I will look at them in disbelief, slowly shake my head, look dejectedly at the ground, slap the butt of my second chair co-counsel, and walk out with my head bowed.
When I see opposing counsel in the hall after the trial, I will walk up to him, grab him by the back of the head, dramatically touch foreheads with him for a few seconds, privately whisper a few words in his ear, then turn around and walk away, flush with victory.
When interviewed outside the courtroom by the Daily Transcript about the trial victory, I will do one of two things:
- I will say “I told that hack on the other side not to try me, not to take this case to trial against me, that there could be only one result when you go to trial against me, a loss”, and then apologize profusely whenever and wherever possible for my comments for the next few weeks; or,
- I will say that it was a team effort, that my trial team just kept fighting to the end, that I couldn’t have won without my client, second chair co-counsel, trial team, excellent staff and partners, and the love and support of my wife and children, that it was a close case that could have gone either way, and that my opposing counsel is a great lawyer – and then thank heaven for the victory.
When interviewed outside the courtroom by the Daily Transcript about the trial loss, I will do one of two things:
- I will say “the judge was awful, he took the case away from us with lousy rulings, he clearly had his mind made up about this case from the start, what a hack, we really need to take a good look at who we are putting on the bench in this state”, and then apologize profusely whenever and wherever possible for my comments for the next few weeks; or,
- I will say that I feel poorly for our client, that I are obviously unhappy about the loss but that my opponent tried a good case and I respect the jury and its decision, and that after getting a little rest I will be looking at the result to determine whether there are issues that an appellate court should review to insure that justice was done in this matter.
As I head back to my office after the trial victory, I will trot away in slow motion, waving one finger in the air for the victory.
As I head back to the office after the trial loss, I will walk quickly, briefcase in hand, red Beats headphones on, stern-faced, eyes forward, acknowledging no one.
Come to think of it, I don’t think I will litigate cases this year like a professional athlete!