After a nine week trial in the Federal District Court in Sacramento, a jury unanimously awarded our client, Pacific MDF Products, Inc., $6,670,185. Pacific MDF manufactures home improvement products, such as baseboards and crown moulding, out of fiberboard at its plant in Rocklin, California. The manufacturing process generates a significant amount of sawdust, which must be disposed of in environmentally sensitive ways. Pacific MDF decided to purchase from Defendants, Advanced Recycling, Inc., Bio-Mass Energy Concepts, LLC and Donald Kunkel, a system which would permit Pacific MDF to burn the sawdust to create both steam heat and electricity to run its plant.

When Defendants were unable to overcome both design and manufacturing defects in the cogeneration system, Thomas G. Redmon and Daniel L. Baxter of our office filed the lawsuit alleging 11 different causes of action, including breach of contract, breach of warranty, fraudulent and negligent misrepresentation, and making false promises. The jury deliberated for less than two days before finding in favor of our client on every cause of action.

Pacific MDF expressed praise for the quality of the representation it received based, not just on the end result, but on the fact that Mr. Redmon and Mr. Baxter exhausted every effort on its behalf to settle the matter in a cost effective manner prior to taking the matter to trial.

A Sacramento jury deliberated less than three hours before returning a near-unanimous verdict in favor of Lodi Memorial Hospital in a medical negligence action. The two week trial in Sacramento County Superior Court pitted Joan Perry, the widow of Stanley Perry, against the hospital and its staff after her husband died suddenly of a ruptured aortic aneurysm during a routine treadmill test one day following admission for sudden onset of chest pain. Mrs. Perry claimed that the hospital and others mismanaged her husband’s care.

Retained by Optima Insurance, the insurance carrier for the hospital, Wilke Fleury partner, David A. Frenznick, successfully argued that the hospital had met and exceeded the standard of nursing care in all aspects of Mr. Perry’s care. Mr. Perry presented with classic signs of coronary artery disease and, prior to the treadmill test, his cardiologist was timely informed by the nursing staff of all pertinent changes in the patient’s condition.

Lodi Memorial Risk Manager, Daleen Murray, praised Wilke, Fleury attorneys after receiving the jury’s verdict. “Your devoted time, expertise and professionalism lead us to the desired outcome of a defense verdict,” she said.

Wilke Fleury recently completed the negotiation and sale of 125 acres of undeveloped land to the California Tahoe Conservancy. The sale is the second largest purchase in the history of the Conservancy. Wilke Fleury Partner Jim Krtil worked closely with the property owners, members of the Barton family, in negotiating acceptable terms for the sale of the land, which had been in the family for generations. The California Tahoe Conservancy will preserve the land, which is likely to be a vital link for a new bike trail through the south portion of the Tahoe basin. The Firm previously negotiated and closed the largest purchase ever to the Conservancy on behalf  of Alva Barton. That sale involved over 300 acres of meadow land, with more than a half-mile of Lake Tahoe beach front. The land now serves as important stream zone land. Each transaction involved years of negotiations, taking into consideration not only the real estate aspects of the transaction, but also the income tax and estate tax implications to the family.

In a three week jury trial involving allegations of medical malpractice, a family practice specialist employed by the Regents of the University of California was successfully defended by Wilke Fleury. The case involved the death of a young man from an aggressive malignant melanoma. The lawsuit was brought on behalf of the patient’s son, who was born four months after his father died of his skin cancer. In a case that abounded with sympathy, Wilke Fleury Partner Scott Gassaway was successful in presenting a scientific and medically-based defense. The claim was largely based on a theory that an uncommon type of benign mole (a “halo nevus”) has a known but very, very uncommon association with a contemporaneously growing malignant melanoma somewhere else on the body. Plaintiff’s theory was that if a physician sees an admittedly benign halo nevus on one part of the body, the physician must rule out malignant melanoma elsewhere on the body. Plaintiff unsuccessfully argued that the presence of the uncommon mole required a full body skin and mucous membrane examination. The defense experts testified that the standard of care for a family practice physician does not require such measures given the extremely small statistical likelihood of discovering a malignant melanoma on a patient with a benign halo nevus. The jury unanimously found that the physician met the standard of care.

Wilke Fleury obtained an order from the San Diego County Superior Court dismissing its client—a large mortgage lender—from a piece of highly contested litigation. In the case, Wilke Fleury’s client was sued by a borrower who was attempting to rescind his home loan nearly three years after the transaction was consummated. After Wilke Fleury’s initial motion resulted in the plaintiff amending his complaint, Wilke Fleury again moved for dismissal on the basis that the amendments failed to state a legally cognizable claim. Over the strenuous opposition of plaintiff and his attorney, the court agreed with Wilke Fleury partner Dan Baxter’s argument that no degree of further amendment could cure the defective character of the plaintiff’s action. As a result, the court dismissed the action in full.

After a lengthy and intense arbitration, Judge William A. Bettinelli found in favor of our client, Thomas Enterprises, Inc. by awarding $52,350,000 as the fair market value of 32 acres of land surrounding the Sacramento Train Depot. Previously, Thomas Enterprises had agreed to sell the acreage to the City of Sacramento, but the parties could not agree on a purchase price. The City offered to purchase the property prior to arbitration for $8,200,000.

Thomas Enterprises had purchased the 237 acre Downtown Railyards site (owned for over a century by Southern Pacific Railroad) and sold the 32 acre parcel to the City for the development of a centralized intermodal site, to include all forms of transportation servicing downtown Sacramento and the surrounding area. Judge Bettinelli’s decision represents the final step in the sales process.

Wilke, Fleury attorneys Tom Redmon and Dan Baxter handled the matter on Thomas Enterprises’ behalf.

On Friday, October 22, a federal jury in Sacramento returned a punitive damages award of over $10,000,000 in a case brought by Wilke Fleury on behalf of plaintiffs Brian Dawe, Gary Harkins, and Flat Iron Mountain Associates. That award was in addition to the same jury’s October 18 award of $2.58 million in compensatory damages.

Represented by Wilke Fleury partner Dan Baxter, the plaintiffs sued the California Correctional Peace Officers’ Association, Corrections USA, and two individual defendants for breach of contract and defamation—among other claims—stemming from a campaign of misconduct perpetrated by the defendants in 2006 and 2007. After a three-month trial, the jury found in favor of Dawe, Harkins, and Flat Iron on their claims, as well as on an assortment of counterclaims made by Corrections USA. Of the total damages awarded to plaintiffs, over $12 million was against CCPOA, the largest correctional officers’ union in the country and a powerful force in California politics.

On December 31, 2010 the firm’s Mergers and Acquisitions group successfully closed the sale of our client’s high-tech manufacturing business to an equity capital fund for cash, debt, and equity consideration of approximately $60,000,000. Much of the management of the business has been retained, and Wilke Fleury continues to provide legal services to the client as general corporate counsel under the new ownership. As is typically the case with business mergers, negotiation and closure of the deal required legal counsel in many areas of business law including contract, employment, Uniform Commercial Code, entity formation, real estate, environmental, and other areas.

Robert F. Tyler of the firm’s litigation department recently prevailed in a major complex medical malpractice case brought against one of the firm’s longstanding clients. The case involved a 48 year old man who was brought into the client’s hospital with a severe brain bleed after falling as the result of an apparent loss of consciousness. Various tests done shortly after admission disclosed cardiac abnormalities, which were ultimately felt to have been caused by the injuries resulting from the fall, rather than being the cause of the loss of consciousness and fall itself. Twenty months later, the patient died in his sleep.

At the time of his death, the patient was 50 years old and earning between $150,000 and $350,000 per year. Both before and after his hospital stay, the patient never complained of any significant medical problems and never took any sick leave. On autopsy, it was found that he had suffered a major heart attack at some point in the past, and that all of his cardiac arteries were severely clogged, with the cause of death stated as untreated cardiac problems.

The wife and the two minor daughters of the patient brought a wrongful death claim, contending that the events leading up to the fall were caused by cardiac problems, which they claimed should have been found and worked up by the hospital. The plaintiffs contended that had that taken place, the patient’s severe underlying cardiac disease would have been demonstrated, and steps would have been taken to avert the patient’s untimely death.

The trial itself involved 32 witnesses, with strongly conflicting testimony from experts in cardiology, intensive care, neurology, clinical laboratory operations, and emergency room care. Plaintiffs postulated an earnings loss of $3.9 million, and ultimately requested a total award in excess of $11.7 million. After a six week trial, the jury returned a 9-3 verdict in favor of the defense, finding that the defendant hospital had correctly interpreted the abnormalities shown on the test in question as being due to the injury caused by the fall (rather than causing the fall), and that the hospital’s workup of the patient was correct and complete. While those conclusions were and are medically correct, they were complex and were very vigorously contested by well-credentialed experts on both sides. Therefore, the fact that the jury ultimately came to appreciate the defendant’s position despite their obvious sympathy for the plaintiffs, clearly constituted a very successful result for the client.

Employers often seek to reduce an employee’s damages in a wrongful termination case by the amount by which the employee mitigated, or could have mitigated, his or her damages. Before the employee’s earnings from the replacement job will be applied in mitigation, employers must be able to prove that the replacement job was comparable to the employee’s lost job. This means that wages from the replacement job will not be used to reduce the employee’s lost wages in a wrongful termination lawsuit when the employee’s new job is different or inferior.

In Villacorta v. Cemex Cement, Inc., 221 Cal.App.4th 1425, (2013), Cemex Cement, Inc. (“Cemex”) laid off Alfredo Villacorta (“Villacorta”) and hundreds of other employees. Villacorta sued Cemex for wrongful termination. Villacorta alleged he was terminated based on his race (Filipino). Villacorta found a new job eight months later. However, the job was not local. His commute to the new job was approximately four to six hours round-trip depending on traffic, so Villacorta rented a room closer to his new employment and only returned home to his family on the weekends. Villacorta prevailed in his wrongful termination lawsuit against Cemex approximately three years after his termination, and was awarded three years of salary (approximately $198,000) instead of eight months of salary (approximately $42,000) as damages. The Court of Appeal upheld the award because the replacement job was inferior in that Villacorta was not able to see his family during the workweek and had to pay for two residences – one for his family and one for himself – during the week.

In today’s tough economy and job market, layoffs, reductions in force, and terminations may be necessary and comparable replacement work might not be readily available to former employees. This case serves as a reminder to ensure that layoffs, reductions in force, and terminations are handled properly and are well documented. Employers should remember that they cannot rely on different or inferior re-employment to mitigate wrongful termination damages, and might consider offering severance packages for higher risk terminations.

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DID YOU KNOW…
Same sex heterosexual employees CAN sexually harass each other. Sexual motivation or interest is not a prerequisite to sexual harassment under the Fair Employment and Housing Act (FEHA). Heterosexual employees may be subjected to harassment because of sex if attacks on their heterosexual identity are used as a weapon of harassment at work. (e.g. harassing conduct insinuating straight employees are gay). Taylor v. Nabors Drilling USA, LP, 222 Cal.App.4th 1228 (2014).
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The State legislature was busy this past year, particularly in the area of employment law. Employers will want to be aware of the changes to make sure they do not have an un-happy year. Here is a synopsis of some of the notable changes:

EMPLOYEE WAGES

AB 10 – Minimum Wage Increase

Under existing law, the minimum wage for all industries is no less than $8.00 per hour.

AB 10 will increase the minimum wage to no less than $9.00 per hour on or after July 1, 2014. The minimum wage will increase again to no less than $10.00 per hour on or after January 1, 2016.

Employers should also reexamine the wages of their exempt employees in light of the minimum wage increase to ensure they still qualify for an exemption.

AB 442 – Minimum Wage Violations

Under existing law, employers who fail to pay the minimum wage to their employees face a citation by the Labor Commissioner consisting of a civil penalty and restitution.

AB 442 expands existing law to also subject the employer to a citation by the Labor Commissioner for liquidated damages, in addition to a civil penalty and restitution. Recovered wages and liquidated damages will be payable to the employee.

AB 390 -Withholding’s from Wages

Existing law criminalizes the failure to make agreed-upon payments to health and welfare funds, pension funds, or specified benefit plans.

AB 390 expands existing law to criminalize the failure to remit state, local or federal withholding’s from employee wages.

TIME OFF AND LEAVE

SB 770 – Paid Family Leave

Under existing law, paid family leave wage replacement benefits are available for employees who take leave to care for a seriously ill child, spouse, parent, or domestic partner.

SB 770 allows employees to receive paid family leave wage replacement benefits to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law.

SB 400 – Stalking Victims

Existing law provides certain protections to employees who are victims of domestic violence or sexual assault, including prohibiting employers from taking adverse action against such victims who take time off from work related to the domestic violence or sexual assault as long as the employee complies with certain conditions.

SB 400 extends the protections in existing law to victims of stalking. It also prohibits employers who learn of an employee’s status as a victim of domestic violence, sexual assault, or stalking from discharging or retaliating against the employee because of their status as victim, and requires employers to provide reasonable accommodations to such employees (e.g., implement safety measures).

SB 288 – Victim’s Rights

Under existing law, employers are prohibited from discharging or discriminating against employees who take time off to serve on a jury, to appear as a witness if they are victims of crime, or to take time off to obtain relief if they are victims of domestic violence or sexual assault.

SB 288 extends the protections of existing law by prohibiting employers from discharging or discriminating against employees who are “victims,” as defined in the law, and take time off upon the victim’s request to appear in any proceeding affecting their rights as a victim.

DISCRIMINATION

AB 556 & 292 – FEHA

Under existing law, the Fair Employment and Housing Act (FEHA) prohibits discrimination and harassment in employment on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, or sexual orientation.

AB 556 expands the protected classes under FEHA to include military and veteran status. (Employers may inquire into military or veteran status in order to award a veteran’s preference under the law.)

SB 292 clarifies that sexual harassment does not have to be motivated by sexual desire.

SB 530 – Judicially Dismissed or Sealed Convictions

Under existing law, employers are generally prohibited from asking applicants or employees for information about an arrest or detention not resulting in a conviction, or from seeking information about a referral or participation in a pre- or post-trial diversion program.

SB 530 extends the protections to generally prohibit employers from asking applicants or employees for information about convictions that have been judicially dismissed or ordered sealed.

AB 263 -Employee Protected Conduct

Under existing law, employers are prohibited from firing or discriminating against an employee or applicant who has engaged in protected conduct.

AB 263 expands existing law to prohibit retaliation or adverse action against an employee or applicant who has engaged in protected conduct, and expands protected conduct to include a written or oral complaint that the employee was underpaid wages.

ENFORCEMENT OF VIOLATIONS

AB 1386 – Liens on Employer Property

Under existing law, the Labor Commissioner hears employee complaints in administrative proceedings that may result in final orders. Existing law then provides a process for turning final administrative orders into judgment liens with the same force and effect as civil court judgments.

AB 1386 provides an alternative procedure to judgment liens that allows the Labor Commissioner to turn final administrative orders into liens that may be recorded in any county where the employer has property, and remain in place for 10 years, unless sooner satisfied or released.

SB 462 – Attorney Fee’s and Costs

Under existing law, a court must award reasonable attorney’s fees and costs to the prevailing party in any action for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions if any party requests attorney’s fees and costs upon the initiation of the action.

SB 462 amends the law to only allow attorney’s fees and costs to a non-employee prevailing party (e.g., an employer) if the court finds the employee brought the action in bad faith.

As an attorney who practices primarily in the construction defect arena, I read Dr. Craner’s commentary¹ with particular interest. My practice includes both prosecution as well as defense of owners and developers in residential and commercial property cases, many of which have a “mold” component. Indeed, my deposition of Dr. Bruce Kelman in the Kerruish v. Kimball Hill Homes case is cited in Craner’s article.

In my many years of experience on both the plaintiff and defense sides of the “mold” debate, i.e., whether and to what extent indoor mold arising in water-damaged buildings is a valid, diagnosable, treatable, and preventable environmental health disorder, I have, since its publication, consistently observed defense experts relying upon the ACOEM’s statement on “Adverse Human Health Effects Associated with Molds in the Indoor Environment”² as the “final” scientific word on the issue. Plaintiff experts, on the other hand, are routinely challenged to defend and prove the scientific basis of their affirmative opinions as a rebuttal to the ACOEM Statement.

Those of us who practice in this area have long suspected that the heretofore concealed process by which the ACOEM Mold Statement was created was flawed and biased, not only in its content and balance as an “evidence-based” guideline, but especially in its tone, which blatantly comes across as a “defense argument” to any attorney willing to read it. How can any advocate come away with any other impression when the same experts who were profiting from defense medical/legal consultations and testifying in mold-related litigation were incredibly selected by ACOEM to be the primary authors of its organizational position statement on this subject?

Dr. Craner’s critique has finally brought some light and balance to the issue. Construction defects and resultant litigation related to indoor mold will go on, but I strongly suspect the ACOEM Mold Statement will no longer receive the same level of reliance or respect that it has been unduly given up to this point by attorneys and experts. ACOEM, as an organization, has major credibility problems as a result of this document and would do well to follow Dr. Craner’s recommendations to restore organizational integrity and respect.

References
1. Craner J. A critique of the ACOEM statement on mold: undisclosed conflicts of interest in the creation of an “evidence-based” statement. Int J Occup Environ Health. 2008 Oct-Dec;14(4): 283-98.
2. Adverse Human Health Effects Associated with Molds in the Indoor Environment. Journal of Occupational and Environmental Medicine:Volume 45(5): 470-478 (2003).