Contributors

Julie S. Pearson

Principal

Christian Scali

Founder and Managing Shareholder

Despite the COVID-19 crisis, California courts continued to issue important decisions that affect dealerships in California. Below is a summary of some of the most important cases that are likely to have precedential value in the future.

B.B. v. County of Los Angeles

Section 1431 of the California Civil Code provides that each defendant in personal injury, property damage, and wrongful death matters shall be liable for non-economic damages (e.g., pain and suffering) only to the extent of that defendant’s fault. It was always commonly understood that this applied in situations where multiple defendants were responsible for such damages due to their negligence. But what if one of those defendants was responsible not due to a negligent act, but rather to an intentional one? Does section 1431 authorize a reduction in the liability even of such intentional tortfeasors to the extent that others were negligent? That was the question that faced the California Supreme Court recently in B.B. v. County of Los Angeles (2020) 10 Cal.5th 1.

On August 3, 2012, the LA County Sheriff’s Department received a report of an ongoing assault in Compton, California. Upon arriving at the scene, Deputies David Aviles and Steve Fernandez observed the deceased, Mr. Darren Burley, approach them with his fists clenched. His mouth was foaming, he was making grunting and growling noises, and he had a blank stare on his face, leading the deputies to suspect that he was under the influence of PCP. The deputies ordered Burley to get on his knees, but Burley did not respond. A distraught woman then appeared suddenly, pointed at Burley, and yelled, “He tried to kill me!” She began to flee. When Burley started running after her, one of the deputies rammed his shoulder into Burley, causing him to land facedown after falling over and hitting his head on a parked truck. A struggle then ensued.

While attempting to subdue Burley, the deputies used their knees to pin him facedown to the pavement with as much body weight as possible. Aviles pressed one knee into the center of his back and another onto the back of his head. Aviles disengaged after Burley's hands were cuffed and his ankles tightly cinched together with a nylon cord. When paramedics arrived, they found Burley, still cuffed and facedown on the pavement, with a different deputy pressing a knee into his back and with no pulse. They restored Burley's pulse, but Burley never regained consciousness and died 10 days later. According to the autopsy report, the cause of death was brain death and swelling from lack of oxygen following a cardiac arrest “due to status post-restraint maneuvers or behavior associated with cocaine, [PCP] and cannabinoids intake.”

Burley’s family sued LA County and the deputies for battery, negligence, and wrongful death. The jury found that Aviles committed battery, and that 20% of the responsibility for Burley’s death was attributable to Aviles’ use of unreasonable force. The jury attributed 40% of the responsibility to Burley’s own negligence, and the final 40% to the other deputies. However, the trial court entered a judgment against Aviles for 100% of the noneconomic damages—set by the jury at $8 million—because his liability was based on commission of an intentional tort (i.e., battery). “Noneconomic damages” in this context are defined as “subjective, non-monetary losses including, but not limited to, pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation.” (Civil Code §1431.2(b)(2).)

The Court of Appeal reversed the judgment, holding that section 1431.2 of the California Civil Code limits the liability for noneconomic damage (even for intentional tortfeasors, such as Aviles) to their proportionate share of fault. The California Supreme Court reversed and remanded the Court of Appeal’s judgment. The Supreme Court found that California principles of comparative fault have never required or authorized the reduction of an intentional tortfeasor's liability based on the acts of others. Because section 1431.2(a) incorporates those “principles of comparative fault,” the Supreme Court held that the statute does not authorize a reduction in the liability of intentional tortfeasors for noneconomic damages based on the extent to which the negligence of other actors contributed to the injuries in question. Thus, in this case (the Supreme Court explained) the statute does not entitle Aviles to reduce his liability based on the acts of Burley or the other defendants.

Given that the BB v. County of Los Angeles decision came down only in September 2020, it may be too soon to know for sure what the legal ramifications of the decision will be. However, it appears likely that plaintiffs may use the decision as motivation for bringing more claims for intentional torts in cases of personal injury, property damage, or wrongful death. After all, those found guilty of intentional torts, regardless of the proportion of their fault, could be held responsible for paying the entirety of a non-economic damages award.

 

In the Matter of the Protest of Vista Ford Oxnard, LLC v. Ford Motor Company Protest

Scali Rasmussen attorneys Halbert Rasmussen and Monica Baumann succeeded in a relocation protest before the California New Motor Vehicle Board. Vista Oxnard Ford is the second auto dealership in the history of the New Motor Vehicle Board to be successful in this type of protest.

In October of 2018, Ford Motor Company gave notice to Vista Ford Oxnard LLC pursuant to Vehicle Code section 3062 of its intention of relocate Ford of Ventura from its current location in downtown Ventura to an auto mall nearby. The dealerships were already within 10 miles of each other; this move would have brought them closer.

Under Vehicle Code section 3062, franchised dealerships have the right to protest the relocation of another dealership of the same line-make within its relevant market area. If such a protest is brought, Vehicle Code section 3063 requires that the Board take into consideration the existing circumstances, including (a) permanency of the investment, (b) the effect on the retail motor vehicle business and the consuming public in that relevant market area, (c) the injury to the public welfare for the dealership to be relocated, (d) the adequacy of the relevant market area competition and (e) whether the establishment of an additional franchise would increase competition and therefore be in the public interest.

Based on the evidence that was presented to the New Motor Vehicle Board, Vista Oxnard Ford established its burden of proof that there is a good cause not to relocate Ford of Ventura to the Ventura Auto Center. This decision barred the relocation of this dealership by Ford. The Board was persuaded by evidence showing that Ford had failed to adequately consider the impact of the relocation on either of the dealerships, including whether the relocating dealership could financially handle the move. While the Board agreed that the proposed location was better for the consuming public, it also found that it would not increase competition and could decrease competition and hurt the public by causing the relocating dealership to go out of business.

Ford sought a writ of mandate overturning the Board’s decision, which the parties argued before the Superior Court of Ventura in late 2020. The Court denied the writ on January 25, 2021, finding that the Board’s decision was soundly based in the evidence.

While this case was fact specific, it does provide some indication that the Board is suspicious of relocations that are not well-analyzed or considered. Dealers that receive notice of a planned relocation should contact competent counsel immediately to review their rights and consider whether to oppose a proposed relocation.

Ramirez v. Transunion LLC

In a case of first impression in the circuit, the Court ruled that all Rule 23 class members were required to have Article III standing at the final stage of a money damages suit for the class to be awarded individual monetary damages. Because a real and direct risk of an intangible injury may be sufficient, every class member was found to have standing as a result of Defendant’s uniquely egregious, reckless and intentional violations of statutes designed to protect consumers.

Plaintiff was a consumer who was denied credit based on a credit report containing a false ‘terrorist alert’ indicating his name potentially matched a person on the US government’s list of known terrorists. A class action with consumer as its representative was certified, which if successful, would award each class member individual monetary damages. Following trial, a verdict was issued in consumer’s favor awarding statutory and punitive damages of more than $60 Million for Defendant’s willful violation of the Fair Credit Reporting Act (“FCRA”).

Defendant appealed, claiming not all class members satisfied the Rule 23 standing requirements at the final stage of a money damages suit, to permit individual monetary damage awards. The appeals court held that “every member of a class certified under Rule 23, must satisfy the basic requirements of Article III standing at the final stage of a money damages suit, when class members are to be awarded individual monetary damages.” To wit, each member of the class must establish individual injury in fact.

This ruling followed Supreme Court precedent in Town of Chester, N.Y. v. Laroe Estates, Inc. that held that all parties seeking to recover a monetary award in their own name must show Article III standing. Such a requirement of injury in fact prevents the distortion of a class action into a vehicle to obtain federal court money judgments for persons who would not otherwise show sufficient injury to recover individually.

The court found each of the 8,815 class members suffered a material risk of harm to their concrete interest as a result of Defendant’s conduct which failed to follow reasonable procedures to ensure accuracy of the information reported on the credit reports. Citing the Supreme Court’s opinion in Spokeo, Inc. v. Robins (Spokeo II), the court agreed such an injury may still be concrete, even if intangible.

In this case, TransUnion’s the violation of the FCRA was not “a mere technical or procedural violation.” In its holding, the court stated “a real risk of harm arose when TransUnion prepared the inaccurate reports …made them readily available to third parties, …sent the inaccurate information to class members …and some …third parties.”

In the absence of similarly willful violation of consumer protection statutes, it seems likely that Rule 23 monetary damage class actions may require closer examination of the qualifications of the class members. Actual harm, or at least a material risk of real harm, should be confirmed for each member, well in advance of the final stage of the money damages suit.

National Association of Wheat Growers v. Becerra

Proposition 65 requires businesses to post warnings about chemicals that may be found on site that have previously been determined by the State of California to cause cancer in humans. Whether a chemical is known to cause cancer is determined by certain outside entities, including the EPA, the FDA, and the International Agency for Research on Cancer (“IARC”). Prop 65 includes a safe harbor provision that does not require businesses to post a warning, if they can establish the chemical levels are below the “no significant risk level” (“NSRL”) for the chemical, as set by the State.

In National Association of Wheat Growers v. Becerra, Plaintiffs sued to bar the enforcement of a recent California warning requirement for glyphosate, an herbicide used to control weeds, arguing the warning violated the First Amendment as compelled speech. (468 F.Supp.3d 1247, 1251 (2020).) California had recently added glyphosate to its list of chemicals known to cause cancer because the IARC had classified the chemical as “carcinogenic to humans” or “probably carcinogenic to humans.” They made this determination based on “sufficient evidence” that glyphosate caused cancer in experimental animals and “limited evidence” it could cause cancer in humans. However, several other organizations, including the EPA, had recently concluded there is “insufficient or no evidence that glyphosate causes cancer.”

Plaintiff argued that there was insufficient evidence to establish glyphosate was carcinogenic to humans, and therefore, a Prop 65 warning was not “purely factual and uncontroversial” under the First Amendment, as required for compelled commercial speech.

The Court first found the case was ripe for review. Even if Plaintiffs could establish their products did not contain glyphosate levels above the safe harbor level, Plaintiffs still faced a “realistic danger of sustaining direct injury” because they would be subject to enforcement actions from private parties under the Private Attorney General Act (“PAGA”). Private actions could still arise, even if the Attorney General said a proposed enforcement suit had no merit, and thus Plaintiffs could incur attorneys’ fees defending themselves in these actions. Plaintiffs would also have the burden of showing their product’s glyphosate exposure fell below the NSRL in a Prop 65 enforcement action, and therefore would incur chemical testing fees.

The Court then turned to the merits of the case. The Court identified two levels of scrutiny it could apply, as “the case law for compelled commercial speech is somewhat unsettled.” The Court considered whether a lower level of scrutiny was appropriate, whereby the government need only establish that the compelled commercial speech required commercial speakers to disclose “purely factual and uncontroversial information” about commercial products or services, and the disclosure requirements are “reasonably related” to a substantial governmental interest, and are neither “unjustified [n]or unduly burdensome.” While this is a lower bar to meet, it is actually harder, because the government must establish the commercial speech is purely factual and contains uncontroversial information. The Court found that the information California desires food producers to include on their Prop 65 warnings was not purely factual and uncontroversial, as the Court had previously determined such a warning was misleading, as the weight of authority did not in fact show glyphosate was known to cause cancer and did not cause cancer.

Because the government failed to establish the requested warning was purely factual and uncontroversial, the Court applied intermediate scrutiny. Intermediate scrutiny requires the law “must directly advance the governmental interest asserted and must not be more extensive than is necessary to serve that interest.” The State also has the burden to “demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree.” The Court found that the State failed to show that the warning requirement advanced the asserted governmental interest of informing Californians about exposure to chemicals that cause cancer. Because the warning was misleading as to glyphosate’s carcinogenicity, and the state’s knowledge of such purported carcinogenicity, Court found the State did not advance a sufficient governmental interest. Further, the Court also found that California had other options available to inform consumers about glyphosate, such as ad campaigns or interest posts, without burdening the free speech of businesses.

After determining the Prop 65 glyphosate warning violated the First Amendment, the Court issued a permanent injunction, enjoining the state from requiring businesses to post a Prop 65 glyphosate warning in their businesses or on their wares.