Justia Business Law Opinion Summaries

Michael O’Connor signed up for a loyalty program when he bought a pair of shoes and socks from Road Runner Sports, Inc. and Road Runner Sports Retail, Inc. (collectively, “Road Runner”). He alleged Road Runner did not tell him the loyalty program was an automatic renewal subscription and that his credit card would be charged an annual subscription fee. After discovering he had been charged for four years of subscription fees, he joined as the named plaintiff in a class action lawsuit alleging Road Runner had violated California’s Automatic Renewal Law and consumer protection statutes. Road Runner asserted O’Connor was bound by an arbitration provision it added to the online terms and conditions of the loyalty program, some three years after he enrolled. Although Road Runner conceded O’Connor did not have actual or constructive notice of the arbitration provision, it contended O’Connor created an implied-in-fact agreement to arbitrate when he obtained imputed knowledge of the arbitration provision through his counsel in the course of litigation and failed to cancel his membership. The Court of Appeal disagreed this was sufficient under California law to prove consent to or acceptance of an agreement to arbitrate. Accordingly, the Court affirmed the trial court’s order denying Road Runner’s motion to compel arbitration. View "Costa v. Road Runner Sports" on Justia Law

Young claims her employer told her that it had received a wage garnishment order in 2019. Young then discovered the existence of a 2010 default judgment against her, in favor of Midland, for a purported debt of $8,529.93 plus interest. Young sued to set aside the 2010 default judgment, based on extrinsic mistake or fraud. She sought damages, penalties, and reasonable attorney fees and costs under the Rosenthal Fair Debt Collection Practices Act (Civ. Code, 1788), arguing that Midland was a debt collector of consumer debt and had engaged in false and deceptive conduct in attempting to collect that debt, citing her contention that she was never served with process. Midland denied Young’s allegations, asserted affirmative defenses, and filed an anti-SLAPP motion (section 425.16) to strike Young’s claims.The trial court granted the anti-SLAPP motions, finding Young did not show she would probably prevail on the merits of her claims and awarded Midland attorney fees and costs. The court of appeal vacated. Young showed she would probably prevail on the merits of her Rosenthal Act claim, producing prima facie evidence that Midland falsely represented substituted service on her was accomplished. She was not required to show that Midland knowingly made this false representation. Young’s Rosenthal Act cause of action was not time-barred. View "Young v. Midland Funding, LLC" on Justia Law

Amy’s employs 2,500 people to manufacture vegetarian meals. It purchased comprehensive property insurance from Fireman’s for a period ending in July 2020. The policy included coverage extensions for communicable diseases and for loss avoidance and mitigation: Fireman’s “will pay for direct physical loss or damage to Property" caused by or resulting from a "communicable disease event at a location.” The policy defines “communicable disease event” as one in which “a public health authority has ordered that a location be evacuated, decontaminated, or disinfected due to the outbreak of a communicable disease.” Amy’s incurred costs “to mitigate, contain, clean, disinfect, monitor, and test for the effects of” the coronavirus at insured locations, and to avoid or mitigate potential coronavirus-related losses, including temperature-screening equipment to test for COVID, protective shields to prevent transmission on assembly lines, masks and goggles, cleaning supplies, and “hero pay.” People with confirmed COVID-19 cases were on Amy’s premises. The complaint cited “various require[d safety measures] for all essential businesses.”Fireman’s denied Amy’s claim. The court of appeal affirmed the dismissal of the complaint. Under communicable disease extension, the need to clean or disinfect infected or potentially infected covered property constitutes “direct physical loss or damage” of the property; Amy’s has not pled a “communicable disease event” but should be given leave to amend to do so. View "Amy's Kitchen, Inc. v. Fireman's Fund Insurance Co." on Justia Law

A client who retained Plaintiff, the Law Corporation, to represent him in a marital dissolution action. The client assigned the judgments to Musick Peeler & Garrett LLC (Musick Peeler). In October 2019, the Law Corporation filed a motion (the setoff motion) in the superior court to set off against its judgment debt to Musick Peeler a debt that Dougherty allegedly owes to the Law Corporation. The client’s alleged tortious actions to hinder, delay, or defraud the Law Corporation in its efforts to collect on a 1999 default judgment prior to our opinion vacating that judgment and declaring it void in 2009. The trial court denied the motion and the Law Corporation appealed.   The Second Appellate District affirmed. The court explained that to the extent the Law Corporation incurred any fees or costs in connection with its defense against the collateral attack actions in California, they were incurred in defending actions by the client, not a third person. These actions, therefore, do not support a setoff claim based on the tort of another doctrine. Further, even if the Law Corporation’s motion was procedurally proper, the Law Corporation failed to support its setoff claims with relevant evidence and, therefore, the court did not abuse its discretion in denying the motion. View "Karton v. Musick, Peeler, Garrett LLP" on Justia Law

Borrower took out a $5.6 million dollar bridge loan, with 8.5% interest per annum, secured by a deed of trust on real property. They defaulted on a monthly payment of $39,667, triggering late fee provisions: a one-time 10% fee assessed against the overdue payment ($3,967) and a default interest charge of 9.99% per annum assessed against the total unpaid principal balance. Borrower filed a demand for arbitration, alleging the loan was in violation of Business & Professions Code 10240 and the late fee was an unlawful penalty in violation of section 1671. The arbitrator rejected both claims and denied the demand for arbitration. Borrower petitioned to vacate the decision, arguing that the arbitrator exceeded their authority by denying claims in violation of “nonwaivable statutory rights and/or contravention of explicit legislative expressions of public policy.”The court of appeal reversed the denial of that petition. The trial court erroneously failed to vacate an award that constitutes an unlawful penalty in contravention of public policy set forth in section 1671. Liquidated damages in the form of a penalty assessed during the lifetime of a partially matured note against the entire outstanding loan amount are unlawful penalties. There is no precedent upholding a liquidated damages provision where a borrower missed a single installment and then was penalized pursuant to such a provision. View "Honchariw v. FJM Private Mortgage Fund, LLC" on Justia Law

Defendant-respondent Roseville Lodge No. 1293, Loyal Order of Moose, Inc. (the Lodge) hired Charlie Gelatini to move an automated teller machine (ATM) on its premises. Plaintiff and appellant Ricky Lee Miller, Jr., worked for Gelatini and was the person who performed the work. Miller was injured on the job when he fell from a scaffold, and he sought to hold the Lodge and its bartender John Dickinson liable for his injuries. Citing the Privette doctrine, the Lodge and Dickinson argued they were not liable, and they moved for summary judgment. Miller argued triable issues of fact existed over whether an exception applieed. The trial court granted the motion, and Miller appealed. Because the alleged hazard in this case was not concealed and was reasonably ascertainable to Gelatini (and Miller), the concealed hazardous condition exception to the Privette doctrine did not apply. Instead, the Privette presumption remained unrebutted, and the Lodge delegated to Gelatini any duty it had to protect Miller from hazards associated with using a wheeled scaffold. Accordingly, the Court of Appeal affirmed the trial court's judgment. View "Miller v. Roseville Lodge No. 1293" on Justia Law

Defendant Jeffrey Mayhew and Plaintiffs David Starr and Thomas Hunt formed a limited liability company to operate a shopping center. They agreed Mayhew would manage the company and Starr and Hunt would provide startup capital. In exchange, Mayhew was entitled to 50 percent of the company’s profits and Starr and Hunt were entitled to the remaining 50 percent. After the shopping center’s business declined in 2008, Mayhew asked Starr and Hunt for additional capital. They agreed to do so only if Mayhew also contributed capital. Mayhew reported a $100,000 contribution, which caused Starr and Hunt to contribute roughly the same amount. The shopping center was later sold for a substantial profit. Mayhew claimed he was entitled to about 56.3 percent ownership interest in the company based on his additional capital contribution. Starr and Hunt disagreed and submitted the dispute to arbitration along with several other claims for damages. The arbitrator ruled in favor of Starr and Hunt, finding Mayhew only held a 50 percent interest in the company. A superior court later confirmed the award over Mayhew’s petition to vacate and entered judgment against him. On appeal, Mayhew claimed the trial court erred by failing to vacate the award, contending the arbitrator lacked authority to clarify the award, that the award was procured by undue means, and that the arbitrator’s award exceeded her powers. After its review, the Court of Appeal disagreed. Since Mayhew failed to identify any basis for vacating the award, the Court affirmed the judgment. View "Starr v. Mayhew" on Justia Law

After Plaintiff-appellant David Salazar bought Walmart, Inc.’s “Great Value White Baking Chips” incorrectly thinking they contained white chocolate, he filed this class action against Walmart for false advertising under various consumer protection statutes. The trial court sustained Walmart’s demurrers without leave to amend, finding as a matter of law that no reasonable consumer would believe Walmart’s White Baking Chips contain white chocolate. The thrust of Salazar's claims was that he was reasonably misled to believe the White Baking Chips had real white chocolate because of the product’s label and its placement near products with real chocolate. Salazar also alleged that the results of a survey he conducted show that 90 percent of consumers were deceived by the White Baking Chips’ advertising and incorrectly believed they contained white chocolate. “California courts . . . have recognized that whether a business practice is deceptive will usually be a question of fact not appropriate for decision on demurrer. ... These are matters of fact, subject to proof that can be tested at trial, even if as judges we might be tempted to debate and speculate further about them.” After careful consideration, the Court of Appeal determined that a reasonable consumer could reasonably believe the morsels had white chocolate. As a result, the Court found Salazar plausibly alleged that “‘a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled’” by the chips' advertising. Judgment was reversed and the matter remanded for further proceedings. View "Salazar v. Walmart, Inc." on Justia Law

After Plaintiff-appellant David Salazar bought Target Corporation’s White Baking Morsels incorrectly thinking they contained white chocolate, he filed this class action against Target for false advertising under various consumer protection statutes. Salazar claimed he was reasonably mislead to believe the White Baking Morsels had real white chocolate because of the product’s label, its price tag, and its placement near products with real chocolate. To support his position, Salazar alleged that the results of a survey he conducted showed that 88 percent of consumers were deceived by the White Baking Morsels’ advertising and incorrectly believe they contained white chocolate. He also alleged that Target falsely advertised on its website that the “‘chocolate type’” of White Baking Morsels was “‘white chocolate,’” and placed the product in the “‘Baking Chocolate & Cocoa’” category. Target demurred to all three claims on the ground that no reasonable consumer would believe the White Baking Morsels contained real white chocolate. Target also argued that Salazar lacked standing to assert claims based on Target’s website because he did not view the website and did not rely on its representations. The court sustained Target’s demurrer without leave to amend and entered judgment for Target. “California courts . . . have recognized that whether a business practice is deceptive will usually be a question of fact not appropriate for decision on demurrer. ... These are matters of fact, subject to proof that can be tested at trial, even if as judges we might be tempted to debate and speculate further about them.” After careful consideration, the Court of Appeal determined that a reasonable consumer could reasonably believe the morsels had white chocolate. As a result, the Court found Salazar plausibly alleged that “‘a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled’” by the White Baking Morsels’ advertising. Judgment was reversed and the matter remanded for further proceedings. View "Salazar v. Target Corp." on Justia Law

In a dispute between members of a limited liability company (LLC), Plaintiff alleged that the LLC’s managing member engaged in self-dealing to the detriment of both Plaintiff and the company. After the managing member, represented by the LLC’s attorneys, cross-complained against Plaintiff, Plaintiff cross-complained against both the managing member and the attorneys for further self-dealing and breach of fiduciary duty, alleging they misappropriated funds from the LLC to finance the litigation. Cross-defendants specially moved to strike the complaint under the anti-SLAPP statute (Strategic Lawsuit Against Protected Activity; Code of Civil Procedure section 425) arguing the alleged conduct occurred as part of the litigation, which was protected activity.   The Second Appellate District affirmed the order imposing monetary sanctions. The court denied the other discovery orders deeming it a petition for extraordinary relief. The court affirmed the anti-SLAPP order striking Plaintiff’s cross-complaint. Further, the court directed the trial court to vacate its order awarding Defendant anti-SLAPP attorney fees and reconsider that order. The court explained that the trial court was in the best position to evaluate Plaintiff’s justifications for deficient responses, and as with the December 9, 2019 order, the court explained it cannot conclude that the trial court’s findings and decision on April 6, 2021, to impose additional monetary sanctions constituted a manifest abuse exceeding the bounds of reason. View "Manlin v. Milner" on Justia Law