Developments of Interest

New Cases of Interest - March 16, 2010

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Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816.  A travel company brought a motion to compel arbitration in connection with a wrongful death action that was brought by the survivors of a client of the travel company who had died on a hiking expedition.  The travel company had provided to the client a release form and had represented in doing so that other travel companies had the same requirements as were contained in this release.  The release limited recovery for any damages to the amount paid for the trip and, if the survivors brought any legal action challenging the provision, required the survivors to indemnify the travel company for legal fees and expenses.  The agreement also required the survivors to pay half of the mediation fees and half of the arbitration expenses in a city that was away from where the survivors lived. 
The trial court denied the motion to compel arbitration and that decision was upheld by the Court of Appeal.  The Court of Appeal noted that weighing the unconscionability of an agreement, as well as an arbitration provision, is on a sliding scale with the more substantively oppressive the term, the less evidence of procedural unconscionability is required in order to void the arbitration provision.  The activity here was nonessential and recreational, and hence a release generally would be enforceable in this area, but the company’s representations that its competitors would insist on the same terms was sufficient to find procedural unconscionability.  The one sided nature of the terms also established substantive unconscionability and the clause was found to be unenforceable.

Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975.  This was also a case which involved an arbitration provision, and in the case an attorney sued for wrongful termination by his employer and opposed a motion by the employer to compel arbitration.  The Court of Appeal reversed the trial court, and required that an order be entered granting the company’s motion to compel arbitration.  The Court found that the arbitration agreement in allowing the arbitrator to expand discovery upon a showing of need removed any unconscionability otherwise present in the agreement.  Procedural unconscionability was present only because the offer had been presented to the attorney on a take it or leave it basis.  The agreement, however, was not overly long, and was written in clear and unambiguous language and the fact that arbitration was a condition of employment was stated numerous times in the agreement in a clear and conspicuous fashion.  The attorney had the ability to understand that he was agreeing to arbitration when he signed the agreement.  He knowingly entered into the agreement in exchange for generous compensation and benefits.  The Court therefore found the arbitration provision to be enforceable.

Harris v. City of Santa Monica (2010) 181 Cal.App.4th 1094.  An employee brought a pregnancy discrimination lawsuit against a city in which the employee, who was an at-will bus driver, alleged that the City had terminated her because she was pregnant.  The City asserted that it had nondiscriminatory reasons for her termination and presented evidence of poor job performance.  The Court stated that the mixed motive defense presented by the employer remains good law in appropriate circumstances.  Because what was presented was now essentially a question of fact as to what the employer’s motivation was, the matter was remanded to the trial court with instructions to proceed to trial.

Sharabianlou v. Karp (2010) 181 Cal.App.4th 1133.  This case involved an attempted rescission of a real estate contract, with the trial court ordering rescission and awarding damages to the sellers as well as attorney’s fees, awarding the buyer some of their expenses and return of their deposit, and finding that a real estate agent had no liability on the buyer’s tort claims.  The rescission claim arose after the parties discovered environmental contamination on the property.  The Court of Appeal partially reversed and held that a damage award which had been made to the sellers for the difference between the sellers’ income from the property which they bought with the proceeds and the higher income that a more valuable replacement property would have provided was not appropriate because it did more than restore the parties to their former position, which was to be the measure of damage in a rescission claim.

Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207.  The plaintiff in this case originally received a municipal contract to maintain a city’s bus stops through a competitive bidding process.  Four years after the bid had been awarded, the City terminated the contract, as the contract allowed the City to do.  Without new competitive bids, the City entered into a new contract with one of plaintiff’s competitors.  Plaintiff sought a writ of mandate and declaratory relief to invalidate the new contract and the City filed a SLAPP motion.  The Court of Appeal reversed the trial court, and instructed the trial court to deny the SLAPP motion.  The Court concluded that even if the plaintiff’s claims involved a public issue, they were not based on any conduct in furtherance of a free speech right or the right to petition a government for redress of grievances.  Rather the claims were based on state and municipal laws requiring certain contracts be awarded only through competitive bidding.  Although the City’s communications had evidentiary value in that respect, the liability was not based on the communications themselves.  Additionally, the City’s decision not to go through the bidding process was not a protected activity.  Because protected activity was not the thrust of the action, the SLAPP statute did not apply, and the motion was denied.

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