Developments of Interest

New Cases of Interest - September 23, 2011

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Salas v. Sierra Chemical Company (2011) 198 Cal.App.4th 29.  A former employee who had filed for worker’s compensation brought an action against the employer contending that the employer had refused to rehire the employee because the employee had made the earlier worker’s compensation claim.  The employer determined after the employee was not rehired that the employee had been using a social security number that belonged to someone else.  The employee contended that the employer had hired several undocumented workers and that the employee had been told by a supervisor not to worry about discrepancies with social security numbers.

The Court of Appeal upheld summary judgment for the employer, finding that the doctrine of after-acquired evidence and clean hands applied to bar the employee’s claims, because his misrepresentations concerning his documented status related directly to those claims.  He was not lawfully qualified to be reemployed, and therefore could not demonstrate that he was being discriminated against by not being rehired.

City of Industry v. City of Fillmore (2011) 190 Cal.App.4th 191.  This is a SLAPP case in which the moving party also brought demurrers to several causes of action.  The underlying complaint had alleged that sales tax revenues had been diverted inappropriately.  The court dealt with a number of demurrers initially but concluded that the fraud and conspiracy claims did not arise from protected activity within the meaning of the SLAPP statute, because the alleged false reporting of sales tax revenues did not involve an official proceeding and therefore an initial foundational requirement of the SLAPP statute had not been met.

Corrales v. Corrales (2011) 198 Cal.App.4th 221.  This was an action in which a partnership consisted of two partners and after one of the partners discovered that his co partner had been engaged in a competing business, one partner withdrew from the partnership.  The court held that because a partnership must consist of at least two persons, the partnership dissolved by operation of law upon the withdrawal of one of the partners.  The trial court should have determined as a result that the partnership had been dissolved and should have applied the dissolution procedures which are found in Corporations Code § 16807.  The court also found that the buyout procedures set forth in Corporations Code § 16701 do not apply to a two person partnership when one partner withdraws.  The court also determined that substantial evidence supported the conclusion that the formation of a competing business was a breach of the duty of loyalty owed by one partner to the other, but that an accounting was necessary in order to comply with Corporations Code § 16807, and any funds improperly obtained by the competing business should be included in the assets of the partnership for the purpose of winding up the partnership business.

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