California Law Update: Toxic Products, Iran Investments, Non-Competes, Teacher Layoffs, More

Allen Matkins’ Eileen Nottoli on why businesses that sell consumer products in California need to be aware of – and act on – the state’s new Safer Consumer Product regulations.

[Link: New Consumer Product Regulations: Manufacturers, Importers and Retailers Need to Prepare]

For your reference, a JD Supra roundup of commentary on a range of legal developments in the most populous state in the Union:

California Legislature Passes Iran Investment Bill (Barger & Wolen):

“On August 22, 2012, the California Assembly gave final legislative approval to Assembly Bill 2160. This bill would require the California insurance commissioner to treat a domestic insurer’s investment in a company that has business operations in Iran as a non-admitted asset.” Read on>>

Social Media Sites: New Battlegrounds for Right of Publicity Disputes (Kilpatrick Townsend):

“The Bogart estate, which controls the deceased actor’s right of publicity, sued Burberry in California, a state that permits the right of publicity to be enforced after death. In its Complaint, the Bogart estate claimed that Burberry’s use of Bogart’s image in [Burberry’s Facebook] historical timeline wrongfully used his persona in a commercial manner without consent in order to enhance Burberry’s sales.” Read on>>

No Surprises Here – California Court Won’t Enforce Non-Compete (Allen Matkins Leck Gamble Mallory & Natsis LLP):

“Employers like covenants not to compete; California doesn’t… Justice Richard Fybel writing for the court found that the covenant contained in the purchase agreement had been satisfied and had protected the goodwill acquired by the buyer for three full years. The covenant in the employment agreement was broader and ‘targeted an employee’s fundamental right to pursue his or her profession’. Justice Fybel also found that the non-solicitation provisions of the covenant were too broad.” Read on>>

Back to School: Is Your Staff Trained to Deal with Student Emergency Medical Issues? (Kronick, Moskovitz, Tiedemann & Girard):

“SB 161, which became effective on January 1, 2012, authorizes non-medical school employees with voluntary emergency medical training to provide, in the absence of a credentialed school or licensed nurse, emergency medical assistance to students with epilepsy who are suffering from seizures. This law also applies to charter schools.” Read on>>

California Supreme Court Grants Review Of L.A. Light Rail Case (Greenberg Glusker Fields Claman & Machtinger LLP):

“On August 8th, the California Supreme Court granted review of the Second District Court of Appeal’s decision in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority… [T]he Second District found that a lead agency’s use of projected future conditions to measure the environmental impacts that a long-term infrastructure project would have on traffic and air quality did not violate the California Environmental Quality Act (CEQA).” Read on>>

Arlene Blum Discusses Flame Retardants (Wendel, Rosen, Black & Dean LLP):

“… Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Arlene Blum, environmental health activist, mountaineer and author of Annapurna and Breaking Trail… California State Senator Mark Leno introduced several bills that would have both eliminated flame retardant chemicals and increased fire safety. Though they were sponsored by health organizations, firefighters and even the furniture industry, the manufacturing lobby successfully defeated those bills.” Read on>>

A Program Guide To The Facebook Fairness Hearing (Allen Matkins Leck Gamble Mallory & Natsis LLP):

“As discussed in this earlier post, Facebook, Inc. has requested a fairness hearing before the California Department of Corporations. Technically, the hearing is being held pursuant to Corporations Code Section 25142 in connection with Facebook’s application for a permit authorizing the issuance of securities to effect its proposed acquisition of Instagram, Inc. Since a permit may be issued without a hearing, the raison d’être for the hearing is to obtain the exemption from federal registration pursuant to Section 3(a)(10) of the Securities Act of 1933. In general, the fairness hearing process is both quicker and cheaper than federal registration.” Read on>>

Shutting Down the Construction Project (Pillsbury Winthrop Shaw Pittman LLP):

“If the decision only is to suspend the prime contract, or to keep the subcontracts in effect, the owner will want to observe the prompt payment statutes and the applicable contractual provisions to avoid significant late payment fees and exposure to contractor or subcontractor rights to stop work or terminate its obligations. In California, the prompt payment requirements are unhelpfully scattered across the Civil Code, the Business & Professions Code, the Public Contract Code and even the Public Utilities Code.” Read on>>

California’s Shine the Light Act: Plenty of Reason$ for Businesses Not to Shine It On (Peter Bauman):

“Recent class actions regarding California’s Shine the Light Act illuminate the need for California businesses to pay attention to their privacy policy compliance practices. Violations of the Act can incur civil penalties of $500 per violation — or $3,000 per violation if it was willful, intentional or reckless — in addition to attorney’s fees and court costs. Shine the Light laws have been on the books since 2005, and require any organization doing business with California residents to protect personal information.” Read on>>

Second Circuit Declines To Apply California Securities Law In Auction Rate Securities Case (Allen Matkins Leck Gamble Mallory & Natsis LLP):

“I wrote about U.S. District Court Judge Susan Illston’s decision allowing a purchaser of auction rate securities to pursue claims under the California Corporations Code against Deutsche Bank Securities Inc. Judge Illston distinguished her ruling from a seemingly contrary decision by Judge Loretta A. Preska in In re Merrill Lynch Auction Rate Secs. Litig., dismissing the same plaintiffs’ California Corporations Code claims against different defendants… The plaintiff appealed Judge Preska’s decision and the Second Circuit Court of Appeals has now sided with Judge Preska.” Read on>>

Court Of Appeal Strikes Down Consent Decree Between LAUSD and UTLA Regarding Teacher Layoffs (Kronick, Moskovitz, Tiedemann & Girard):

“In May 2010, the Los Angeles County Superior Court surprised the school and legal community when issuing a preliminary injunction ordering the Los Angeles Unified School District (“LAUSD”) to reinstate permanent, probationary, and long-term substitute teachers at three middle schools to resolve students’ claims that teacher layoffs disproportionately impacted the students’ right to equal educational opportunities. However, the court of appeal recently reversed this judgment.” Read on>>

Ninth Circuit Finds No Duty to Warn in Light of the State of the Art (Sedgwick LLP):

“The decedent’s parents sued the manufacturer of the Taser under theories of both strict products liability and negligence, arguing that the manufacturer had a duty to warn the police officers of the specific dangers of the product. In opposing the manufacturer’s motion for summary judgment, the plaintiffs argued that the manufacturer had a broad duty to warn of risks even if those risks were unsubstantiated in the medical and scientific literature or based on isolated case reports… The court noted that, under California law, a manufacturer had a duty to warn of a particular risk if the risk was known or ‘knowable in light of generally recognized and prevailing best scientific and medical knowledge available at the time of manufacture and distributing.’” Read on>>

Assured Sues OneWest Bank in Connection with RMBS Insurance (Orrick):

“On August 9, Assured Guaranty filed suit in California state court against OneWest Bank FSB, claiming that the company’s loan servicing was to blame for $335 million it has paid in insurance claims related to residential mortgage-backed securities.” Read on>>

“For Now”, Hiring An Employee And Leasing An Office Doesn’t Necessarily Add Up To Transacting Intrastate Business (Allen Matkins Leck Gamble Mallory & Natsis LLP):

“An Illinois corporation hires an employee, leases office space in California. A dispute then arises between the corporation and its California employee. The employee sues and the corporation counterclaims. The employee moves to dismiss the counterclaims based on the corporation’s failure to qualify to transact intrastate business. Who wins? If your guess is the employee, guess again.” Read on>>

California Court Criticizes Prior Case Law Invalidating Class Action Waivers, Then Punts To State Supreme Court (Proskauer):

“California law involving classwide wage-and-hour arbitration continues to evolve in the aftermath of the United States Supreme Court’s landmark decision in AT&T Mobility LLC v. Concepcion, which generally prohibits states from requiring additional due process guarantees (not required under the Federal Arbitration Act) for enforcing arbitration agreements.” Read on>>

Truly Nolen v. Superior Court: A Unique Take On California’s Gentry Decision And Its Application To Arbitration Agreements In The Wake of Concepcion (Orrick):

“In its landmark Concepcion and Stolt-Nielsen decisions, the U.S. Supreme Court made clear that courts must enforce private agreements to arbitrate according to their terms, even if doing so results in the enforcement of a class action waiver provision or otherwise compels a plaintiff to arbitrate her claims on an individual basis. Perhaps the biggest issue facing California employers since Concepcion and Stolt-Nielsen has been whether Gentry v. Superior Court – in which the California Supreme Court articulated a four-factor test for invalidating class arbitration waivers – remains viable.” Read on>>

Another California Court of Appeal Rules That Concepcion Discredits Gentry‘s Rule Invalidating Most Class Action Waivers In Arbitration Provisions (Sheppard Mullin Richter & Hampton LLP):

Gentry, a pre-Concepcion opinion, established a rule effectively invalidating most class action waivers contained in arbitration provisions based on certain state statutory rights. The Truly Nolen decision expressly joined the emerging ‘majority view’ in recognizing that the FAA preempts Gentry, ‘Based on Concepcion’s expansive language and its clear mandate that arbitration agreements must be enforced according to their terms despite a state’s policy reasons to the contrary.’” Read on>>

Proposed CEQA Guidelines Seek to Expedite Infill Development Reviews (Pillsbury Winthrop Shaw Pittman LLP):

“Last year, the state Legislature enacted Senate Bill 226 to streamline review of infill development projects under the California Environmental Quality Act, or CEQA… However, developers and local governments have long complained that the CEQA process is expensive, time-consuming and allows NIMBY opponents to wield allegations of environmental effects as a weapon, even against urban, transit-oriented projects that benefit the environment by reducing suburban sprawl, traffic congestion and vehicle pollution.” Read on>>

Entertainment Litigation Update (Quinn Emanuel Urquhart & Sullivan, LLP):

“On July 5, 2012, a federal court in California denied Sony Pictures’s motion to dismiss writer Joe Quirk’s beach of implied contract claim relating to the upcoming film, Premium Rush… Quirk alleged that Premium Rush is derived from his 1998 novel, Ultimate Rush, and that Sony breached an implied contract to compensate him for the use of his material. Although the court noted that Quirk’s theory of liability stretches California’s law of idea theft to its ‘breaking point,’ Quirk’s claim was found to meet the low ‘facially plausible’ standard required to survive a motion to dismiss.” Read on>>

MERS Has The Power To Assign Its Interest Under A Deed of Trust When It Is Granted By The Deed of Trust (Kronick, Moskovitz, Tiedemann & Girard):

“In Herrera v. Federal National Mortgage Association, a California Court of Appeal considered whether a nonjudicial foreclosure sale on a property was valid after the defaulting property owners brought a lawsuit alleging that beneficiary Mortgage Electronic Registration Systems, Inc., (‘MERS’) failed to properly assign the deed of trust to another party prior to the sale. The court ruled that because the property owners specifically granted such authority to MERS when they signed the deed of trust, MERS did have authority to assign the deed of trust and the sale was valid.” Read on>>

Supreme Court Defines Scope of “Power Press” Exception to Work Comp Exclusive Remedy Rule (Barger & Wolen):

“In its August 20, 2012 decision in LeFiell Manufacturing Company v. Superior Court, the California Supreme Court held that an injured employee’s spouse is not allowed to pursue a claim for loss of consortium in the employee’s civil lawsuit brought under the ‘power press’ exception to the workers’ compensation exclusive remedy rule.” Read on>>

Can An Attorney Blow The Whistle On His Client? (Allen Matkins Leck Gamble Mallory & Natsis LLP):

“This month’s issue of California Lawyer magazine includes this long piece discussing the case of Dimitrious P. Biller, a former in-house attorney. In 2011, an arbitrator ordered Mr. Biller to pay his former employer $2.6 million in damages and $100,000 in punitive damages. According to the arbitrator, Hon. Gary L. Taylor (Ret.), Mr. Biller ‘did the professionally unthinkable: he betrayed the confidences of his client.’ The arbitration award was confirmed by the trial court and upheld by the Ninth Circuit Court of Appeals.” Read on>>

Embattled Blackberry Maker has Multi-Million Dollar Lawsuit Tossed in California (Amiel Wade):

“In a rare piece of good news for the troubled Research in Motion, a California judge this week threw out a $147.2 million patent judgment against the BlackBerry manufacturer. In reviewing the case, the judge decided that RIM had not infringed on a patent for wireless mobile device management via BlackBerry Enterprise Server and dismissed the multi-million dollar fine.” Read on>>

Insurance Adjusters are Not Exempt From Overtime Compensation (Low, Ball & Lynch):

“The Second Appellate District of the California Court of Appeal on remand from the Supreme Court has held that insurance claims adjusters are not exempt from overtime compensation because their primary work duties are the day-to-day tasks of adjusting individual claims not directly relating to management policies or general business operations.” Read on>>

Borrowing Money From A Foreign Government May Make You A Subversive Organization In California (Allen Matkins Leck Gamble Mallory & Natsis LLP):

“The Subversive Organization Registration Law is still on California’s books and can be found at Corporations Code Sections 35000-35302. The legislature hasn’t forgotten about law. As recently as 2011, it amended the penalty provision for officers and directors. 2011 Stats. ch. 15 § 55. In general, the law requires subversive organizations to file information with the Secretary of State. (Although I’ve asked the Secretary of State’s office whether it has received any filings under the law, I haven’t yet received a response.)” Read on>>

See also:

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