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February 2009 /$4
E A R N MCLE CR E D I T
Federal ADA Amendments page 10
Class Action Coupon Settlements page 26
Text Messaging to Clients page 38
PLUS
Los Angeles lawyer Robin Allen analyzes theelements of the crime of elder abuse page 14
ProtectingOur Elders
2009 Guide to Trial Support Services
PrivateInvestigationsof Jurorspage 21
14 Protecting Our EldersBY ROBIN ALLEN
Under the criminal elder abuse statute, prosecutors must prove that the perpetrator
knew or should have known that the victim of a crime was 65 or older
21 The Private Lives of JurorsBY TRACY J. HASPER AND GORDON F. LULL
When investigating potential jurors, private investigators are agents of the
attorneys who employ them and must observe the Rules of Professional Conduct
and the Private Investigator Act
Plus: Earn MCLE legal ethics credit. MCLE Test No. 178 appears on page 23.
26 Clipping CouponsBY DAVID MARTINEZ AND REBECKA BIEJO
Unlike federal courts, California courts have rejected the notion that coupon
settlements of class actions are inherently suspect
32 Special Section2009 Guide to Trial Support Services
F EATU RE S
Los Angeles Lawyer
the magazine of
the Los Angeles County
Bar Association
February 2009
Volume 31, No. 11
COVER PHOTO: TOM KELLER
02.09
9 Barristers TipsHow malpractice insurance ERPs apply toLLP partnersBY DAN MCKENNA
10 Practice TipsRecent amendments to federal lawincrease protection for the disabledBY LYNNE M. HOOK AND STACEY A. LEE
38 Computer CounselorWhat lawyers need to know about textmessaging with clientsBY DAVID SCHNIDER
40 By the BookThe Buffalo Creek Disaster
REVIEWED BY JEFFREY D. WOLF
44 Closing ArgumentThe new pet trust statute is certain todog the judiciaryBY KENNETH W. KOSSOFF
42 Classifieds
42 Index to Advertisers
43 CLE Preview
DE PARTM E NTS
LOS ANGELES LAWYER (ISSN 0162-2900) is published monthly,except for a combined issue in July/August, by the Los AngelesCounty Bar Association, 261 S. Figueroa St., Suite 300, LosAngeles, CA 90012, (213) 896-6503. Periodicals postage paidat Los Angeles, CA and additional mailing offices. Annual sub-scription price of $14 included in the Association membershipdues. Nonmember subscriptions: $28 annually; single copyprice: $4 plus handling. Address changes must be submittedsix weeks in advance of next issue date. POSTMASTER:ADDRESS SERVICE REQUESTED. Send address changes to LosAngeles Lawyer, P. O. Box 55020, Los Angeles CA 90055.
4 Los Angeles Lawyer February 2009
Mediator Arbitrator
Referee213-926-6665 www.judgecrispo.com
HONORABLELAWRENCE W. CRISPO(RETIRED)
Four years later, President Bill Clinton would tell the Rwandan people: “All overthe world there were people like me sitting in offices who did not fully appreciatethe depth and the speed with which you were being engulfed by this unimaginableterror.”
In 2004, historians and international observers came together to mark the 10-year anniversary of the Rwandan genocide. As they did, many remarked on the haunt-ing parallels between what happened in 1994 and what was then unfolding inDarfur, a region of Sudan roughly the size of Texas, where a brutal cycle of ethniccleansing had already claimed the lives of 200,000 and made over 1 million refugees.In July 2004, the U.S. Congress—in an extraordinary act of bipartisanship for anelection year—concluded unanimously that “genocide” accurately described whatwas happening in Darfur. By November 2004, both President George Bush andSenator John Kerry likewise had expressed that view.
By 2007, attacks on humanitarian workers reached extraordinary levels, whiledevastating malnutrition and catastrophic mortality rates for children under fivebecame particularly grim signals of the enormity of the Darfur crisis. Firsthand reportsof the genocide evoked the worst of the twentieth century: sadistic extremes of vio-lence, unspeakable horrors inflicted on women and girls, and brazen interference withrelief efforts. The statistics have continued to leap forward: As many as 450,000 haveperished, and over 2 million displaced.
Without question, attorneys across the country now face a full array of stressesand uncertainties, both within and beyond our practices. At the same time, the real-ity of the twenty-first century’s first recognized genocide marks a unique moral imper-ative. This is all the more so because a number of grass roots organizations—as wellas twenty-first century technology—have made it particularly easy for us to partic-ipate in efforts to halt the genocide. Those with very little time can make a toll-freetelephone call to 1-800-GENOCIDE. The antigenocide hotline, brilliantly con-ceived by the Genocide Intervention Network, connects callers to their elected offi-cials and provides updated information and talking points. In a similar vein, the SaveDarfur Coalition has mounted a postcard and e-mail campaign aimed at urging thenew administration to work with the international community to ensure an end tothe killings and the safe and swift delivery of desperately needed humanitarian aid.
Bar associations, law firms, and public officials can go a step further. Hosting dis-cussions or meetings with Sudanese survivors, aid workers, and antigenocide lead-ers; promoting genocide education and awareness; and supporting nonpartisanefforts to deliver relief to the victims are just a few of the ways in which we can gobeyond “sitting in offices.”
Genocide is, after all, not only a humanitarian crisis but also the civilized world’sworst known crime. The late Senator Paul Simon famously noted that if each mem-ber of Congress had just received 100 letters from home, the Rwandan genocide mighthave been stopped. While the information age may have altered the formula, all ofus—as attorneys and citizens who recognize the broader meaning of “justice”—shouldparticipate in efforts to end the genocide in Darfur. ■
April 6, 2009, will mark the 15-year anniversary of thedeaths of Presidents Habyarimana of Rwanda andNtaryamira of Burundi, whose downed plane ignited
a raging genocidal campaign that left 800,000 dead—a greatmany of them women and children—in less than a month.
Angela J. Davis is an assistant U.S. attorney and the 2008-09 chair of the Los Angeles Lawyer
Editorial Board. Her views do not necessarily reflect those of the U.S. Department of Justice.
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Copyright © 2009 by the Los Angeles County Bar Association. All rightsreserved. Reproduction in whole or in part without permission is prohibited.Printed by R. R. Donnelley, Liberty, MO. Member Business PublicationsAudit of Circulation (BPA).
The opinions and positions stated in signed material are those of theauthors and not by the fact of publication necessarily those of the Associationor its members. All manuscripts are carefully considered by the EditorialBoard. Letters to the editor are subject to editing.
8 Los Angeles Lawyer February 2009
LOS ANGELES LAWYER IS THE OFFICIAL PUBLICATION OF THE LOS ANGELES COUNTY BAR ASSOCIATION 261 S. Figueroa St., Suite 300, Los Angeles, CA 90012-1881 Telephone 213.627.2727 / www.lacba.org
ASSOCIATION OFFICERSPresidentDANETTE E. MEYERSPresident-ElectDON MIKE ANTHONYSenior Vice PresidentALAN K. STEINBRECHERVice PresidentERIC A. WEBBERTreasurerLINDA L. CURTISAssistant Vice PresidentPATRICIA EGAN DAEHNKEAssistant Vice PresidentANTHONY PAUL DIAZAssistant Vice PresidentMARGARET P. STEVENSAssistant Vice PresidentJULIE K. XANDERSImmediate Past PresidentGRETCHEN M. NELSONExecutive DirectorSTUART A. FORSYTHAssociate Executive Director/Chief Financial OfficerBRUCE BERRAAssociate Executive Director/General CounselW. CLARK BROWN
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There is no substitute for experience.Over 1,250 successful mediations14 years as a full-time mediator92% of cases resolvedDirector, Pepperdine Law School’s “Mediating the Litigated Case” program
LEE JAY BERMAN, Mediator213.383.0438 • www.LeeJayBerman.comLEE JAY BERMAN, Mediator213.383.0438 • www.LeeJayBerman.com
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Los Angeles Lawyer February 2009 9
THE PROFESSIONAL BUSINESS STATUS of a limited liability part-nership (LLP) has existed in California since the adoption of theUniform Partnership Act in 1996.1 Lawyers can take advantage of thishybrid business form, gaining the benefits of running an informal prac-tice between partners without the concern of personal liability for thenegligence or wrongful acts of the other partners. Of course, there isa price to pay for this corporate veil. Recent revisions to Section 16956of the Corporations Code governing LLPs contain an ambiguity thatcan trap the unwary at the worst possible time—after dissolution. AllCalifornia attorneys, especially those just beginning their practice inCalifornia as a member of an LLP, should be aware of the ambigu-ity and take necessary precautions.
LLPs have flourished over the past 12 years; there are now over1,900 law firm LLPs in this state. In fact, many LLPs have been formedstrictly as a means of sharing costs. Some attorneys barely know theirfellow partners, and they are not concerned about the ability of theirother partners to practice law. They believe they are isolated from lia-bility for a partner’s incompetence.
Section 16956 of the Corporations Code, relating to security forclaims against the LLP and effective January 1, 2008, mandates thatLLPs must meet either a financial security threshold or purchasemalpractice insurance. If the partners elect the securitization optionin lieu of purchasing malpractice insurance, subdivision (b) applies,and it prescribes the amount and types of security.
Most LLPs purchase insurance. If the partners elect to purchasemalpractice insurance in lieu of securitization, subdivision (a) applies.Under the subdivision, the insurance for “partnerships with five orfewer licensed persons shall not be less than one million dollars…andfor partnerships with more than five licensees…an additional one hun-dred thousand dollars…of insurance shall be obtained for each addi-tional licensee; however, the maximum amount of insurance is notrequired to exceed seven and a half million dollars.…”
Professional liability policies are typically issued with per-claim andaggregate limits. The 2008 revision only mentions the aggregatelimit of exposure. Thomas Clark, the staff counsel for the AssemblyJudiciary Committee, confirmed that the revision was not intendedto increase the per-claim limit, only the aggregate.2 The per-claim limitof liability is the maximum that the insurance company will pay onbehalf of an insured for any one claim. The aggregate limit of liabil-ity is the maximum the carrier will pay on behalf of an insured foran entire policy period, without regard to the number of claims.
Most California professional liability policies are sold on a claims-made and reported policy form. The responsible insurance carrier isthe one insuring the entity when the claim is actually made as opposedto when the reported act occurred. What happens when the LLP dis-solves?
Clearly, the legislative intent was to continue protecting the gen-eral public (clients) through financial securitization or mandatedprofessional liability insurance. The issue of dissolution was addressedin subdivision (a) of Section 16956: “Upon the dissolution…of the
partnership, the partnership shall, with respect to any insurance pol-icy or policies…maintain [them]…for a minimum of three years if rea-sonably available from the insurer.”
Reasonably Available
The ambiguity in the statute is how to interpret “if reasonably avail-able from the insurer.” The extended reporting period endorsement(ERP), or tail coverage, is an additional premium paid to the insurerto extend the period of time to report claims after the policy hasexpired or been canceled. If an ERP is not purchased, the insured can-not report claims to the insurer. Some insurers will not allow an ERPto be purchased if the insured is canceled for nonpayment of premium.If the dissolving partnership finds the cost of the ERP unreasonablyexpensive, does the prohibitive cost mean the endorsement is not “rea-sonably available from the insurer” to afford the benefit of the LLPstatus? If the LLP does not purchase the ERP, the negligent attorneyis exposed to a claim—and an innocent partner likely will now alsobe exposed on a vicarious liability theory if the LLP does not purchasethe three-year ERP. When contemplating formation of an LLP, part-ners should be sure their professional liability policy offers at least athree-year ERP—many do not—and that the limits of liability are rein-stated upon the purchase of the ERP.
Again, under the provisions of many policies, the limits availableare less any monies paid out in claims during the last policy period.It is possible that if these requirements are not met, an attorney willbe financially exposed to the negligent acts of any partner. For exam-ple, if an LLP dissolves on December 31, 2008, and a client of oneattorney sues the other attorneys in the LLP, those other attorneys couldbe financially responsible for any damages that the client’s attorneycannot satisfy if the proper ERP was not in place.
The statutory language “maintain or obtain an extended report-ing period endorsement.…if reasonably available from the insurer”is an extremely ambiguous way of affording protection to the part-nership’s former clients and allowing the isolated exposure benefit tolimited partners. This gray area creates a business decision for the part-ners. The partners can continue gaining the protection of the LLP sta-tus by purchasing a minimum three-year ERP with the required lim-its, or, if they find the cost unreasonably high, the partners may electto lose the LLP protection. The California Legislature may soonaddress the ambiguity in the phrase “if reasonably available from theinsurer” and increase the minimum per-claim limit. Any potentialchanges to these requirements will be posted at the CaliforniaAssembly’s Judiciary Committee Web site (http://www.assembly.ca.gov/acs/newcomframeset.asp?committee=15). ■
1 See CORP. CODE §§16100, 16951 et seq.2 Conversation with Thomas Clark, Aug. 2008.
barristers tips BY DAN MCKENNA
How Malpractice Insurance ERPs Apply to LLP Partners
Dan McKenna heads Mitchell & Mitchell’s Professional Liability Program in
Novato, California.
10 Los Angeles Lawyer February 200910 Los Angeles Lawyer February 2009
IN AN EFFORT TO BROADEN THE PROTECTION afforded to individ-uals with disabilities in the workplace, President George W. Bush signedthe ADA Amendments Act of 2008 (ADA Amendments) in September2008. This new legislation went into effect January 1, 2009. However,California employers should be aware that in certain significantareas of the law, the California Fair Employment and Housing Act(FEHA)1 provides a broader scope of protection than even theamended ADA for individuals with disabilities in the workplace.The FEHA dictates that the broader definitions will prevail. Californiaemployers and their counsel nevertheless should be aware of thenew provisions in the federal law.
The new legislation responds to and specifically rejects a series ofU.S. Supreme Court cases that, in favor of employers, narrowed thedefinition of “disability” and the scope of individuals protectedunder the ADA. The ADA Amendments instruct courts that “the ques-tion of whether an individual’s impairment is a disability under theADA should not demand extensive analysis.” Specifically, the new leg-islation rejects the standard announced by the U.S. Supreme Courtin Sutton v. United Air Lines, Inc.,2 which required that the deter-mination of whether an impairment substantially limits a major lifeactivity be balanced against the “ameliorative effects of mitigation mea-sures,” such as medication or medical devices.
The ADA Amendments also reject the standards set forth by theSupreme Court in Toyota Motor Manufacturing, Kentucky, Inc. v.Williams,3 which held that 1) the terms “substantially limited” and“major life activities” must be strictly construed when determiningthe existence of a qualifying disability and 2) an individual must showthat the disability prevents or severely restricts him or her from“doing activities that are of central importance to most people’slives.” The rejection of these decisions calls into question numerouscourt decisions that have denied protection for various conditions—including diabetes, epilepsy, heart disease, mental disabilities, and can-cer. Changing the definitions of the ADA fundamentally alters theunderstanding of and policies regarding accommodation of disabil-ities in the workplace.
The ADA Amendments will broaden the federal definition of“disability.” Under the revisions, an individual has a “disability” ifhe or she: 1) has a physical or mental impairment that substantiallylimits one or more major life activities, 2) has a record of such animpairment, or 3) is regarded as having such an impairment.4 In orderto be considered a disability, an impairment only needs to limit onemajor life activity. The definition includes impairments that areepisodic or in remission if they would substantially limit a major lifeactivity when active.5
The amendments, however, do not specifically define “substantiallylimits.” Instead, Congress has authorized the Equal EmploymentOpportunity Commission, the attorney general, and the secretary oftransportation to issue regulations defining this term and furtherdefining “disability” in accordance with the purposes of the ADAAmendments. Presently, the EEOC Web site states the agency is in the
process of “evaluating the impact of these changes on its enforcementguidances and other publications addressing the ADA.”6
Until regulations are issued, it is unknown how “substantially lim-its” will ultimately be defined and whether the new provisions of theADA will afford more or less protection to employees than what iscurrently provided by the FEHA. At this point, it is unclear whatimpact, if any, the ADA Amendments will have on California employ-ers with respect to the extent to which an impairment or conditionmust restrict a major life activity.
Under the ADA Amendments, certain activities and major bodilyfunctions are designated as “major life activities.” A nonexclusive listof activities that qualify as a major life activity includes caring for one-self, performing manual tasks, seeing, hearing, eating, sleeping, walk-ing, standing, lifting, bending, speaking, breathing, learning, reading,concentrating, thinking, communicating, and working.7 Major bod-ily functions include, but are not limited to, functions of the immunesystem, normal cell growth, digestive, bowel, bladder, neurological,brain, respiratory, circulatory, endocrine, and reproductive functions.8
The most significant change under the ADA Amendments is the
practice tips BY LYNNE M. HOOK AND STACEY A. LEE
Recent Amendments to Federal Law Increase Protection for the Disabled
RIC
HA
RD
EW
ING
Lynne M. Hook is a partner in the Labor & Employment Department of Fox
Rothschild LLP’s Los Angeles office, and Stacey A. Lee is an associate in the
same department of Fox Rothschild in San Francisco.
12 Los Angeles Lawyer February 2009
elimination of the restrictions on “working”as a major life activity. Currently, the ADArequires that an individual’s ability to performa class of jobs or a broad range of positions besignificantly restricted in order to be consideredsubstantially limited in the major life activityof working. However, the new language ofthe ADA Amendments will bring the ADA inline with the FEHA, in which the inability toperform one’s present job is enough to limit themajor life activity of working.
The ADA Amendments specify that inorder to be regarded as having an impair-ment, an individual only needs to prove thathe or she was subjected to an action that isprohibited because of an actual or perceivedphysical or mental impairment, regardless ofwhether that physical or mental impairmentlimits or is perceived to limit a major lifeactivity.9 The ADA Amendments, however,will prevent the ADA’s protection from extend-ing to minor illnesses, such as a common coldor flu. An individual with an impairment thatis transitory and minor, with an actual orexpected duration of six months or less, willnot be regarded as having a disability.10
In addition, the ADA Amendments elim-inate the consideration of mitigating mea-sures in determining whether an individual’simpairment substantially limits a major lifeactivity, with the exception of “ordinaryglasses and contact lenses.” Under the lan-guage of the ADA Amendments, the miti-gating measures that are not to be consideredinclude medication; medical supplies, equip-ment, or appliances; low-vision devices;prosthetics; hearing aids and implanted hear-ing devices; mobility devices; oxygen ther-apy equipment and supplies; use of assistivetechnology; reasonable accommodations orauxiliary aids or services; or learned behav-ioral or adaptive neurological modifica-tions.11 To ensure compliance with the newlyenacted ADA Amendments, Californiaemployers will need to continue to adhere tothe protection afforded by the FEHA toindividuals with disabilities in the work-place. If the FEHA provides a broader scopeof protection than the ADA, the FEHA willtake precedence.
Under the FEHA, an individual has a dis-ability if he or she: 1) has a physical or men-tal disability that limits one or more major lifeactivities, 2) has a history or record of suchan impairment that is known to the employer,3) is regarded or treated as having or havinghad such an impairment that limits a majorlife activity, or 4) is regarded or treated as hav-ing or having had an impairment that has nopresent disabling effect but may become aphysical disability in the future.12
The FEHA indicates that a disability lim-its a major life activity “if it makes the achieve-ment of the major life activity difficult.”13 An
(949) 388-0524www.dmv-law.pro
individual only needs to show that his or herimpairment makes a major life activity moredifficult than it is for an average person with-out the impairment. The FEHA broadly defines“major life activity” to include physical, men-tal, and social activities, as well as working.14
The FEHA regards employees as having a dis-ability if their employers treat them as thoughthey have, or have had, a health condition orimpairment that limits a major life activity.15
Even if an impairment or condition presentlyhas no disabling effect, if it could become a dis-ability limiting a major life activity in thefuture, an individual will be regarded as hav-ing a disability that is subject to protection. Inaddition, the FEHA’s definition of disabilityplaces no minimum duration of an impair-ment or condition for it to be considered a dis-ability that has protection. By protecting futuredisabilities and not restricting impairments toa certain minimum duration, the FEHAappears to have a more expansive scope thanthe ADA regarding who may be regarded ashaving a disability.
The ADA Amendments require employ-ers to show that use of a qualification standard,employment test, or other selection criteriathat is based upon an individual’s uncorrectedvision is related to the job or a business neces-sity. This change will have no effect onCalifornia employers, however, since the FEHAprovides a greater scope of protection than willbe provided by the new provisions of the ADA.Under the FEHA, California employers areprohibited from considering mitigating mea-sures or devices in determining whether a con-dition limits a major life activity unless a mit-igating measure or device itself limits a majorlife activity.16 Unlike the ADA Amendments,no exception exists under the FEHA for ordi-nary eyeglasses or contact lenses.
Coverage of which individuals will beregarded as having a disability, subject toprotection under the FEHA, may be slightlyexpanded under the ADA Amendments. If anemployer takes a prohibited action against anemployee because of an actual or perceivedphysical or mental impairment—whether ornot that impairment actually limits or is actu-ally perceived to limit a major life activity—the employee will be regarded as having a dis-ability under the ADA.
For the most part, until regulations areissued to provide guidance on the definitionof “substantially limits,” the FEHA will con-tinue to provide broader protection to indi-viduals with disabilities in the workplacethan the new federal provisions under theADA Amendments. For now, Californiaemployers should review their policies andensure that they are in strict compliance withthe FEHA. California employers should alsocontinue to engage in an interactive processwith employees who have disabilities, as
defined by state law, and ensure that theyare provided with the reasonable and neces-sary accommodations required to performtheir job functions.
However, as regulations defining “sub-stantially limits” and further defining thedefinition of “disability” under the ADA arepromulgated, the protection provided by theADA may become broader than what isgranted under California law. In such a case,the FEHA holds that the more expansiveprotection prevails. ■
1 GOV’T CODE §§12900 et seq.2 Sutton v. United Air Lines, Inc., 527 U.S. 471, 130
F. 3d 893 (1999).3 Toyota Motor Mfg., Ky., Inc. v. Williams, 534 U.S.184, 224 F. 3d 840 (2002).4 42 U.S.C. §12102.5 42 U.S.C. §12101(4)(D).6 See http://www.eeoc.gov/ada/amendments_notice.html.7 42 U.S.C. §12102(2)(A).8 42 U.S.C. §12102(2)(B).9 42 U.S.C. §12102(3)(A).10 42 U.S.C. §12102(3)(B).11 42 U.S.C. §12102(4)(E).12 GOV’T CODE §12926.13 GOV’T CODE §§12926(k)(1)(B)(ii), (i)(1)(B).14 GOV’T CODE §12926(k)(1)(B)(iii), (i)(1)(C).15 GOV’T CODE §12926(k)(4).16 GOV’T CODE §12926(k)(1)(B)(i), (i)(1)(A).
Los Angeles Lawyer February 2009 13
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14 Los Angeles Lawyer February 2009
CALIFORNIA LAW recognizes that elderand dependent adults should receive specialprotection as members of a group particularlyvulnerable to crime. Crimes against elder anddependent adults run the gamut, includingneglect, theft, and murder. These adults fallvictim to crimes that are also perpetratedagainst younger and healthier people, butelder and dependent adults are often less ableto protect themselves, recover from beingvictimized, and participate in the legal processof reporting and pursuing those who com-mitted the crimes.
Penal Code Section 368 is California’selder abuse statute, the starting point for allcriminal cases involving abuse against elderand dependent adults. The three categories ofcrimes that are prosecuted most frequentlyunder Section 368 are theft, neglect by oth-ers, and physical abuse.
Section 368 contains critical definitions. Itprovides that an elder is “any person who is65 years of age or older.”1 A “dependent adult[is]…any person who is between the ages of 18and 64 who has physical or mental limita-tions, which restrict his or her ability to carryout normal activities or to protect his or herrights,2 including, but is not limited to, personswho have physical or developmental disabil-ities, or whose physical or mental abilitieshave diminished because of age.”3 The dis-abilities can be permanent or temporary.
These definitions apply to all prosecu-tions pursuant to Penal Code Section 368.However, for specified sex crimes prosecu-tions, the age distinction becomes moot. Asenior victim must fit within the definition ofa dependent adult in order to prove the ele-ments of the crime.4
Analyzing a theft case for possible pros-
ecution under the elder abuse statute requiresconsideration of the wide variety of ways inwhich an elder can be victimized. This processhelps prosecutors focus on the type of evi-dence required to prove the crime. One cat-egory of theft involves the taking of property,including money or other valuable items,without the victim’s permission. A commonscenario involves seniors who park and locktheir car in their driveway, only to returnlater to find the car gone, without havinggiven anyone permission to take the car. In acase like this, the theft victim will be required
Robin Allen is a deputy district attorney in the Los
Angeles County District Attorney’s Office and is cur-
rently assigned to the Elder Abuse Section. She
was the prosecutor in People v. Cleaver, People v.
Cooper, People v. Hong, People v. Incion, and People
v. Rock.
PROTECTINGOUR ELDERSPenal Code Section 368 is the starting point for
all elder and dependent adult criminal cases
by Robin Allen
AM
AN
E K
AN
EK
O
to go to court and testify. With seniors anddisabled adults, time is critical. They mustcome to court and sometimes submit to aconditional examination, which may be nec-essary to preserve their testimony.
Another category of theft involves appar-ent consent, which is consent obtained throughtrickery or deceit. Thieves may induce anelder or dependent adult to give them prop-erty or money based on a fraud. For instance,in People v. Cleaver,5 the defendant convinceda dozen seniors to invest their life savings inan annuity that the defendant was marketing.In fact, the annuity was a sham. All the moneythat the seniors invested—in excess of $1 mil-
lion—was stolen by the defendant to fund herlavish lifestyle and a lawsuit that she waspursuing against her former employer. Noneof the seniors would have agreed to giveher any money if they had known that theannuity in which they were investing didnot exist. The victims came to court andtestified to the details of the scam. Thedefendant was convicted of multiple countsof elder abuse, sentenced to five years instate prison, and ordered to pay restitutionto all her victims.
Theft can also involve the exercise ofundue influence to induce a senior to give con-sent and relinquish property. This occurswhen a victim’s will is overcome by anotherperson’s actions. An agreement under such cir-cumstances is not consensual. Consent mustbe voluntary, knowing, and intelligentlyobtained from the person who is seeminglyagreeing to part with his or her property.These victims must come to court and testifyregarding their experiences.
Another form of theft involves elders whocannot consent to a financial transactionbecause they are too cognitively impaired tounderstand it. Prosecuting these cases requires
the use of expert testimony from geriatri-cians and neuropsychologists regarding thevictim’s dementia or delirium. Prosecutorsneed the expert to render an opinion thatthe victim was incapable of consenting tothe transaction because of his or her cogni-tive impairment. In these cases, the victimusually does not testify. These cases can bevery challenging to prove and require exten-sive documentation.
People v. Cooper, one of the few pub-lished cases in the elder abuse area, involveda cognitively impaired elder victim.6 The vic-tim was unable to testify during the criminalproceedings but was interviewed twice before
the case was filed by the police and caseworkers from Adult Protective Services andthe Department of Mental Health. Videotapesof these interviews were provided to the pros-ecution’s neuropsychologist, who relied uponthem in forming an opinion that the victimcould not consent to the financial transactionsat issue in the case.
The court ruled that the videotaped evi-dence did not violate the confrontation clauseand was admissible but subject to EvidenceCode Section 352.7 The court also citedEvidence Code Sections 801 and 802, whichallow experts to testify regarding the sourceson which they base their opinions, includinghearsay reasonably relied upon by profes-sionals in their field.8 The neuropsychologistcould testify regarding the contents of thetape recordings and be cross-examined onthe subject.9 The defendant was eventuallyconvicted of elder abuse and ordered to payrestitution to the estate of the victim.
When the victim of a theft is 65 years ofage or older, prosecutors can charge the crimeunder the elder abuse statute regardless of thetype of thievery. To prove criminal elder theft,the prosecution must establish that the defen-
dant knew, or reasonably should have known,that the victim was an elder or dependentadult10 or that the defendant was a caretakerfor the elder or dependent adult victim.11
This must be proven in addition to the under-lying act of thievery.
Most perpetrators of theft crimes againstelders are aware of the victim’s age becausethey personally know the victim, or they havehad face-to-face dealings with the elder andcan ascertain the victim’s approximate age.Many of those suspected of theft are care-takers of elders or dependent adults. Thestatute defines “caretaker” as “any personwho has the care, custody or control of, orwho stands in a position of trust with, an elderor dependent adult.”12
Neglect and Physical Abuse
Neglect of seniors and dependent adults is aserious and growing problem. There are twobasic types of neglect: self-neglect and neglectby others. Self-neglect is the failure of anindividual to provide for his or her basicneeds. This is a significant societal problem,but it is not a crime. Social service providerssuch as Adult Protective Services and theDepartment of Mental Health provide serviceto those seniors who cannot take care ofthemselves.
Neglect by others is a crime. Unlike chil-dren, there is no person who is designated bylaw to be a caretaker for an elderly or depen-dent adult. Children of elders are not obligatedto care for their parents or grandparents, butonce they assume those responsibilities,whether on a paid or unpaid basis, they havea responsibility to do a reasonable job. Theyhave a duty to provide for necessities of lifesuch as food, clothing, shelter, medical care,and hygiene.
Many neglect cases involve catastrophicinjuries and death to the victims, who fail toreceive appropriate medical care or adequatenutrition. They are often found dead or neardeath, lying in their own urine and feces andmost commonly covered in pressure sores.These sores can worsen to the point of becom-ing gaping holes that go through skin andmuscle and reach all the way to the bone.They are portals for infection that can resultin sepsis and cause organ failure and death.
In People v. Hong,13 the defendantbrought her aunt to the United States fromChina to work as a nanny for her family.The defendant was physically abusive to heraunt, who as a result became increasinglyincapacitated. Eventually her condition wors-ened so that she could not protect herself orprovide for her own needs. Moreover, thedefendant failed to provide nutrition andmedical care for her aunt. The defendanteventually deposited her aunt at LAC+USCMedical Center, where she succumbed to her
16 Los Angeles Lawyer February 2009
Los Angeles Lawyer February 2009 17
wounds. In this case, the defendant hadassumed responsibility for her aunt and there-fore was required to care for her needs. Afterthe coroner and an expert geriatrician testi-fied that the aunt had died from neglect, thedefendant was convicted of elder abuse caus-ing death and of involuntary manslaughter.
Physical abuse against elders is anothercrime on the rise in Los Angeles County.Sometimes an elder is targeted simply forbeing an elder; sometimes attacks are com-pletely random.
The decision to prosecute physical abuseand neglect cases involves first consideringwhether the conduct at issue took place undercircumstances likely to cause great bodilyinjury or death. If the abuse or neglect wascommitted in such a manner, the case can be prosecuted as a felony.14 If not, a misde-meanor prosecution is appropriate. In eval-uating the conduct of an abuser for prose-cution, another factor to consider is whetherthe same level of force exerted against an80-year-old and a 20-year-old would result inthe same or a different outcome. In People v.Bulajic,15 the defendant attacked her elderlandlord by slamming a door in the victim’sface and then pushing the victim in the chest.This assault caused the senior to fall andfracture her hip, and the victim required hipreplacement surgery.
The sentencing range for felony prosecu-tion under Penal Code Section 368 is fromtwo to four years in state prison.16 The max-imum possible sentence for a misdemeanorprosecution under this section is one year incounty jail and a fine of $2,000.17 The valueof the loss in a theft case must exceed $400for a felony prosecution.18 The statute con-tains enhancements that cause a defendant toserve additional time in custody if the valueof the theft is in excess of $65,000, $200,000,$1.3 million, and $3.2 million.19 The enhance-ments range from one to four years of addi-tional time in state prison beyond the amountof time received on the underlying charge.20
Defendants also face sentencing enhance-ments if their crime involves causing greatbodily injury and death to an elder or depen-dent adult. These range from three to sevenadditional years in state prison beyond theamount of time received on the underlyingcharge.21 Further, Probate Code Sections 250and 259 prevent those convicted of elder ordependent adult abuse under Penal CodeSection 368 from receiving an inheritancefrom their victims.22
Sexual Abuse and Murder
Sexual crimes perpetrated against elders anddependent adults are handled much the sameas those prosecuted against any member ofsociety. However, lawmakers have craftedsections of the Penal Code that delineate two
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crimes specifically aimed at protecting thedisabled from sexual abuse by a caregiver.These laws have been drawn as part of astatute prohibiting child molestation. UnderPenal Code Section 288(b)(2), “any personwho is a caretaker and commits an actdescribed in subdivision (a) upon a dependentperson by use of force, violence, duress, men-ace or fear of immediate and unlawful bod-ily injury on the victim or another person” isguilty of a crime.23 Under Penal Code Section288(c)(2), “any person who is a caretaker andcommits an act described in subdivision (a)upon a dependent person” is guilty of acrime.24 Section 288(a) proscribes lewd or las-civious acts committed with the “intent ofarousing, appealing to, or gratifying the lust,passions, or sexual desires” of the perpetra-tor or the victim.25
The language of subdivision (a) from thechild molestation statute is expressly refer-enced in the code section proscribing sexualabuse of the disabled. There is no specificprovision for elders, but they are includedwithin the subdivision of Penal Code Section288 dealing with the disabled. Penal CodeSection 288(f)(3) defines a disabled person as“any person who has a physical or mentalimpairment that substantially restricts his orher ability to carry out normal activities or to
protect his or her rights, including, but notlimited to, persons who have physical ordevelopmental disabilities or whose physi-cal or mental abilities have significantly dimin-ished because of age.”26 It also includes “anyperson who is admitted as an inpatient to a24-hour health facility….”27
In People v. Incion,28 the defendant wasa caretaker for a senior who was wheelchairbound and had previously suffered an inca-pacitating stroke. The defendant touched thevictim on her chest and took her hand andplaced it on his genitals. Not only did the vic-tim not consent to any of the touching, shealso was scared and told her family about theincident later that day. The defendant wasconvicted of violating Penal Code Section288(c)(2).29 The defendant was the victim’scaretaker, the victim was disabled, and thetouching was done for the defendant’s sexualgratification.
Finally, the law also addresses the prose-cution of those who murder elder and dis-abled adults. Frequently the most extremecases of neglect are filed as homicides. Thesecases are being prosecuted under an impliedmalice theory: The caretaker exercised a con-scious disregard for human life.
A significant number of elder abuse casesinvolve mentally ill adult offspring commit-
ting crimes against their aged parents. Theworst of these cases result in the death of thesenior. Many of these elders never wanted toinstitutionalize their sons or daughters. As theparents and their children age, and the par-ents become unable to provide care and sta-bility for their adult dependents, it is hard todiscern who are the caregivers—the parentsor the adult dependents. The worst possiblescenario occurred in People v. Rock,30 inwhich the defendant, who suffers from schiz-ophrenia, killed his mother by beating herhead into a wall. Following the killing, hemoved his mother’s body from inside thehome onto the front porch. He confessed hiscrimes to the neighbors, several children whowalked by his home, and law enforcement. Hebelieved that his mother was the devil.Prosecution and defense psychiatrists allbelieved that the defendant was legally insaneat the time of the killing. The defendantpleaded guilty to murder, after which thecourt found that he was not guilty by reasonof insanity.
Elder and dependent adults often requirea team of professionals working together todeal with the challenges that their cases pre-sent. These professionals are aided by thefact that laws prohibiting abuse have beenaugmented to provide additional protectionsto the elder and dependent adults who areincreasingly becoming victims of crime. ■
1 PENAL CODE §368(g).2 PENAL CODE §368(h).3 Id.4 PENAL CODE §288(f)(3).5 People v. Cleaver, L.A. County Superior Ct. Case No.BA274666 (sentenced Dec. 11, 2007).6 People v. Cooper, 148 Cal. App. 4th 731 (2007).7 Id. at 746; see also EVID. CODE §352.8 Cooper, 148 Cal. App. 4th at 746; see also EVID. CODE
§§801-802.9 Cooper, 148 Cal. App. 4th at 747.10 PENAL CODE §368(d).11 Id.12 PENAL CODE §368(i).13 People v. Hong, L.A. County Superior Ct. Case No.KA073441 (sentenced Apr. 10, 2007).14 PENAL CODE §368(b)(1).15 People v. Bulajic, L.A. County Superior Ct. Case No.LA055842 (sentenced May 27, 2008).16 PENAL CODE §368(b)(1), (d), (e), (f).17 PENAL CODE §368(c).18 PENAL CODE §368(d)-(e).19 PENAL CODE §12022.6.20 Id.21 PENAL CODE §368(b)(2)-(b)(3).22 PROB. CODE §§250, 259.23 PENAL CODE §288(b)(2).24 PENAL CODE §288(c)(2).25 PENAL CODE §288(a).26 PENAL CODE §288(f)(3).27 Id.28 People v. Incion, L.A. County Superior Ct. CaseNo. KA076304 (sentenced Mar. 9, 2007).29 PENAL CODE §288(c)(2).30 People v. Rock, L.A. County Superior Ct. Case No.PA055152 (sentenced Mar. 21, 2007).
18 Los Angeles Lawyer February 2009
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Los Angeles Lawyer February 2009 21
Inthe 2003 film Runaway Jury,Rankin Fitch, a ruthless trialconsultant played by GeneHackman, strikes a cynical note
about jurors: “You think your average juroris King Solomon? No, he’s a roofer with amortgage. He wants to go home and sit in hisBarcalounger and let the cable TV wash overhim. And this man doesn’t give a single, soli-tary droplet…about truth, justice or yourAmerican way.” As a contrast, consider thebanner prominently displayed at several LosAngeles County courthouses: “To OurJurors…Embodying Justice, Serving theCommunity. Thank You For Your Service.”
As much as we may all want to believe inthe ideal proclaimed by the banner, litiga-tors in high stakes trials often see a differentreality. Some jurors, far from “embodying jus-tice,” embrace prejudice. Some, emboldenedby jargon gleaned from daytime television,
believe they bring a wealth of legal wisdomto their jury service. Other jurors harbordeep biases. How does a trial attorney sepa-rate the good jurors from the bad, the jurorsthat will judge his or her case fairly fromthose that will wreak havoc?
In recent years, attorneys have begun totap a growing body of experts, consultants,and litigation support providers to assistthem in finding fair jurors. These expertsprovide an array of services, such as focusgroups, mock trials, online juror testing, bodylanguage analysis, and draft questions forvoir dire.
One increasingly controversial trend is
Tracy J. Hasper, an attorney licensed by the State
of California, is a licensed private investigator and
the director of investigations at Batza & Associates
Inc. Gordon F. Lull is a licensed private investiga-
tor who is also employed at Batza.
JurorsLitigators must be cautious when
employing private investigators to look into the background of jurors
by Tracy J. Hasper and Gordon F. Lull
MCLE ARTICLE AND SELF-ASSESSMENT TEST
By reading this article and answering the accompanying test questions, you can earn one MCLE legal ethics credit.
To apply for credit, please follow the instructions on the test answer sheet on page 23.
THE PRIVATE LIVES OF
the use of licensed private investigators toassist in sharpening the focus on jurors—before and after trial. The time-honored andvital role that investigators generally haveplayed for lawyers includes locating missingwitnesses, obtaining relevant public records,serving process, and finding assets. Now, inthe ever-changing Internet age, investigatorsalso access public and proprietary databases.This traditional use of private investigatorsusually draws little if any attention. However,recent investigative excesses have becomeheadline news, putting the investigative indus-try on the defensive, attorneys on the fence,and judges in a rage. Consider these examples:• During 2006, defense attorneys—includingKenneth W. Starr, the dean of PepperdineLaw School and former special prosecutor in
the impeachment investigation of PresidentBill Clinton—attempted to gain clemencyfor Michael Morales, convicted of the January8, 1981, rape and murder of 17-year-oldTerri Winchell, a Lodi, California, highschool student. The defense team hired inves-tigator Kathleen Culhane to follow up withjurors in the criminal trial. Culhane pro-ceeded to draft false declarations for five ofthe jurors. The declarations were submittedin a clemency filing, only to be withdrawnafter the forgeries were discovered. Culhanewas later convicted on perjury and forgerycharges1 and is currently serving a five-yearprison sentence.• During 2005, Hewlett-Packard faced aseries of embarrassing leaks to the mediafrom its board meetings. The company’s chairof the board, Patricia Dunn, hired a Mas-sachusetts-based private detective agency toidentify who was responsible for passingalong the sensitive information. The detectivecontracted with five investigators nation-wide, each of whom utilized a form of sub-terfuge, referred to as pretexts, with tele-phone company employees to obtain thetelephone records of board members, HPemployees, and journalists. The exposure ofthis caper triggered state and federal probes.The Federal Trade Commission brought suit
against Bryan Wagner and Cassandra Selvage,the owners of Eye in the Sky Investigations,Inc. FTC fines levied against the couple totaled$538,762, and they faced federal charges inconnection with the scandal.2 Meanwhile,HP settled the spying charges brought againstit by agreeing to pay $14.5 million to the Stateof California. In her testimony before a con-gressional committee, ousted chair Dunnremarked, “I never doubted…that what they[the investigators] were doing was legal.”3
• During December 2007, 10 private inves-tigators in five states were indicted on chargesof identity theft. The investigators obtainedpersonal financial, tax, and medical infor-mation of more than 12,000 people throughthe use of pretexting. According to pub-lished reports, the ultimate clients in the pre-
texting schemes were lawyers, insurancecompanies, collection firms, and other privateinvestigators.4
• The recent trial, conviction, and sentencingof “private investigator to the stars” AnthonyPellicano constitute a shot across the bow forinvestigators and attorneys alike. Pellicanowas convicted in federal court of 76 racke-teering counts, including illegal wiretapping,computer fraud, identity theft, and wire fraud.The attorney who hired him, Terry Christen-sen, founder of a well-known Century Citylaw firm, was also convicted on two felonycounts and sentenced to prison, sending shockwaves throughout the legal community.5
Clearly, something is amiss in the mannerin which some attorneys hire and manageinvestigators. Attorneys are obligated to vig-orously pursue the interests of their clients,including using all available tools to helpthem during the jury selection process. Privateinvestigators may be instrumental in thistask. But there are risks involved in usinginvestigators as agents of the trial attorney.How should investigators be educated andmanaged? What criminal or tort liabilitiesmight an attorney incur if an investigatorcrosses the line from aggressive performanceto violation of the law? In fact, in criminal orcivil trials, when the stakes are so high, why
use investigators at all?Generally, investigators find and report
information for their clients. Investigatorsglean this information from three broad cat-egories of sources: public records, interviews,and on-site observation (often documentedthrough photography or videography).
Public records can yield a wealth of infor-mation regarding jurors. During trial, withfrequent, imminent deadlines, investigatorscan offer the most efficient means by whichto generate solid information quickly. Publicrecords routinely accessed by private inves-tigators include property transaction records,mortgages, assignments, substitutions,releases, notices, agreements, affidavits, taxliens, judgments, civil and small claimsrecords, traffic records, local ordinance vio-lation records, probate cases, criminal mat-ters, federal court records (civil, criminal,and bankruptcy), vital records (birth, mar-riage, and death), corporate and partnershiprecords, fictitious business names, records ofpolitical affiliation and contributions, licenses,and certifications.
Other records are available, although theyare not technically public because they can-not be certified as authentic by a governmentagency. These include media accounts (printand electronic), business records, city streetdirectories, records available at college anduniversity libraries, and information in localhistory archives.
In addition, the Internet has spawnedmyriad new sources of information that canbe used to develop a profile of jurors or toassess the veracity of answers to juror ques-tionnaires. Investigators can profitably minedozens of popular social networking Websites, such as Facebook and MySpace, forcritical information. During the recent Miamifederal trial of accused terrorist Jose Padilla,for example, defense lawyers performedsearches on their laptops for all jurors anddetermined that one female juror, who hadclaimed no experience in the criminal courtsystem, was being investigated for malfea-sance. She was summarily dismissed.6
As part of the effort to profile jurors,some litigators hire investigators to performwhat is sometimes called a drive-by. Thisinvolves a visit to, and careful observation of,a juror’s residence and neighborhood. Whilean investigator cannot directly contact a juroror a juror’s family members or interview ajuror’s neighbors or acquaintances, a drive-by is permissible and can sometimes yieldvaluable information regarding the juror’seconomic, cultural, and social environment.One investigator, for example, performed adrive-by of a juror in a high-profile tobaccoindustry case and observed a vehicle parkedin the driveway of the juror’s home bearinga bumper sticker that read, “Cigarettes Kill!”
22 Los Angeles Lawyer February 2009
Investigators can profitably
mine dozens of popular social
networking Web sites, such
as Facebook and MySpace,
for critical information.
Los Angeles Lawyer February 2009 23
MCLE Test No. 178The Los Angeles County Bar Association certifies that this activity has been approved for Minimum
Continuing Legal Education legal ethics credit by the State Bar of California in the amount of 1 hour.
MCLE Answer Sheet #178
THE PRIVATE LIVES OF JURORS
Name
Law Firm/Organization
Address
City
State/Zip
Phone
State Bar #
INSTRUCTIONS FOR OBTAINING MCLE CREDITS
1. Study the MCLE article in this issue.
2. Answer the test questions opposite by markingthe appropriate boxes below. Each questionhas only one answer. Photocopies of thisanswer sheet may be submitted; however, thisform should not be enlarged or reduced.
3. Mail the answer sheet and the $15 testing fee($20 for non-LACBA members) to:
Los Angeles LawyerMCLE TestP.O. Box 55020Los Angeles, CA 90055
Make checks payable to Los Angeles Lawyer.
4. Within six weeks, Los Angeles Lawyer willreturn your test with the correct answers, arationale for the correct answers, and acertificate verifying the MCLE credit you earnedthrough this self-assessment activity.
5. For future reference, please retain the MCLEtest materials returned to you.
ANSWERS
Mark your answers to the test by checking theappropriate boxes below. Each question has onlyone answer.
1. ■■ True ■■ False
2. ■■ True ■■ False
3. ■■ True ■■ False
4. ■■ True ■■ False
5. ■■ True ■■ False
6. ■■ True ■■ False
7. ■■ True ■■ False
8. ■■ True ■■ False
9. ■■ True ■■ False
10. ■■ True ■■ False
11. ■■ True ■■ False
12. ■■ True ■■ False
13. ■■ True ■■ False
14. ■■ True ■■ False
15. ■■ True ■■ False
16. ■■ True ■■ False
17. ■■ True ■■ False
18. ■■ True ■■ False
19. ■■ True ■■ False
20. ■■ True ■■ False
1. In 2005, investigators who utilized subterfuge dur-
ing the course of an investigation for Hewlett-Packard
were considered to be acting legally.
True.
False.
2. Information regarding potential jurors that is obtained
from public databases, online court records, and social
networking sites can provide grounds for a juror to be
dismissed from jury service for cause.
True.
False.
3. Driving by a juror’s home is considered to be “con-
tact” with the juror and therefore is unacceptable.
True.
False.
4. Attorneys do not have a fiduciary duty to their clients
to conduct due diligence regarding the hiring of a pri-
vate investigator as long as the investigator is licensed.
True.
False.
5. The status of an investigator’s license can be con-
firmed with the State Bar of California.
True.
False.
6. The definition of “private investigator” is set forth
in the California Rules of Professional Conduct.
True.
False.
7. A lawyer who knowingly engages a nonexempt, unli-
censed investigator is guilty of a misdemeanor and
may receive a fine of $5,000 and/or imprisonment.
True.
False.
8. Applicants for an investigative license may be denied
licensure if their previous partners had their inves-
tigative licenses suspended.
True.
False.
9. Private investigators cannot lose their licenses for
impersonating a law enforcement officer.
True.
False.
10. Investigators face the suspension or revocation of
their licenses for acting as runners or cappers for an
attorney but not for knowingly violating a court order.
True.
False.
11. In Wayne v. Bureau of Private Investigators and
Adjustors, a licensed private investigator who misled
interviewees regarding his representation in a case
was not considered to be acting in a manner that con-
stituted dishonesty or fraud.
True.
False.
12. The Private Investigator Act provides an exhaustive
list of guidelines to investigators and attorneys on the
type of conduct that is not permissible.
True.
False.
13. Investigators hired by attorneys are not required to
comply with the same ethical rules that govern attor-
neys but are bound solely by the Business and
Professions Code.
True.
False.
14. The Rules of Professional Conduct prohibit an attor-
ney from communicating with a juror except in official
proceedings.
True.
False.
15. An attorney who learns of improper conduct by a
juror toward another juror is not required to disclose
this information.
True.
False.
16. Rule 5-320(E)-(F) of the Rules of Professional
Conduct prohibits an attorney from conducting an
investigation of a juror in a manner that will influ-
ence the state of mind of that juror regarding present
or future jury service.
True.
False.
17. In Noble v. Sears, Roebuck & Company, the court
held that utilizing a pretext to gain admittance to a hos-
pital room was a violation of the right to privacy.
True.
False.
18. In California, an attorney who hires a private inves-
tigator for an investigation may be liable for the inten-
tional torts committed by the investigator (or the
employees of the investigator) in the course of the
investigation.
True.
False.
19. Evidence obtained by an investigator as a result of
a feigned friendship can be used in trial.
True.
False.
20. An attorney and an investigator should formulate
a written agreement to ensure compliance with the
Rules of Professional Conduct.
True.
False.
The range of tasks that can be assigned toinvestigators is substantial. If an attorney isknowledgeable about the rules that govern theconduct of private investigators as well as theapplicable rules of professional responsibil-ity, the risks of investigator excess can beminimized.
Business and Professions Code
An attorney has a fiduciary obligation to hisor her client to exercise caution in hiringoutside parties who act as the attorney’sagents at trial. Regarding private investigators,the foundation of due diligence by the attor-ney is to confirm that the investigator is alicensed private investigator.
The licensing and regulatory authorityfor private investigators in California is the
Bureau of Security and Investigative Services(BSIS), which operates as a division within thestate’s Bureau of Consumer Affairs. The sta-tus of an investigator’s license can be con-firmed with the BSIS.
Additionally, understanding the rules gov-erning an investigator’s conduct is criticalfor attorneys who hire private investigators.The regulations with which investigatorsmust comply are set forth in Business andProfessions Code Sections 7512 through7573, which are generally referred to as thePrivate Investigator Act (PIA). The PIA citesChapter 1, Division 5, of the CaliforniaInsurance Code for its definition of a “privateinvestigator,” and makes it clear that “noperson shall engage in the business of privateinvestigator…unless that person has appliedfor and received a license….”7 Significantly,the next section of the PIA8 states, “Any per-son…who knowingly engages a nonexemptunlicensed person is guilty of a misdemeanor,”subject to a fine of $5,000, imprisonmentfor one year, or both.
Applicants for an investigative licensemay be denied licensure on one or more ofseven different grounds: 1) an act that wouldconstitute a basis for suspension or revoca-tion, 2) “any act constituting dishonesty orfraud,” 3) acts or crimes involving weapons
covered under Section 489, 4) previous sus-pension or revocation of an investigator’slicense, 5) past status as an officer, partner, ormanager with one who has had a license sus-pended or revoked, 6) while unlicensed, hav-ing aided or abetted the commission of an actthat required licensure, and 7) lying on anapplication.9
According to a subsequent section in thePIA, a licensed investigator faces the sus-pension or revocation of his or her license asa result of an array of conduct that includesimpersonating a law enforcement officer;failing or refusing to render agreed uponclient services; committing assault, battery,kidnapping, or using violence “without properjustification”; knowingly violating (or assist-ing in the violation of) a court order; acting
“as a runner or capper for any attorney”; andcommitting “any act in the course of thelicensee’s business constituting dishonesty orfraud.”10 According to the PIA, the refer-ence to “dishonesty or fraud” includes 1)knowingly making a false statement relatingto evidence or information obtained in thecourse of employment, or knowingly pub-lishing a slander or a libel in the course ofbusiness, 2) using illegal means in the col-lection or attempted collection of a debt orobligation, 3) manufacturing evidence, and 4)accepting employment that is adverse to aclient or former client “relating to a matterwith respect to which the licensee hasobtained confidential information by reasonof or in the course of his or her employmentby the client or former client.”
An appellate court applied the PIA inWayne v. Bureau of Private Investigators andAdjustors, in which a licensed private inves-tigator misled interviewees regarding his rep-resentation in a case. The investigator knewthat if he told the interviewees that he repre-sented an adverse party he would likely notobtain any information. So he introducedhimself as an investigator “checking out theaccident” and omitted any further disclosure.
Based on these facts, the appellate courtupheld the suspension of the investigator’s
license. The court adopted a broad interpre-tation of the phrase “dishonesty or fraud” inthe PIA, concluding, “There was a dispositionto deceive, betray, and mislead the intervie-wees. In other words, there was a lack ofcomplete integrity.”11
The PIA provides some guidelines to inves-tigators and attorneys regarding the type ofconduct that is not permissible. However,the PIA’s provisions are not exhaustive. Allagents of an attorney, including investiga-tors, are also obligated to maintain the samerigorous standards with which lawyers them-selves are tasked in California’s Rules ofProfessional Conduct. This includes the pro-scriptions in the rules regarding contact withjurors and the need for juror privacy.
Rules of Professional Conduct
Thus when an attorney hires investigatorsor consultants to act on his or her behalf, byextension those agents are bound to complywith the same ethical rules that govern theattorney: the Rules of Professional Conduct.In fact, the rules obligate an attorney to care-fully monitor the work of all employees,including investigators and other agents, toensure compliance with Rule 3-110 regard-ing professional competency: “A membershall not intentionally, recklessly, or repeat-edly fail to perform legal services with com-petence.” The Discussion section of this rulestates: “The duties set forth in rule 3-110include the duty to supervise the work ofsubordinate attorney and non-attorneyemployees or agents.”12
Accordingly, attorneys cannot simply statethe task to the investigator and stand back.Investigators must be carefully instructed andmonitored. This is particularly critical wheninvestigators are hired to work in connectionwith jurors. Several specific principles must befollowed.
Rule 5-320 of the Rules of ProfessionalConduct is devoted to the conduct of attor-neys (and their agents) regarding jurors. Therule prohibits communication with, or oth-erwise attempting to influence, any memberof a panel from which a jury will be chosen.Specifically, an attorney cannot communi-cate directly or indirectly with a juror exceptin official proceedings, cannot ask questionsdesigned to embarrass or harass a dischargedmember of a jury, and must promptly revealto the court “improper conduct” by a jurortoward another juror or another juror’s fam-ily member.
Regarding any effect or influence an inves-tigation during a trial may have, Rule 5-320(E)-(F) is clear: “A member shall notdirectly or indirectly conduct an out of courtinvestigation of a person who is either amember of a venire or a juror in a mannerlikely to influence the state of mind of such
24 Los Angeles Lawyer February 2009
The rule prohibits communi-
cation with, or otherwise
attempting to influence, any
member of a panel from
which a jury will be chosen.
person in connection with present or futurejury service. All restrictions imposed by thisrule also apply to communications with, orinvestigations of, members of the family of aperson who is either a member of a venire ora juror.”13 Thus a lawyer is obligated toensure that the agents that he or she hiresmaintain this principle of no contact withany jury member or the juror’s family mem-bers, and not engage in any undertakingsthat will cause contact to be made or causea juror to be in any way influenced becauseof the investigator’s activity.
Tort Liability
The requisite professional codes and rulesclarify the standards with which attorneys andinvestigators must comply. Case law furtherbuttresses the general notion that attorneyscan be held legally responsible for the tortscommitted by the investigators they hire.
In Noble v. Sears, Roebuck & Company,the attorneys for Sears, Roebuck retained a private investigator in connection with apersonal injury lawsuit. In an attempt tolocate the address of a witness in the case, anemployee of the investigator “gained admit-tance to a hospital room” and, utilizing a pretext, “secured the address.” The plaintiffbrought suit against Sears, its attorneys, andthe private investigator for invasion of privacy and negligent entrustment of agents.The trial court sustained demurrers to theplaintiff’s claims, and the plaintiff appealed.The court of appeal reversed, finding that“an unreasonably intrusive investigation mayviolate a plaintiff’s right to privacy.”14 Ad-ditionally, the appellate court found that “inCalifornia the hirer of a detective agencyfor either a single investigation or for the pro-tection of property, may be liable for theintentional torts of employees of the privatedetective agency committed in the course ofemployment.”15
Additionally, if an attorney uses an inves-tigator to obtain evidence in a “deceitful”manner, the attorney risks a finding that theevidence cannot be used at trial. In Redner v.Workmen’s Compensation Appeals Board,an insurance company orchestrated a “sting”in which its retained investigator hired a manto befriend an allegedly injured worker. Thesupposed friend then invited the worker to hisranch, offered the worker alcohol, and con-vinced him to go horseback riding. The inves-tigator documented these activities on film,including the actions of the worker that wereinconsistent with the claimed injury. At ahearing on the worker’s claim for workers’compensation, the insurance company soughtto introduce a medical report from a doctorthat had viewed the film and relied upon it inrendering his opinion. The hearing refereerefused to admit the evidence, and the insur-
ance company appealed.The California Supreme Court found
that the hearing referee “should have refusedto rely upon [the evidence] because the car-rier obtained it by fraudulent inducement.”16
Elaborating on this concept, the supremecourt declared that “the carrier should notprofit from its own deceitful conduct. Theinvestigators feigned friendship and con-cealed their employer’s identity in bringingabout [the] applicant’s inebriation and effec-tuating his horseback ride….[Accordingly,]the board may not rely upon evidenceobtained, as in the present case, by deceit-ful inducement of an applicant to engage inactivities which he would not otherwisehave undertaken.”17
Recommendations
Runaway Jury’s Rankin Fitch observes,“Gentlemen, trials are too important to be leftup to juries.” Litigators involved in highstakes trials may at least agree that trials aretoo important to be left in the hands of unex-amined jurors. Based upon case law as wellas statutes and rules regulating the conductof attorneys and the investigators they hire,some recommendations may be gatheredregarding how an appropriate juror exami-nation should take place.
Given the nature of their business andtraining, private investigators can be used, togreat benefit, in profiling jurors. However, asimportant as the assessment of potentialjurors may be, it is important to understandthat information gathered by ethically orlegally questionable means will invite con-sequences such as potential tort liability, dis-cipline under the Rules of Professional Con-duct, and exclusion of the evidence at trial.The value of using private investigators toprofile jurors is directly related to the dili-gence with which the investigators areselected and managed.
Attorneys have an obligation to theirclients to choose their investigators with greatcare. BSIS licensing is a necessary but farfrom sufficient qualification. Litigators shouldformulate a written agreement with the inves-tigators they hire that commits investigatorsto fully comply not only with the PIA but also,because they are agents, with the Rules ofProfessional Conduct. This agreement shouldensure that the objective of the engagementand its intended outcome are clear and agreedto by the attorney and the investigator. Itshould contain a promise by the investigatorto fully educate his or her entire staff on theagreement’s provisions and an acknowledg-ment that the achievement of trial goals can-not include activities that violate any laws orthe Rules of Professional Conduct underwhich they must operate. The agreement alsoshould be provided to the client.
Additionally, attorneys should maintainongoing communication with and manage-ment of investigators. In trial settings, it is crit-ically important that attorneys scrutinize theactivities of their investigators to avoid notonly obvious violations of law but also anysigns of aggressiveness that may be technicallypermissible but might create the appearanceof misconduct for some judges. Managementof investigators should be guided by key con-siderations in the requisite laws and rulesgoverning investigators and attorneys as wellas evolving principles from case law.
When case law is silent, attorneys andtheir investigators should err on the side ofcaution. Common sense is always a safe har-bor. Attorneys should make this simple prin-ciple clear to the investigators they retain. Byfollowing this and the guidelines establishedby the appropriate laws and rules, attorneyscan represent their clients vigorously byobtaining critical information about jurorswhile minimizing potential liability for inves-tigative excesses. ■
1 People v. Culhane, Sacramento County Superior Ct.Case No. 07F01781 (sentenced Aug. 16, 2007); LouisSahagun, Death Penalty Foe Gets Five Years in Prison,L.A. TIMES, Aug. 17, 2007, at B-1. See also Bob Egelko,Starr Says He Supports Death Penalty, S.F. CHRONICLE,Feb. 17, 2006, at B-1.2 Hewlett-Packard Pretextors Fined, available athttp://www.piava.wordpress.com/2008/05/28. Thisitem includes a link to a Federal Trade Commissionpress release regarding the settlement.3 Damon Darlin, Hewlett-Packard Spied on Writers inLeaks, N.Y. TIMES, Sept. 6, 2006. See also OustedHewlett-Packard Chairwoman: I Consulted Othersin Leak Probe, Never Doubted Legality, FoxNews.com, Sept. 27, 2006, available at http://www.foxnews.com/story/0,2933,216200,00.html.4 Kim Zetter, Private Eyes Indicted in Massive Identity-Theft Scheme Involving HP-Style “Pretexting,” WiredBlog Network, Dec. 7, 2007.5 Marc Graser, Pellicano Convicted of Racketeering,VARIETY, May 15, 2008. See also David B. Parker &Pierre B. Pine, The Pellican’s Mess: EthicalConsiderations for Attorneys Who Hire PrivateInvestigators in the Wake of Pellicano, published in con-nection with the Film & Television Law Symposium,Beverly Hills, CA (Sept. 29, 2006).6 David Oscar Markus, Juror Research, SouthernDistrict of Florida Blog, Aug. 13, 2008. This blogentry cites a passage from a Daily Business Review arti-cle authored by Julie Kay.7 BUS. & PROF. CODE §7523(a).8 BUS. & PROF. CODE §7523(b).9 BUS. & PROF. CODE §7538.10 BUS. & PROF. CODE §7561.11 Wayne v. Bureau of Private Investigators & Adjusters,201 Cal. App. 2d 427, 437 (1962). See also JohnCaragozian, Private Eyes, LOS ANGELES LAWYER, Dec.2004, at 31.12 CAL. RULES OF PROF’L CONDUCT R. 3-110A.13 CAL. RULES OF PROF’L CONDUCT R. 5-320(E)-(F).14 Noble v. Sears, Roebuck & Co., 33 Cal. App. 3d 654,660 (1973).15 Id. at 663.16 Redner v. Workmen’s Comp. Appeals Bd., 5 Cal. 3d83, 93-94 (1971).17 Id. at 94-95.
Los Angeles Lawyer February 2009 25
26 Los Angeles Lawyer February 2009
As“guardians of the rights of absentee class members,”1 trial courts must deter-mine whether proposed class action settlements are “fair, adequate and rea-sonable” to the class at large.2 In the wake of the federal Class ActionFairness Act of 2005 (CAFA) and recent federal and state court decisions,
no other type of settlement has drawn greater scrutiny by trial courts conducting fairness hear-ings than so-called coupon settlements. This is the result of what CAFA’s proponents claimedwere abusive settlement practices that resulted in little value to class members but significantfee awards to class counsel.3
Yet what exactly constitutes a coupon settlement remains unsettled, particularly in theabsence of a statutory definition in CAFA. These settlements can take various forms, includ-ing coupons, discounts, other in-kind compensation, or a combination of these elements. Indeed,some courts have distinguished between “pure coupon settlements” and “variant[s] of thecoupon settlement[s]” based on whether class members receive discounts that require themto make new purchases.4 Ultimately, any settlement with some provision for nonmonetarycompensation may be regarded as a coupon settlement.5
Coupon settlements create tough issues for courts to resolve when their actual value is dif-ficult for the parties and the court to ascertain.6 Unlike cash settlements, coupon settlementstypically involve offers for discounted goods or services whose actual value may differ sig-nificantly from their face value. As a result, ascertaining fairness often requires a more com-plex economic analysis than other types of settlements, and in some cases expert testimonyis crucial.
Additionally, state and federal courts treat coupon settlements differently. While federalcourts strictly scrutinize these settlements under CAFA,7 California has no analogous legis-lation, and California state courts have rejected the notion that coupon settlements areinherently suspect or improper.8
Court approval of coupon settlements hinges on how the settlement is structured, howits value to the class is determined, and the venue in which the dispute is being resolved.Approval also depends upon the breadth of information litigants provide the court to enableit to properly assess the settlement’s fairness. Only after these matters are considered,
ClippingCouponsCoupon settlements come under a
higher level of scrutiny to ensure
fairness to absentee class members
by David Martinez and Rebecka Biejo
David Martinez is a partner and Rebecka Biejo is an associate in the Los Angeles office of Robins, Kaplan,
Miller & Ciresi L.L.P., where they handle class actions and other complex business litigation. KE
N C
OR
RA
L
Los Angeles Lawyer February 2009 27
addressed, and supported by appropriate evi-dence can parties ensure that the settlementwill be approved at the fairness hearing.
Coupon Settlements under CAFA
In addition to significantly expanding fed-eral jurisdiction over class actions,9 severalCAFA provisions require special scrutiny ofcoupon settlements in class actions pendingin federal courts. These provisions are applic-able for cases originally filed in federal courtand for those removed from state court.10
For example, prior to approving a couponsettlement, federal courts must hold a hear-ing and make specific findings that the set-tlement is fair, reasonable, and adequate, andthat the class’s interests are adequately rep-resented.11 This determination involves aconsideration of numerous factors:1) The strength of the plaintiff’s case.2) The risk, expense, complexity, and dura-tion of further litigation.3) The risk of maintaining class action status.4) The amount offered in settlement.5) The extent of the discovery that has beencompleted.6) The experience of counsel.7) The presence of a governmental partici-pant.8) The reaction of class members to the pro-posed settlement.12
Courts have noted that the “fair, reason-able and adequate” standard under CAFA isidentical to the standard that has been inplace under Rule 23(e) of the Federal Rulesof Civil Procedure.13 Under this standard thecourt usually presents its fairness determi-nation in a writing after conducting the fair-ness hearing.14 Nevertheless, CAFA has beeninvariably construed to require “the appli-cation of a higher level of scrutiny to the…cri-teria that existed pre-CAFA.”15 Courts apply-ing this higher standard rely on CAFA’slegislative intent. Further, they note thatcoupon settlements “have been severely crit-icized by commentators in the field” and “arestrongly disfavored by the Attorneys Generalof most of the states.”16
Prior to the enactment of CAFA’s couponsettlement provisions, the Ninth Circuit Courtof Appeals held that fees may be based on thevalue “of the entire common fund created forthe class, even if some [class] members makeno claims against the fund so that moneyremains in it that otherwise would be returnedto the defendants.”17 This standard remainsapplicable for settlements that do not includecoupon components.18
However, CAFA regulates attorney’s feesin coupon settlements by providing that anyportion of fees attributable to the award ofthe coupons “shall be based on the value toclass members of the coupons that areredeemed” rather than the theoretical value
of the coupons available for redemption.19
Redemption rates can be affected by variousfactors, including the eligibility and use restric-tions associated with the coupons and thetransaction costs involved in redeeming them.Further, because valuation can be complex,CAFA provides that the court “may receiveexpert testimony…on the actual value to theclass members of the coupons that areredeemed.”20
Substantial creative energy has been spentcrafting settlements that resolve class actionsand provide class members with a benefit thatthe parties believe a court will approve asfair, adequate, and reasonable. Several post-CAFA cases include parameters for how courtsshould define and value coupon settlementsand illustrate the types of settlements that arelikely to receive court approval. Some of thesecases reflect an inherent bias against couponsettlements and their derivatives.
In Synfuel Technologies, Inc. v. DHLExpress,21 for example, the trial courtapproved a settlement that offered up to fourprepaid DHL shipping envelopes or $30 cashin addition to injunctive relief. Noting that thetrial court’s role in reviewing a settlementagreement is “akin to the high duty of carethat the law requires of fiduciaries,”22 theSeventh Circuit reversed because “the [trial]court did not attempt to quantify the value of[the] plaintiffs’ case or even the overall valueof the settlement offer to class members.”23
The court also criticized the “in-kind com-pensation” component of the settlement, not-ing that it was akin to coupons. While theDHL shipping envelopes were not “identicalto coupons” because they represented an“entire product, not just a discount on a pro-posed purchase,” they nevertheless sharedsome characteristics of coupons because somepercentage of the prepaid envelopes would notbe used and thus would not constitute a costto the defendant. Like coupons, the envelopesalso forced class members to continue doingbusiness with the defendants. Given thesesimilarities, the court stated that, even ifCAFA was not theoretically applicable, the“in-kind compensation” component of thesettlement was subject to higher scrutiny bythe trial court.24
In some circumstances, giving class mem-bers a complete, and free, product mightprove valuable and acceptable because it doesnot create a continuing business relationshipbetween the class members and the defendant.Yeagley v. Wells Fargo & Company illus-trates the point.25 In Yeagley, the partiesreached a settlement agreement in which eachclass member was eligible to receive two freecredit reports and a $50 discount on a newmortgage. Noting the absence of a statutorydefinition of “coupons” under CAFA, theNorthern District of California reasoned that
the settlement “arguably provided the classwith a ‘coupon’ for a free…credit report.”26
The court suggested that “a free credit reportis unlike a coupon in that it does not requirea class member to do business with WellsFargo, and it entitles the member to a wholeproduct…rather than merely a discount.” Evenif the credit report did not fall under CAFA’scoupon provisions, the court concluded, CAFAwas nevertheless “instructive.”27
Then the court analyzed the value of thesettlement—to determine whether it was fairand adequate, and to calculate the fee award.It valued the settlement by multiplying thenumber of redemptions (less than 1 percent)by the price that Wells Fargo paid for eachreport, rather than the actual cost of thereport to the public at large.28 The court rea-soned that the second credit report presentedno value to the class because the likelihoodof redemption was negligible, and the $50 dis-count was merely a marketing opportunity forWells Fargo that provided no benefit to theclass. Despite these findings, the court nev-ertheless concluded the settlement was fairand adequate because the plaintiffs’ prospectsfor prevailing in the litigation were “so bleakas to render this a ‘good value’ for a relativelyweak case.”29
Credit reports were also at issue in Acostav. Trans Union, LLC, in which the CentralDistrict of California evaluated a settlementthat provided free credit reports to the class anda cash component to certain class members.Although the court did not characterize thecredit reports as coupons, it closely scruti-nized the settlement and concluded that thereports provided little or no value to the classbecause consumers were already entitled to onefree credit report, which most consumers didnot redeem.30 The court also noted that fewclass members would qualify for the cash com-ponent and found that class counsel had con-ducted very limited discovery and did not evenconsult any experts until the settlement wasfinalized. Therefore, the court rejected the set-tlement, noting in particular that “the eco-nomic value of the Settlement pales in com-parison to [the] Plaintiffs’ potential recoverythrough litigation.”31 The court was particu-larly critical in light of its finding that the pro-posed attorney’s fees of roughly $5.5 millionwas “so grossly out of proportion to the classmembers’ probable aggregate recovery as tosuggest a strong possibility of impropriety.”32
Coupons that create a continuing businessrelationship may be approved, but their termsmust demonstrate value to the class. InFigueroa v. Sharper Image, the settlementprovided class members with $19 coupons foruse at the defendant’s stores plus a guard toprotect against emissions of allegedly defec-tive air purifiers.33 After the parties receivedconsiderable objection to the original settle-
ment agreement, they retained a “nation-wide expert on coupon settlements” toimprove the settlement and cure the objec-tions.34 The third draft of the agreementenlarged the redemption period, providedfor the transferability and aggregation of thecoupons, allowed their use against any prod-uct, and included a provision for cy-pres dis-tribution to certain charities.35
Applying a “greater level of scrutiny,”the Southern District of Florida rejected thesettlement, reasoning that it was not theproduct of an informed, arm’s-length nego-tiation. The parties failed to provide the courtwith sufficient information regarding thepotential value of the litigation and the rangeof possible outcomes. Thus “the issue ofwhether the $19 is sufficient [had] still notbeen answered.”36 The court also rejectedthe use restriction improvements suggested bythe parties’ expert, noting that “enhance-ments to what is nothing more than a couponsettlement” did not make it “fair, adequate orreasonable.”37
Other federal decisions show greater favorfor agreements that include variants of acoupon settlement. In Fleury v. RichemontNorth America, Inc., the Northern Districtof California reasoned that “it is the settlement,taken as a whole, rather than the individualcomponent parts, that must be examined foroverall fairness.”38 The Fleury court approveda settlement of an antitrust class action broughtby two classes of watchmakers and consumersalleging that the defendant’s illegal tyingarrangement precluded independent watch-makers from repairing Cartier watches.39 Thesettlement called for the defendant to, inter alia,expand its network of authorized repair work-shops, pay certain watchmakers the costs forCartier-specific tooling, and issue $100 trans-ferable credit vouchers to the consumer sub-class. The court found that “the settlementvalue, although not great, [was] not withoutany worth” and was “appropriate in light ofthe significant litigation risks attendant to [the]Plaintiffs’ case.”40
In Young v. Polo Retail, LLC, the samecourt approved a proposed class settlementfor $1 million in cash and $500,000 in giftcards to class members.41 While noting that“the primary downside of the proposed set-tlement is the use of product vouchers,” thecourt reasoned that the vouchers did nothave product restrictions and were fully trans-ferable.42 Presumably because the gift cardsdid not constitute coupons, the court did notdecide the case under CAFA, and thus did notlimit attorney’s fees based on the number ofactual redemptions.43
Another Northern District decision offersa way to distinguish settlements providing forfree goods from those providing onlycoupons. The court in Browning v. Yahoo!
28 Los Angeles Lawyer February 2009
Inc. approved two class action settlementsproviding class members with either a freecredit score or two months of free creditmonitoring.44 The court determined that “thein-kind relief offered in this case is not a‘coupon settlement’ because it does notrequire class members to spend money inorder to realize the settlement benefit.”45 Itconcluded that the settlement, “althoughmodest, is appropriate and valuable” andrecognized that “settlement, as a product ofcompromise, typically offers less than a fullrecovery.”46
California’s Presumption of Fairness
California state courts generally give couponsettlements greater deference than their federal counterparts.47 State courts are notbound by CAFA and “have never adoptedRule 23 as a procedural strait jacket.”48 Tothe contrary, “trial courts [are] urged to exer-cise pragmatism and flexibility in dealingwith class actions”49 and must give “dueregard…to what is otherwise a private con-sensual agreement between the parties.”50
While state courts generally follow a sim-ilar analytical framework as federal courts inassessing fairness,51 a state court settlementis presumed fair if:
(1) the settlement is reached througharm’s-length bargaining; (2) investi-gation and discovery are sufficient toallow counsel and the court to actintelligently; (3) counsel is experiencedin similar litigation; and (4) the per-centage of objectors is small.52
This presumption applies with equal force tocoupon settlements, which are neither per seimproper nor subject to heightened scrutiny.53
Moreover, the California Court of Appealrecently distinguished between “pure couponsettlements” and “variant[s] of coupon set-tlements,” suggesting that the latter shouldreceive more deference.54
In Chavez v. Netflix, Inc., the courtapproved a class action settlement that pro-vided one month of free DVD rental servicesor membership upgrades. One objectorappealed, claiming that CAFA regardedcoupon settlements as “highly suspicious”and “inherently suspect” and thereforerequired greater scrutiny under state law.55 Theobjector further argued that the settlementwas an improper coupon settlement becauseit provided a free service of nominal valuewhile giving the defendant a promotionalopportunity.56
The Chavez court upheld the judgment,noting that the objector had failed to challengeany of the factors establishing a presumptionof fairness. Moreover, the court concludedthat the settlement was not a “pure couponsettlement,” explaining that:
In a pure coupon settlement, the class
members would receive a coupon,voucher, or discount that would partlydefray the cost of making a new pur-chase of goods or services from thedefendant. In many cases, the couponmight induce the member to make apurchase he or she would not otherwisehave made, which may actually pro-duce a net benefit for the defendant.57
In contrast, the DVD subscription at issue inChavez was “a variant of the coupon settle-ment” because class members were not nec-essarily required to make a purchase, andthe potential benefit to the defendant wasreduced, limited, or altogether absent.58
The court of appeal’s affirmance of thetrial court’s ruling was based squarely on thefactors establishing a presumption of fair-ness. It noted that the agreement resultedfrom arm’s-length bargaining during media-tion with a respected magistrate judge, theparties had engaged in extensive discovery, theattorneys possessed substantial experiencein class action litigation, and the percentageof objectors to the settlement was small.59
Chavez follows a line of California casesapproving coupon settlements based on evi-dence establishing a presumption of fairness.In Dunk v. Ford Motor Company, a 1996pre-CAFA case, the court approved a settle-ment in which class members receivedcoupons for $400 off the price of a new vehi-cle.60 The court established and applied thefour-factor test and found the settlement pre-sumptively fair, noting in particular that theparties conducted extensive discovery, thenumber of objectors was small, and the set-tlement coupons represented at least two-thirds of the highest noted damages to classmembers.61
More recently, in Wershba v. Apple Com-puter, Inc., the court of appeal approved aclass settlement that provided class memberswith either a $35 reimbursement or $50coupon toward any purchase over $99.62 Thecourt noted this settlement was “much moreattractive” than the deal in Dunk becausethe coupons were transferable (although theycould not be aggregated), and some classmembers were eligible for cash reimburse-ments. Furthermore, “[i]n the context of a set-tlement agreement, the test is not the maxi-mum amount plaintiffs might have obtainedat trial on the complaint, but rather whetherthe settlement is reasonable under all of thecircumstances.”63
The approach of California courts haschanged little since CAFA’s enactment. In Inre Microsoft I-V, the trial court approved asettlement providing vouchers ranging from$5 to $29.64 The settlement also included acy-pres remedy in which a portion of un-claimed vouchers was redistributed toCalifornia schools to provide indirect com-
pensation to the class and ensure disgorge-ment by the defendant. The settlement thusprovided a “fair and reasonable residual dis-tribution” that was “as near as possible” toaccomplishing the overarching purposes of thelitigation.65 In re Microsoft thus illustrates thetypes of “enhancements” that provide in-creased value to the class, including the aggre-gation and transferability of the coupons,long redemption periods, and a residual dis-tribution plan.66
At least three unpublished, post-CAFA,state court decisions have also upheld couponsettlements based on evidence establishing apresumption of fairness. For example, inIntervention, Inc. v. Avanir Pharmaceuticals,67
the court approved a settlement that pro-vided 50 million vouchers to class membersand $1 million in cold sore research grants.The court observed that while class mem-bers received a nominal $3 discount, thegrant funds provided a significant benefit tothe entire class, particularly given the difficultyin locating class members.68 In Vroegh v.Eastman Kodak Company, the court ap-proved a settlement providing a 5 percentrefund or 10 percent discount on future pur-chases of flash memory drives.69 In Campbellv. Airtouch Cellular, the court approved a set-tlement providing two vouchers for a ser-vice credit, six months of text messaging, aphone accessory, long distance minutes,and/or a hands-free device.70
While giving coupon settlements moredeference, California state courts arguablyplace less emphasis on an analysis of theunderlying action’s merits or the valuation ofthe settlement. Thus “the merits of the under-lying class claims are not a basis for upsettingthe settlement of a class action,” and “the pro-posed settlement is not to be judged againsta hypothetical or speculative measure of whatmight have been achieved had [the] plaintiffsprevailed at trial.”71 The trial court’s fair-ness analysis is ultimately “nothing morethan an amalgam of delicate balancing, grossapproximations and rough justice.”72 Thus,coupon settlements under California statelaw may not require the more nuanced eco-nomic analyses often used, and sometimesrequired, under CAFA.
Structuring a Coupon Settlement
Whether a case is pending in state or federalcourt, properly structuring a coupon settle-ment is crucial to obtaining final approvalfrom the trial court. Courts are more likelyto approve coupon settlements that impose nouse restrictions, or only very limited ones, onthe coupons. For example, coupons that arefreely transferable and do not have aggrega-tion limits provide more value to the classmembers, as do coupons that have longerredemption periods and are not limited to par-
Los Angeles Lawyer February 2009 29
ticular products or services. Coupon settle-ments that avoid restrictions on use and trans-ferability or that include enhancements, in-kind compensation, and/or cash componentsare also less likely to draw opt-outs andobjectors. This will in turn facilitate the trialcourt’s decision to approve the settlement. Ahybrid settlement that includes a cash com-ponent or a variant of the coupon settlementthat provides in-kind compensation is alsolikely to receive greater deference.
To be successful, a motion for final ap-proval of the settlement must also includesufficient information to enable the trial courtto make an informed analysis of the fairnessfactors under state or federal law. At a mini-mum, the motion must provide an appropri-ate level of detail regarding the discoveryefforts and settlement negotiations of the par-ties. If the settlement was reached throughmediation, the parties should inform the courtof the mediator’s endorsement of the settle-ment. Depending on the complexity of thecoupon settlement, the parties should alsoconsider retaining an expert to assess its value.
Litigants should remind the trial court ofthe policies in state and federal court favor-ing the settlement of disputes. Those policiesare furthered by approving the settlement ofparticularly weak—and particularly strong—cases early. Thus, in order to put the settle-ment in proper perspective, the parties shouldprovide the trial court with a cogent analy-sis of the strengths and weaknesses of theclaims and defenses. Only in view of the factsand law applicable to the case can the courtproperly assess whether the settlement is fair,adequate, and reasonable. ■
1 Kullar v. Foot Locker Retail, Inc., 168 Cal. App. 4th116, 129 (2008).2 Acosta v. Trans Union, LLC, 243 F.R.D. 377, 386(C.D. Cal. 2007).3 Figueroa v. Sharper Image Corp., 517 F. Supp. 2d1292, 1328 (S.D. Fla. 2007).4 Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 53(2008).5 See Yeagley v. Wells Fargo & Co., 2008 U.S. Dist.LEXIS 5040, at *24 (N.D. Cal. Jan. 18, 2008) (rea-soning that even if credit report did not qualify as“coupon,” CAFA was nevertheless instructive). Seegenerally Synfuel Techs., Inc. v. DHL Express, 463 F.3d 646 (7th Cir. 2006) (prepaid shipping envelopes sim-ilar to coupons); Acosta, 243 F.R.D. at 377 (creditreports compared to coupons); Young v. Polo Retail,LLC, 2007 U.S. Dist. LEXIS 27269 (N.D. Cal. Mar.28, 2007) (gift cards); In re Microsoft I-V, 135 Cal.App. 4th 706 (2006) (vouchers); Chavez, 162 Cal.App. 4th at 46 (DVD subscription).6 See, e.g., Yeagley, 2008 U.S. Dist. LEXIS 5040, at *8.7 Class Action Fairness Act of 2005 (CAFA), 28 U.S.C.§1712(a), (b), (e).8 See generally Chavez, 162 Cal. App. 4th at 424.9 Federal courts now have original jurisdiction to hearclass actions in which: 1) the aggregated damagesclaim exceeds $5 million, 2) there are at least 100class members, and 3) at least one plaintiff and onedefendant are citizens of different states. See 28 U.S.C.§1332(d)(2).
30 Los Angeles Lawyer February 2009
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10 28 U.S.C. §1712.11 28 U.S.C. §1712(d).12 Acosta v. Trans Union, LLC, 243 F.R.D. 377, 386(C.D. Cal. 2007); see also Young v. Polo Retail, LLC,2007 U.S. Dist. LEXIS 27269, at *3 (N.D. Cal. Mar.28, 2007).13 FED. R. CIV. P. 23(e)(1)(c).14 See Figueroa v. Sharper Image Corp., 517 F. Supp.2d 1292, 1321 (S.D. Fla. 2007).15 Id. Criticism of coupon settlements predates CAFA.See, e.g., Buchet v. ITT Consumer Fin. Corp., 845 F.Supp. 684, 696 (D. Minn. 1994), amended by 858 F.Supp. 944 (proposed coupon settlement rejected aftercourt found that coupon redemption rates in similarcases were so low that the certificates in this caseoffered no real value to the class).16 Id. at 1321.17 Williams v. MGM-Pathe Commc’n Co., 129 F. 3d1026, 1027 (9th Cir. 1997) (securities fraud classaction that settled for a $4.5 million common fund) (cit-ing Boeing Co. v. Van Gemert, 444 U.S. 472, 480-81(1980)).18 Young v. Polo Retail, LLC, 2007 U.S. Dist. LEXIS27269, at *5 (N.D. Cal. Mar. 28, 2007) (citingWilliams, 129 F. 3d at 1027).19 28 U.S.C. §1712(a) (emphasis added).20 28 U.S.C. §1712(d).21 Synfuel Techs., Inc. v. DHL Express, 463 F. 3d 646,648 (7th Cir. 2006).22 Id. at 652-53 (citations omitted).23 Id. at 654.24 Id.25 Yeagley v. Wells Fargo & Co., 2008 U.S. Dist.LEXIS 5040, at *17 (N.D. Cal. Jan. 18, 2008).26 Id. at *24.27 Id.28 Id. at *8.
29 Id. at *14.30 Acosta v. Trans Union, LLC, 243 F.R.D. 377 (C.D.Cal. 2007).31 Id. at 393.32 Id. at 393-94.33 Figueroa v. Sharper Image Corp., 517 F. Supp. 2d1292, 1321 (S.D. Fla. 2007).34 The parties retained Christopher R. Leslie, a professorat Chicago-Kent College of Law. See Christopher R.Leslie, The Need to Study Coupon Settlements in ClassAction Litigation, 18 GEO. J. LEGAL ETHICS 1395,1396-97 (2005). In his article, Leslie criticizes couponsettlements on grounds that they 1) often do not “pro-vide meaningful compensation to most class mem-bers,” 2) often “fail to disgorge ill-gotten gains fromthe defendant,” and 3) may force class members “to dofuture business with the defendant.”35 Figueroa, 517 F. Supp. 2d at 1314-15.36 Id. at 1327.37 Id. at 1329.38 Fleury v. Richemont N. Am., Inc., 2008 U.S. Dist.LEXIS 64521 (N.D. Cal. July 3, 2008).39 Id. at *51.40 Id. at *73.41 Young v. Polo Retail, LLC, 2007 U.S. Dist. LEXIS27269, at *14 (N.D. Cal. Mar. 28, 2007).42 Id. at *11.43 Id. at *23 (citing Williams v. MGM-Pathe Commc’nCo., 129 F. 3d 1026, 1027 (9th Cir. 1997)).44 Browning v. Yahoo! Inc., 2007 U.S. Dist. LEXIS86266 (N.D. Cal. Nov. 16, 2007).45 Id. at *16.46 Id. at *17.47 Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 54(2008).48 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th224, 240 (2001).
49 Id.50 In re Microsoft I-V, 135 Cal. App. 4th 706, 723(2006).51 Id. at 723 & n.13.52 Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794,1802 (1996).53 Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 54(2008).54 Id. at 52.55 Id. at 54.56 Id. at 52.57 Id. at 53.58 Id. at 54 (“[T]he potential for Netflix to actually ben-efit financially from the settlement is much reduced com-pared to a pure coupon discount program.”).59 Id.60 Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794,1800 (1996).61 Id. at 1802.62 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th224, 246 (2001).63 Id. at 247.64 In re Microsoft I-V, 135 Cal. App. 4th 706, 712(2006).65 Id. at 730.66 Id. at 712.67 Intervention, Inc. v. Avanir Pharms., 2007 Cal. App.Unpub. LEXIS 2092 (Mar. 15, 2007) (unpublished).68 Id. at *6.69 Vroegh v. Eastman Kodak Co., 2007 Cal. App.Unpub. LEXIS 9735 (Nov. 30, 2007) (unpublished).70 Campbell v. Airtouch Cellular, 2006 Cal. App.Unpub. LEXIS 2459 (Mar. 24, 2006) (unpublished).71 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th224, 246 (2001).72 7-Eleven Owners for Fair Franchising v. SouthlandCorp., 85 Cal. App. 4th 1135, 1145 (2000).
Los Angeles Lawyer February 2009 31
COMPUTER ANIMATIONCASE IN POINT CONSULTING, INC. 18737 Club, Huntington Beach, CA 92648, (714) 292-7498, fax (714) 841-1901, e-mail: clp @caseinpoint.net. Contact Chip Pedersen. Ser-vices available: 3D Computer Animation, static ex-hibits, and full-video services. We are a specialtyprovider of technical 3D animation. Unlike many trialconsulting firms that farm out their 3D animation tofreelance artists, we create all of our animation inhouse. Our engineering background allows us towork directly with your technical expert witnesses,speaking the language they are most familiar with.We have over 15 years of experience creating anima-tion for patent infringement, medical/biological, acci-dent/injury, personal liability, toxic tort and wrongfuldeath cases. Visit www.caseinpoint.net to view 3Dsamples. We also offer High Definition, and DV videoshooting and editing for site walkthroughs, accidentscene, Day-in-the-Life, and settlement videos. Seedisplay ad on page 33.
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32 Los Angeles Lawyer February 2009
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34 Los Angeles Lawyer February 2009
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38 Los Angeles Lawyer February 2009
IN OUR NATION of about 300 million people, there are over 233 mil-lion cell phones in circulation, the majority of which are capable ofsending text messages.1 In June 2006, there were over 12.5 billion textmessages sent worldwide, up 71 percent from the year before.2 ByDecember 2007, that number was up to over 48 billion.3 By the endof 2008, it is expected that more than 80 billion text messages will besent every month.4 E-mail use among teens in the United States is drop-ping, with 46 percent of them saying they prefer text messaging.5 Thishas prompted at least one analyst to ask whether e-mail is facing extinc-tion.6 Those who do not yet send text messages may rest assured thatthe predictions of the demise of e-mail are pre-mature. But the statistics do not lie. Text mes-saging is rapidly gaining popularity and, espe-cially among younger users, it is replacing e-mailas the favored means of communication.
For those not familiar with text messaging,or texting: It is the act of sending a “short elec-tronically transmitted written message, esp.those sent to a handheld device such as a pager,PDA, cell phone.”7 The technical term for it isSMS, which stands for short messaging ser-vice.8 Because text messages are generally typedon small devices, often with limited keyboards,they tend to be very short and often includeabridged phrases or acronyms whose meaningis generally understood by those who use this form of communication.It is the rise of text messaging that is responsible for the recent waveof advertising featuring such enigmatic phrases as “OMG,” which intexting code stands for “Oh, my god.” There was even a recent stirover print advertising for the television show Gossip Girl that featuredthe more explicit “OMFG.”9
The increasing popularity of texting likely is a result of its speed.E-mail is generally sent from a computer over the Internet. Even if itis sent from a wireless device, for example a Blackberry, e-mail is stillgoing through computer servers. E-mail often moves very quickly, butit can be subject to delays ranging from a few seconds to many min-utes. If servers go down, the mail can be lost. By contrast, text mes-sages are generally sent over a cellular network. The sending devicefeeds the message to a hub on the cell network that will then hold ituntil the receiving phone is located and the message sent.10 As a result,text messages can often be exchanged in near real time, alleviatingthe delay of the minute or two that users may suffer with theirarchaic e-mail systems. Text messages are also limited to 160 char-acters each (although many services now simply break up longer mes-sages and send them one after another).11 For those American youthwith short attention spans and their imitators, texting gains a con-versational rhythm, often filled with shorthand acronyms and text-based expressions like the all-too-ubiquitous sideways happy face.
For lawyers constantly looking for new ways to improve client com-munication, texting can be a valuable tool. It is quick, goes straight
to a client’s cell phone, and is likely to draw immediate attention (quitepossibly with a cute buzz or tone sure to annoy anyone the client maybe meeting with). But texting is not without its pitfalls. As attorney-client communication, the privacy of texting is a significant con-cern. Permanence is also an issue. Unlike most industries that are freeto rush into the digital age, the legal community still must be concernedabout documenting communications. The flip side of such docu-mentation, again largely unique to the legal community, is the poten-tial creation of an evidentiary trail. Finally, there are practical issuesof costs and available plans.
In some ways, texting is a relatively private form of communica-tion. Unlike e-mail, text messages are not stored on servers. An e-mailsent to a client may be saved on backup media for years. By contrast,text messages never pass through either. Most text messaging servicesdo go through a central hub controlled by the service provider, butmost service providers do not save copies of those messages for anyextended period (though there are some exceptions, such as SkyTel).12
Because most people carry their cell phones with them, there is notmuch risk of a communication falling into a third party’s hands orbeing retrieved from a dumpster. However, clients may leave their cellphones lying around or allow others to read messages on theirphones. Before sending confidential information by text, consider therecipients and make sure they are aware that they need to protect theattorney-client privilege.
Attorneys who are concerned for their personal privacy should knowthat text messages automatically include the cell phone number fromwhich they are sent. Attorneys who generally do not give their cell phonenumbers to clients should take note. Some service providers, however,allow users to send text messages from a Web site so that the user’scell phone number is not included. There are also Web sites thatallow texting without a cell phone, including www.hooya.com orwww.quios.com. But these more anonymous methods largely defeat
computer counselor BY DAVID SCHNIDER
What Lawyers Need to Know about Text Messaging with Clients
Predictions of the demise of e-mail are premature. But the
statistics do not lie. Text messaging is rapidly gaining
popularity and, especially among younger users, it is
replacing e-mail as the favored means of communication.
David Schnider is general counsel for Leg Avenue, Inc., a leading
distributor of costumes and apparel.
the purpose of being able to communicatequickly.
Another consideration when communi-cating with clients by texting is that there isno printed record of the communication.When an attorney sends or receives an e-mail, it can be printed and filed. Even if theattorney forgets to do that, there is at least acopy on a server that can be retrieved. Becausetext messages are sent by wireless devicesand do not go through firm computers, thereis no convenient means to print them. Onsome devices it may be possible to forwardmessages to yourself as an e-mail, which maybe printed. But otherwise, text messages arelost in the ether. So if a client is late to court,texting may be a good way to find out whenhe or she expects to arrive. But to alert aclient that a statute of limitation is running,it is more prudent to use e-mail or regularmail, both of which leave a paper trail.
The flip side of messages that leave arecord is that they also create evidence. Mostlawyers, at some time, come across an occa-sion when they would prefer to have a dis-cussion with a client that is entirely off therecord. When dealing with such sensitiveissues, it is generally best to speak with aclient by phone or in person. While a text mes-sage is less likely to leave a discoverablerecord, it is not entirely secure. The serviceprovider keeps a copy for some amount oftime, and there is no way to know how longthat may be. Some services may keep messageslonger, and it is possible for employers tohave data maintained even for text messages.At least one court dealing with the issue hasfound that employees have an expectation ofprivacy in their text messages,13 but as theybecome more prevalent employers are morelikely to specify that text messages are not pri-vate, and courts may be more inclined tosubject them to disclosure. Further, a textmessage is a written communication, andthere is no way to prevent a client from for-warding it as an e-mail and printing it, therebycreating a written record. Text messaging ismore discreet than e-mail, but its ephemeralquality should not mislead users into think-ing that it is entirely secure and confidential.
Nearly all current generation cell phonesare capable of sending text messages, andmost service providers offer plans. However,these cute missives come at a price. If textingis not included in a plan, service providers willgenerally charge a fee per message, usually inthe range of 10 to 20 cents. That does notsound like much, but imagine being chargedthat amount every time something is said ina conversation. It adds up quickly. Attorneyswho are going to send text messages at allshould sign up on a plan. The offerings vary.Verizon’s nationwide business plans all includeunlimited texting.14 Most of its individual
plans also include unlimited texting, but themost basic plan charges 20 cents per mes-sage.15 AT&T’s wireless plans generally donot include texting, but it can be added foran additional charge.16 Boost Mobile offersa plan with unlimited texting for one dollara day.17 These plans change regularly, how-ever. Usually, texting plans are included witha service or are a relatively inexpensive add-on, so it is worth contacting a service provider.
There are some additional features to con-sider. Most but not all plans will includemedia messaging service (MMS), which isbasically texting for pictures. This servicecan come in very handy. For example, anattorney with MMS inspects the scene wherea client had a car accident. A question aboutwhere the client was driving arises, and ratherthan try to describe it, the attorney can takea picture and message it to the client, who cansee what the attorney is seeing and answerbased on the picture rather than memory. Italso comes in handy if you want to ask yourspouse which brand of mustard you shouldbe picking up at the market.
As a practical matter, text messagingremains more a plaything for young adultsthan a powerful asset in the legal arsenal.But its popularity is undeniably spreadingquickly, and more and more clients will cometo appreciate an attorney’s ability to use thisform of communication. Used appropriately,with a clear understanding of its benefits andlimitations, text messaging can be a valuabletool for communicating with clients. ■
1 http://www.messagebuzz.com/resources/statistics.asp.2 Id.3 http://www.ctia.org/advocacy/research/index.cfm/AID/10323.4 http://www.cellsigns.com/industry.shtml.5 http://money.cnn.com/2006/07/26/technology/thirdscreen0726.biz2/index.htm.6 Chris Marriot, Is email facing extinction? (July 9,2007), available at http://www.imediaconnection.com/content/15637.asp.7 WEBSTER’S NEW MILLENNIUM DICTIONARY OF ENGLISH,PREVIEW EDITION (Lexico).8 Jennifer Hord, How SMS Works, available athttp://communication.howstuffworks.com/sms.htm.9 Lauren Beckham Falcone, Critics pan provocative adcampaign for Gossip Girl, THE BOSTON HERALD (Sept.1, 2008).10 http://communication.howstuffworks.com/sms.htm.11 Id.12 Mike Wendland, Most Text Messages Just Vanish,DETROIT FREE PRESS (Jan. 25, 2008), available at http://www.freep.com/apps/pbcs.dll/article?AID=/20080125/COL11/801250422/0/NEWS01.13 Quon v. Arch Wireless, 529 F. 3d 892 (9th Cir.2008).14 See http://b2b.vzw.com/productsservices/businesscallingplans/voiceplans.html.15 See http://www.verizonwireless.com/b2c/splash/splash.jsp?v=1.16 See http://www.wireless.att.com/cell-phone-service/services/services-list.jsp?catId=cat1470003&LOSGId=&catName=Messaging+and+MEdia(TM)+Bundles.17 See http://plans.boostmobile.com/chat.aspx.
Los Angeles Lawyer February 2009 39
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One early Saturday morning inFebruary 1972, 130 million gal-lons of black water and wasteoverflowed a massive dam inWest Virginia and descendedupon the valley below. Althoughreminiscent of the flooding thatbefell New Orleans and the GulfCoast several years ago, the dev-astating tidal wave in 1972 thatengulfed Buffalo Creek Valleysprung from a coal company’srefuse pile. Nevertheless, thePittston Coal Company, owner ofthe refuse pile, quickly pro-claimed that “the break in thedam was caused by flooding—anAct of God.”
The Pittston statement wasintended as an argument toescape liability for the devasta-tion, but it also succeeded inemboldening the survivors—reli-gious individuals outraged at the
accusation that God had brought this upon them. Rather than acceptthe small settlements proposed by Pittston, many survivors hiredcounsel and instituted a lawsuit against the company. In The BuffaloCreek Disaster: How the Survivors of One of the Worst Disasters inCoal-Mining History Brought Suit against the Coal Company—andWon, author Gerald Stern writes about the legal battle the survivorswaged, with him as their attorney, against Pittston.
Although the book focuses on the lawsuit that followed the dev-astation, Stern’s accounts of the victim’s stories are poignant. The blacksludge reached a speed of 30 miles per hour as it swept into the 16coal mining towns in the valley. The sludge engulfed the townspeo-ple before they recognized what had happened. Parents struggled tohold onto children and husbands grasped for their wives as theysearched for something to hold. One such husband, whose wife, inparting moments, told him to take care of their baby, survived the floodbut explained later, “Somewhere along there I lost that boy of mine.I don’t know where.” Ultimately, 125 people died, thousands otherswere injured, and numerous homes were destroyed.
Unsurprisingly, the survivors of this tragedy suffered severe psy-chological effects. Experts diagnosed the survivors with a then cut-ting-edge diagnosis of “psychic impairment,” which later wouldbecome known as post traumatic stress disorder. PTSD is now a rec-ognized psychiatric diagnosis, but at the time of the flood in BuffaloCreek, the condition was not well understood, and Pittston attorneyswrote off the claims of psychic impairment as “mere puff and blow.”
In The Buffalo Creek Disaster, Stern moves beyond the tragedy
and focuses on the legal process. The reader learns that Pittston fileda motion to dismiss the weakest psychic impairment claims, thosebrought by individuals who suffered loss but were not themselves pres-ent at the time of the flood. Stern’s concern at the time was that fol-lowing a ruling on the absentee plaintiff’s motion, Pittston would thenfile a motion to dismiss claims brought by those who were presentfor the flood but did not suffer physical injury. In this way, Pittstonwould attempt to “slice up our case bit by bit.” Pittston’s counsel per-sonally served the motion to limit the amount of time for an oppo-sition, but the judge granted the plaintiffs’ request for an extension.This extension gave the plaintiffs sufficient time to provide a thought-ful opposition and prevented Pittston’s efforts at a piecemeal attackon the psychic impairment claims.
Stern also delves into the realities and practicalities of litigation.Stern and his colleagues decided to postpone the psychological exam-inations of their clients due to the excessive cost of the testing.Ultimately, however, the testing had to be conducted, because the courtset a date for an exchange of the medical reports. The plaintiffsbrought in teams of psychiatrists to conduct the testing, who foundthat a vast majority of the victims were suffering from severe psy-chological effects of the disaster.
Pittston also had the plaintiffs examined by a doctor of its ownchoosing. The Pittston doctor confirmed the victims’ suffering but char-acterized it as a transient disturbance. However, many of the plain-tiffs were still suffering from symptoms well over a year after the flood.The Pittston doctor concocted an explanation: The individuals whocontinued to suffer from psychological effects from the trauma musthave suffered from a preexisting vulnerability.
In addition to describing the positions taken by both sides duringthe litigation, Stern also recounts the strategic considerations under-lying many of the actions that the parties took. Strategy decisions hadto be made from the initial filing of suit in federal court to the set-tlement discussions, which finally resolved the matter. Concerned thathis Washington-based firm would have difficulty with local statejudges in Logan County, Stern filed suit in federal court and overcamePittston’s unsuccessful challenge to diversity jurisdiction. Nevertheless,the hometown prejudice raised its head in an unexpected fashion. Thelocal bar committee decided to investigate Stern’s firm for ambulancechasing.
Strategy, too, was critical to the settlement discussions between thetownspeople and Pittston. As with most litigation, the most productivesettlement talks only occurred after the court set a firm trial date. Sternand his cocounsel had to convey to Pittston that they had faith in theircase but were still flexible. The posturing even included bringingdefense counsel through Stern’s law offices to show the extent to whichthey were preparing for trial.
by the book REVIEWED BY JEFFREY D. WOLF
Jeffrey D. Wolf is a trial attorney and a partner at Pocrass, Heimanson &
Wolf, representing individuals injured in severe personal injury, product
liability, aviation, and medical malpractice cases.
The Buffalo Creek Disaster
The Buffalo Creek Disaster
By Gerald M. Stern
Vintage, 2008
$11.95, 304 pages
Stern describes the practical hurdles heencountered during the settlement discus-sions. He represented numerous plaintiffs,and he knew that Pittston’s counsel wouldinsist that he have authority to negotiate a set-tlement on behalf of all of his clients.Although the townspeople gave him author-ity to settle, ethical considerations precludedhim from entering into a binding settlementon behalf of multiple plaintiffs without firsttelling them how much each plaintiff wouldreceive. Stern resolved the problem by obtain-ing permission to conduct the discussionsand provide recommendations for a split.
With such close attention to detail aboutthe legal process, it is not surprising thatoften the book has been required readingfor law students. However, The Buffalo CreekDisaster goes well beyond providing somevaluable lessons about the litigation process.The book shows how our court system canbe a great equalizer, placing large multimil-lion-dollar corporations on even footing withpeople who have no economic or politicalclout.
Through the litigation and more specifi-cally the discovery process, Pittston becameanswerable to the people of the town. Deposi-tions of key Pittston personnel revealed thatPittston knew that it was exposing the peo-ple to significant risk of the flood. With therevelation of this information, Pittston facedtrue exposure to punitive damages and, con-sequently, power shifted to the townspeople.Thereafter, Pittston settled the claims andfinally compensated the victims for their loss.Beyond that, the settlement served as a checkon Pittston, deterring it from constructinganother faulty dam. The threat of this typeof litigation forces large corporations likePittston to rethink business decisions thatplace the public in harm’s way.
Yet, even after we read The Buffalo CreekDisaster and celebrate the triumph of thetownspeople in the wake of the flood thatdestroyed their town over 35 years ago, weare faced with news of another, similar fail-ure. In December 2008, the Tennessee ValleyAuthority’s Kingston Fossil Plant in Harri-man, Tennessee, experienced a failure of adike wall. The broken earthen wall releasedapproximately 1 billion gallons of slurried ashfrom a coal-ash containment pond.Fortunately, no one was killed, but the spilldestroyed homes and continues to pose envi-ronmental threats as the result of the releaseof barium, lead, manganese, and arseniccompounds. Cenospheres, which are spher-ical particles of silica, polluted the local lake.The Tennessee Valley Authority has reportedthat the cenospheres can cause watering of theeyes, sneezing, or coughing but do not posea health threat. At least it has not yet attrib-uted the spill to an act of God. ■
Los Angeles Lawyer February 2009 41
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Accident Reconstruction Specialists, p. 31
Tel. 562-743-7230 www.FieldAndTestEngineering.com
ACT of Communication, p. 34
Tel. 310-391-9661 www.actofcommunication.com
Ahern Insurance Brokerage, Inside Front Cover
Tel. 800-282-9786 x101, [email protected]
Arizona State University, p. 12
Tel. 480-965-6181 www.law.asu.edu
Lee Jay Berman, p. 8
Tel. 213-383-0438 www.leejayberman.com
Case in Point Consulting, Inc., p. 33
Tel. 714-292-7498 e-mail: [email protected]
Charon Solutions, Inc., p. 34
Tel. 310-606-2664 www.thecharonshield.com
Cheong, Denove, Rowell & Bennett, p. 13
Tel. 310-277-4857 www.cdrb-law.com
Chizai Corporation, p. 35
Tel. 781-235-1353 www.chizai-usa.com e-mail: info-
Cohen Miskei & Mowrey, p. 41
Tel. 818-986-5070 e-mail: [email protected]
Coldwell Banker, p. 6
Tel. 310-442-1398 www.mickeykessler.com
Commerce Escrow Company, p. 30
Tel. 213-484-0855 www.comescrow.com
Cook Construction, p. 17
Tel. 818-438-4535 e-mail: [email protected]
Lawrence W. Crispo, p. 4
Tel. 213-926-6665 e-mail: [email protected]
DepoSums Deposition Summaries, p. 33
Tel. 800-789-DEPO (800-789-3376) www.deposums.biz
Dixon Q. Dern, P.C., p. 17
Tel. 310-557-2244 e-mail: [email protected]
Econ One Research, Inc., p. 36
Tel. 213-624-9600 e-mail: [email protected]
E. L. Evans & Associates, p. 41
Tel. 310-559-4005
Steven L. Gleitman, Esq., p. 6
Tel. 310-553-5080
Guaranteed Subpoena, Inside Back Cover
Tel. 800-PROCESS (800-776-2377) e-mail: [email protected]
Habeas Videas, p. 35
Tel. 626-797-8101 www.habeasvideas.com
Higgins, Marcus & Lovett, Inc., p. 34
Tel. 213-617-7775 www.hmlinc.com
The Holmes Law Firm, p. 20
Tel. 626-432-7222 www.theholmeslawfirm.com
Jack Trimarco & Associates Polygraph, Inc., p. 33
Tel. 310-247-2637 www.jacktrimarco.com
Kantor & Kantor, LLP, p. 39
Tel. 877-783-8686 www.kantorlaw.net
Law Offices of Rock O. Kendall, p. 12
Tel. 949-388-0524 www.dmv-law.com
Lawyers’ Mutual Insurance Co., p. 7
Tel. 800-252-2045 www.lawyersmutual.com
Lexis Publishing, p. 1, 11
www.lexis.com
Linzer & Associates, P. C., p. 41
Tel. 310-826-2627 e-mail: [email protected]
MCLE4LAWYERS.COM, p. 8
Tel. 310-552-5382 www.MCLEforlawyers.com
Mitchell & Mitchell, p. 8
Tel. 800-247-1403 www.mitchellandmitchell.com
On The Record, Inc., p. 36
Tel. 310-342-7170 www.ontherecord.com
On Trial LLC., p. 37 Tel. 714-505-5655 www.on-trial.com
Pacific Health & Safety Consulting, Inc., p. 39
Tel. 949-253-4065 www.phsc-web.com
Pro/Consul, Inc., p. 2
Tel. 800-392-1119 www.expertinfo.com
RGL-Forensic Accountants & Consultants, p. 37
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R. S. Ruggles & Co., Inc., p. 32
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Steven R. Sauer APC, p. 4
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Bruce Schwartz, p. 6
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Anita Rae Shapiro, p. 12
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Stonefield Josephson, Inc., p. 5
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White, Zuckerman, Warsavsky, Luna, Wolf & Hunt, p. 19
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Justice Howard B. Wiener, p. 17
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Witkin & Eisinger, LLC, p. 17
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Wolfsdorf Immigration Law Group, p. 30
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Los Angeles Lawyer February 2009 43
ON TUESDAY, FEBRUARY 24, the Senior Lawyers Division and the BarristersSection will host an interactive round table mentoring session. Those whoparticipate will have the chance to select preferred table topics and interactwith Hugh I. Biele, Judge Richard P. Byrne, Ernestine Fields, Harry L.Hathaway, Charles E. Michaels, David J. Pasternak, Patricia Phillips, JillSwitzer, and William L. Tan. This event is an opportunity to share bestpractices, new ideas, and expert advice. Each table will have a judge orsenior lawyer as the moderator who will briefly introduce the topic and leada discussion. This new event will take place at the LACBA ConferenceCenter, 281 South Figueroa Street, Downtown. Figueroa Courtyard reducedparking with LACBA validation costs $10. On-site registration will begin at 5P.M., with the program continuing from 5:30 to 7:30 and dinner from 6:20 to6:50. The registration code number is 010270. The prices below include themeal.$35—CLE+PLUS members$45—LACBA members$80—all others1 CLE hour
Senior Lawyers Division and Barristers Round Table
The Los Angeles County Bar Association is a State Bar of California MCLE approved provider. To register for the programs
listed on this page, please call the Member Service Department at (213) 896-6560 or visit the Association Web site at
http://calendar.lacba.org/where you will find a full listing of this month’s Association programs.
ON THURSDAY, FEBRUARY 19, the Los Angeles County Bar Association and theSmall and Solo Division will host a program on the wise use of investigators.Good investigators are the secret weapon of any successful lawyer. SpeakerMohamad Khatibloo will discuss how to work with investigators to obtainadmissible facts and vet witnesses in order to win in an adversarial setting. Inthis program, attorneys will learn about what to do before sending aninvestigator out in the field. The seminar will take place at the LACBAConference Center, 281 South Figueroa Street, Downtown. Figueroa Courtyardreduced parking with LACBA validation costs $10. On-site registration and themeal will begin at 4:30 P.M., with the program continuing from 5 to 8:30 P.M.The registration code number is 010121. The prices below include the meal.$165—CLE+PLUS members$215—Small and Solo Division members$235—LACBA members$295—all others3.25 CLE hours
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ON TUESDAY, FEBRUARY 24, the
International Law Section,
the Corporate Law Department Section,
and the Business and Corporate Law
Section will host a seminar designed for
lawyers, other professionals, and
businesspeople who are interested in
international transactions. Speakers
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Hiraide, Ann M. Longmore, Roger D.
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$35—CLE+Plus members
$65—hosting section members
$70—LACBA members
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$90—all at-the-door registrants
2 CLE hours
Investigations and Winning Trials
44 Los Angeles Lawyer February 2009
A NEW PET TRUST STATUTE, which took effect on January 1, 2009,replaces former Probate Code Section 15212 and makes it clear thatpet trusts are now enforceable in California. That is welcome reliefto those clients who care a lot more about taking care of their petsafter their incapacity or death than they do their ungrateful children.However, the California Legislature is quite possibly the only legislativebody in the nation that could take a simple concept embodied in theUniform Probate Code—that a pet trust should be enforceable—andturn it into quagmire designed to promote such organizations as thespecial interest that sponsored it (the San Francisco Society for thePrevention of Cruelty to Animals). The resultis certain to further clog already overburdenedprobate courts with litigation.
While there are myriad problems with thenew statute, two stand out. First, among thoseauthorized to enforce a pet trust in new ProbateCode Section 15212(c) is “any person inter-ested in the welfare of the animal or any non-profit charitable organization that has as itsprincipal activity the care of animals.” Section15212(f) gives a trust’s named enforcer andthese nonprofit charitable animal care corpo-rations the right to “inspect the animal, thepremises where the animal is maintained, or thebooks and records of the trust.”
The rights of an animal care corporation to inspect not only theanimal but also the premises on which it is maintained are seeminglyunlimited. For example, there is no statutory basis to limit the rightof inspection to particular areas that specifically are maintained tohouse the animal. Instead, the inspection right seems to extend to acaretaker’s entire home. Does that mean that “enforcers” can inspectbedrooms, whether or not the pet spends most of its time in a back-yard? Can enforcers inspect closets? A safe room? Can they ask if thecaretaker maintains rat poison or firearms on the premises? Do theyneed to give reasonable notice before they come to inspect? If the care-taker does not like what the enforcers do when they inspect a prop-erty, can they be sued?
What if the animal bites the inspector from the animal care orga-nization? Is it proper for the pet trust to pay for an increased premiumon the caregiver’s homeowner’s policy? Can the trust defend andindemnify a caretaker if his or her carrier refuses to cover the pet? Orwas the inspector assuming the risk? Nor does it appear that an enter-prising contingent beneficiary who wants to get his or her hands onthe inheritance would be prevented from using an animal care orga-nization to exercise its rights under the statute to harass the caretakerof the pet to the point that the caretaker refuses to keep the pet. Inshort, if a caretaker has to let strangers from an animal care organi-zation—or 50 animal care organizations—inspect every nook andcranny of his or her house, who is going to agree to care for adeceased friend’s animals?
Subdivision (f) is even more startling when one considers that thereare no similar private (or public) inspection or enforcement mecha-nisms to ensure that guardians of minor children are doing their jobproperly.
Subdivision (e) of the statute provides animal care organizations,among others, with the right to obtain the trust accountings requiredunder Probate Code Section 16062. While accountings are waived forpet trusts that have assets worth less than $40,000, it will not be outof the ordinary to find pet trusts that have millions of dollars of assets.If a horse owner wants his or her horses to live out their lives on the
family ranch, or a dog owner wants the pet to live out its life in theBeverly Hills house that is the only home the dog has ever known,far more than $40,000 is going to be required.
To prevent an animal care organization from getting an account-ing of the trust that owns or maintains property housing the animal,the pet trust could be designed as a stand-alone trust—something thatestate planners should consider as an alternative to a pet subtrust ofa living trust. Even then, the organization could initiate litigation todemand that the trust improve the living conditions of the animalsand may be able to intrude into the finances of related trusts throughsuch litigation. (Of course, if the trustee offers to donate a tidy sumlike $100,000 to the animal care organization, maybe it will drop thewhole thing.)
It is little comfort that the road to hell may be paved with goodintentions. It still takes you where you do not want to go. Hopefully,the probate bar or judiciary can work with the legislature to fix theproblems with the new pet trust law before the problems get out ofhand. Until then, estate planners can give their clients the good newsthat pet trusts are now enforceable in California—and enterprisingattorneys will work with animal care organizations to leverage set-tlements from those trusts. ■
closing argument BY KENNETH W. KOSSOFF
The New Pet Trust Statute Is Certain to Dog the Judiciary
If a caretaker has to let strangers from an animal care
organization—or 50 animal care organizations—inspect every
nook and cranny of his or her house, who is going to agree to
care for a deceased friend’s animals?
Kenneth W. Kossoff is a Certified State Bar of California Specialist in estate
planning and probate and trust law and a member of Panitz & Kossoff, LLP,
in Westlake Village, California.
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