Sometimes the standard of review is better than you might first think

Clients (and their lawyers) can be disheartened when they conclude that the ruling they want to challenge on appeal is subject to review for abuse of discretion — a standard of review that is indeed daunting. But keep in mind that rulings ordinarily subject to review for abuse of discretion may be subject to the much more appellant-friendly de novo (independent) standard of review, in which the court of appeal decides the issue without any deference to the trial court.

The defendant-appellant in Children’s Hospital Central California v. Blue Cross of California, case no. F065603 (5th Dist. June 9, 2010) was able to take advantage of this situation. Blue Cross had a contract with the state to provide a managed care plan for Medi-Cal recipients. Plaintiff hospital and Blue Cross had a written rate agreement that lapsed, and did not enter into a new agreement for about ten months. In the interim, the hospital kept providing services and Blue Cross paid the hospital more than $4 million based on government Medi-Cal rates, but the hospital contended that the reasonable value of the services provided was nearly $11 million, and sued to recover the difference.

Blue Cross contended that the trial court improperly limited the evidence of the reasonable value of the services by denying Blue Cross’s discovery motion to compel the production of the hospital’s written agreements with other insurers and granting the hospital’s motion in limine to preclude any evidence of the rates accepted by or paid to Hospital by other payors, the Medicare Plan G fee for service rates paid by the government, and Hospital’s service specific costs. The hospital contended that reasonable reimbursement rates were governed solely by the six factors set forth in a regulation.

Normally discovery rulings and evidentiary ruling are subject to review for abuse of discretion. Here, however, Blue Cross benefited from a de novo standard, because the basis for the trial court’s rulings — its conclusion that the evidence was irrelevant — is an “analysis of the substantive law governing the case,” making it a legal issue subject to independent review.

The abuse of discretion standard is full of nuance. Don’t let it automatically discourage you from pursuing an appeal. Instead, consider the actual error to be asserted to see if it comes within independent review.

Preserving Evidentiary Objections for Appeal from a Summary Judgment

Last Friday, the California Supreme Court granted review in Reid v. Google, Inc., case no. S158965. The Supreme Court states the following as one of the issues for review: “Are evidentiary objections not expressly ruled on at the time of decision on a summary judgment motion preserved for appeal?”

Until now, the answer has generally been “no.” That’s a rule that has always rankled me because securing a ruling can be out of the objecting party’s hands. No matter how much prodding one does, the court may fail to rule.

Tom Caso at the Opening Brief pointed out this likelihood last October, when he covered a series of decisions creating a conflict on this issue in the courts of appeal.  CalBizLit posted on Friday that trial court practice as to how a court purports to rule on the objections has been “all over the map.”

It will be good to get this issue settled.  The parties have only so much control over the state of the record sometimes. (Just ask the Oakland Raiders, for an example in another context.)

More on California’s Private Attorney General Statute

This post at The UCL Practitioner notes an article about a case being argued today in the California Supreme Court (Olson v. Automobile Club of Southern California, no. S143999) addressing whether expert witness fees are recoverable under the state’s private attorney general statute, Code of Civil Procedure section 1021.5.

If the private AG statute interests you generally, make sure you didn’t miss this post from yesterday, which appears immediately below this one on the home page.

Supreme Court Gets Rid of Conflicts by Dismissing Case

Laura Ernde, a staff writer at the Daily Journal, alerted me to her piece in yesterday’s edition of that paper about last week’s dismissal of the Lockheed Litigation Cases, case no. S132167. According to her article, this was one of the oldest matters on the court’s docket and the dismissal comes more than two years after briefing was complete.

The dismissal apparently arises out of conflicts of interest. According to the article, four of the seven justices had recused themselves from these five consolidated toxic tort cases because they owned stock in at least one of the oil company defendants.

The Supreme Court’s actual order is not posted as a final disposition on the court’s website, nor does it appear to be available on Westlaw. But here’s how the docket web page for the case describes it, which may or may not be verbatim from the order:

Review in the above-captioned matter is dismissed in light of circumstances, arising since review was granted, that require a majority of the permanent members of the court to recuse themselves. (See Cal. Code of Judicial Ethics, Canon 3.E(4)(c), (5)(d); Cal. Rules of Court, rule 8.528(b).) Kennard, Baxter, Chin, and Corrigan, JJ., were recused and did not participate. Hon. William R. McGuiness, Administrative Presiding Justice of the Court of Appeal, First Appellate District, Division Three, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. Votes: George, C.J., Werdegar, Moreno, and McGuiness, JJ.

The article is devoted in large part to the unusual reasons for the dismissal. It quotes Santa Clara University law professor Gerald Uelman’s astonishment at the reasons for the dismissal, as well as Chief Justice George’s defense of it on the ground that a decision on the merits by appointed justices would not carry the same weight as a decision of the regular court members. The latter strikes me as an odd position to take in light of the fact that, as the article points out, the court has appointed 7-member panels in the past. The article claims that has happened in cases in which the entire court was “conflicted,” but writes that Chief Justice George distinguishes those prior occasions because “the new panels [on those prior occasions] were created out of necessity and not conflicts of interest.” (That is Ms. Ernde’s characterization of Chief Justice George’s position, not a quote attributed to him.)

The article quotes several of the attorneys involved in the case, none of whom saw the dismissal coming. My favorite quote is from Horvitz & Levy attorney David M. Axelrad, representing Exxon, who is quoted as saying, “Some people say that appellate litigation is not exciting. Well, that’s not actually true.”

The article also discusses the nature of the issue on the merits. The online case summary page for the case describes the issue this way:

Does Evidence Code section 801, subdivision (b), permit a trial court to review the evidence an expert relied upon in reaching his or her conclusions in order to determine whether that evidence provides a reasonable basis for the expert’s opinion?

A pretty good summary of the implications of the question appears here, at the website of environmental law firm Barg Coffin Lewis & Trapp LLP.

Ms. Ernde’s article is behind the subscription wall at the Daily Journal, so if you are not a subscriber, you’ll need to get your hands on a physical copy of the November 5 edition. Thanks to Laura Ernde for alerting me to this.

UPDATE (11/8/07): Cal Bz Lit has a post on the merits of the evidentiary issue in the case. The post includes a link to his original post on the case (which includes a nice history on the development of expert witness “gatekeeping” authority of California judges).

UPDATE ( 12/14/07): The Supreme Court — part of it, anyway — has denied a request to republish the Court of Appeal opinion.

Privilege within the Company

Lawyer advises the CEO of his client on some litigation strategy. Privileged communication, obviously. CEO then meets with his VPs and shares the information with them. Privileged?

I always thought it should be, and now I have the decision in Zurich American Ins. Co. v. Superior Court (Watts Industries, Inc.), case no. B194793 (2d Dist. Oct. 11, 2007) to back me up.

The court holds that the trial court construed the attorney-client privilege too narrowly by exempting from discovery only those documents that “contain actual copies of letters or e-mail communications from outside counsel, or documents that have been created by counsel, or received by counsel, or that contain direct communications from counsel.” Evidence Code section 952 defines confidential communications between lawyer and client much more broadly. Under section 952:

[C]onfidential communications include information transmitted to persons “to whom disclosure is reasonably necessary for the transmission of the information,” and those to whom disclosure is reasonably necessary for “the accomplishment of the purpose for which the lawyer is consulted.” Section 952 expressly includes legal opinions and advice given by a lawyer within the definition of confidential communication.

Since corporations are unquestionably “persons” who can invoke the privilege, and can only communicate through living individuals:

It follows that in order to implement the advice of lawyers, the advice must be communicated to others within the corporation. It is neither practical nor efficient to require that every corporate employee charged with implementing legal advice given by counsel for the corporation must directly meet with counsel or see verbatim excerpts of the legal advice given. But that is what the approach adopted by the referee and trial court would require in light of the narrow construction of section 952 they adopted.

But before your company gets too crazy telling everybody everything, realize there are limits: “The privilege only protects disclosure of communications, it does not protect disclosure of the underlying facts by those who communicated with the attorney.”

Documents are privileged if they (1) contain legal advice or a discussion of legal advice or strategy and (2) were not disclosed within the corporation to anyone but those identified in section 952, i.e.,

those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.

Hearsay Admissibility Conditions Blend Into Each Other

A hearsay statement regarding the infliction or threat of physical injury upon the declarant is admissible if it meets the conditions of Evidence Code section 1370, subdivision (a), which include that the statement was made “at or near the time” of the infliction or threat and that the statement was made under circumstances that would indicate its trustworthiness. In People v. Quitiquit, case no. D050385 (4th Dist. Sept. 12, 2007), the Court of Appeal says that a declarant’s statements that the defendant had caused her neck injury seven weeks earlier were not made “at or near” the time of infliction. Thus, the statements were improperly admitted, and Quitiquit’s conviction for voluntary manslaughter of the declarant is reversed.

The normal rules of statutory construction don’t seem to help much with the construction of “at or near.” Nonetheless, the court finds that “[t]he plain meaning of the phrase ‘at or near’ denotes a time close to the infliction of the injury – which in most circumstances will be within hours or days, rather than weeks or months.”

The court finds that the legislature intended the “at or near” requirement

to provide some assurance that the statements would relate to facts fresh in the declarant’s mind and reduce the risk that the statements resulted from the declarant’s prevarication or coaching by third parties.

I think this line of reasoning essentially makes the “at or near” requirement a subset of another requirement: that the statement be made under “circumstances that would indicate its trustworthiness.” The court finds that the declarant’s opportunity to reflect and deliberate, especially considering that she met with her children — at least one of whom was angry with the defendant — is evidence of both temporal distance and lack of trustworthiness. In other words, the “at or near” requirement implicates not just accuracy, but also honesty.

Justice Haller concurs in the reversal on alternate grounds but disagrees with the majority’s hearsay analysis. She relies on People v. Martinez (2000) 22 Cal. 4th 106, a case regarding the public records hearsay exception of Evidence Code section 1280, which likewise requires that the public records to have been made “at or near the time of the act, condition or event” recorded therein. The Martinez court held that “a computer generated printout of the defendant’s criminal history” could be admitted “for purposes of proving the criminal history,” despite that there may have been a 30-to 90-day delay in recording the relevant information.

Drawing from Martinez, Justice Haller contends that “at or near” cannot be measured only temporally, but rather must also be measured by practical considerations, such as the “nature of the information recorded” and the “immutable reliability of the sources from which the information was drawn.” Justice Haller would essentially impose only a “lapse of memory” test that would find a statement made “at or near” the time of the occurrence so long as there were indicia that the declarant is relating reliable information.

Does Justice Haller’s approach — using “at or near” to evaluate accuracy rather than truthfulness — come closer to the intent of the statute? Perhaps. Honesty is probably covered by the factors to be considered in determining trustworthiness, set forth in Evidence Code section 1370, subdivision (b):

[C]ircumstances relevant to the issue of trustworthiness include, but are not limited to, the following:(1) Whether the statement was made in contemplation of pending or anticipated litigation in which the declarant was interested.

(2) Whether the declarant has a bias or motive for fabricating the statement, and the extent of any bias or motive.

(3) Whether the statement is corroborated by evidence other than statements that are admissible only pursuant to this section.

Perhaps the way to evaluate this issue is first to consider whether the “at or near” factor suggests that the declarant could make an accurate statement and, if so, figure the “at or near” requirement into the calculus of whether the declarant honestly did so.

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