Seventeen years ago, in 2004, the California Legislature enacted the Labor Code Private Attorneys General Act of 2004 (“PAGA”). Appropriately dubbed a “bounty hunter” law, PAGA authorizes any current or former “aggrieved” employee of a California employer to file suit to seek statutory penalties for essentially any violation of the California Labor Code together with attorney’s fees, hence the incentive for plaintiff attorneys to bring such cases. Specifically, under PAGA a current or former employee who is “aggrieved” by a violation of the California Labor Code can seek in addition to damages and liquidated damages, civil penalties on the employee’s behalf and on behalf of all other similarly “aggrieved” (i.e., affected) current and former employees. The recoverable civil penalties are up to $100 per employee per pay period for an initial violation and $200 per employee per pay period for each subsequent violation, plus attorney’s fees and litigation costs. When such penalties are awarded, the plaintiff current or former employee along with all other similar “aggrieved” employee will receive 25% of the penalties together with their attorney’s fees as a “bounty,” with the balance of the penalties payable to a State agency known as the California Labor and Workforce Development Agency.
The California homestead exemption has been amended effective January 1, 2021. Under the new law, the homestead exemption now protects home equity equal to the median home price in the county where the debtor resides, not to exceed $600,000, or $300,000, whichever is greater. The exemption adjusts annually for inflation. The homestead exemption should be taken into consideration when the defendant may be personally liable for the judgment.
The California Supreme Court has rejected an emergency constitutional challenge filed by drivers for Uber, Lyft and other app-based companies and various unions requesting that the Court declare the voter-approved Proposition 22 unconstitutional. Proposition 22 (“Prop 22”) permits some app-based gig ride-hailing and delivery companies to continue to classify workers as independent contractors despite California’s adoption of the stringent ABC test for worker classification (discussed here). The union-backed challenge to Prop 22 was not decided on the merits and continued legal activity challenging Prop 22 is expected. The lawsuit is entitled Hector Castellanos, et al. v. State of California, et al., Case Number S266551.
In MSY Trading Inc., et al. v. Saleen Automotive, Inc., the California Court of Appeal recently ruled on a question of first impression: whether a postjudgment, independent action to establish alter ego liability for a judgment on a contract is subject to an award of attorney fees (pursuant to the contract) for a prevailing party, even if the prevailing party had not signed that contract. The Court of Appeal affirmed that any prevailing party, having prevailed in an action based on the contract, could properly seek attorney fees as allowed by the contract. The Court of Appeal also noted that had such alter ego allegations been made in the prior breach of contract action, the prevailing party would most certainly have been entitled to recover its attorney’s fees — therefore, the postjudgment, independent action to establish alter ego liability on that judgment must be considered an action based on the contract.
On April 23, 2020, the United States Supreme Court ruled that a trademark holder need not prove that the infringement of its trademark was willful in order to recover an award of the infringer’s profits. The Court’s decision in Romag Fasteners, Inc. v. Fossil, Inc. resolves a longstanding circuit split and may make it easier for trademark holders in many jurisdictions, including the Ninth Circuit, to recover damages in trademark infringement cases.
On March 23, 2020, the Supreme Court unanimously held in Allen v. Cooper that, absent consent, states cannot be sued for copyright infringement and are shielded from such actions under the doctrine of sovereign immunity. The Court found that the Copyright Remedy Clarification Act of 1990 (CRCA), which expressly provided that states “shall not be immune” under any doctrine of sovereign immunity for copyright infringement, was an unconstitutional abrogation of state sovereign immunity. However, the Court also noted that its decision would “not prevent Congress from passing a valid copyright abrogation law in the future” that is more tailored to pass constitutional muster.
Owners conducting business through a legal entity often do so to limit personal liability and to protect assets unrelated to the business from commercial risks. However, once formed, owners sometimes jeopardize those exposure limiting objectives by filing away their incorporation documents and neglecting corporate formalities. That approach may work fine until, of course, an adverse party argues that the business entity should be disregarded as an ‘alter ego’ of the owners.
In Techno Lite, Inc. v. Emcod, LLC, the California Court of Appeal recently affirmed the finding that an employee can be liable for fraud when said employee violates his promise not to compete with his employer while still employed. Though public policy in California places strict limitations on non-compete agreements after an employee has left employment, this shield was never meant to become a sword by which an employee could undermine his employer with impunity even before his employment ends.
In Magic Carpet Ride LLC, et al. v. Rugger Investment Group, LLC, the California Court of Appeal recently reversed a trial court’s decision to grant summary adjudication on a breach of contract claim where the defendant was eight days late in depositing a required lien release. Even though the contract stated that “time is of the essence” and the late deposit violated the strict terms of the contract, the Court of Appeal clarified that it could be considered substantial performance, creating a triable issue of material fact which made summary adjudication improper.
October marks the opening of the new Supreme Court 2019-2020 term and there is one case in particular that trademark practitioners are anxiously awaiting for the Court to weigh in on to resolve a longstanding circuit split and definitively answer the question whether willful infringement is a prerequisite for an award of an infringer’s profits in an action for trademark infringement.
Other AALRR Blogs
- California Court of Appeal Issues Potentially Far Reaching Decision Regarding California’s “Bounty Hunter” Labor Code Private Attorneys General Statute
- Supreme Court Ruling Narrowing Patent Assignor Estoppel Doctrine Favors Employee Mobility In Post-Employment Disputes Involving Invention Assignments
- Supreme Court Ruling in Google v. Oracle Marks Significant Victory for Copyright “Fair Use” in Commercial Works
- Recent Amendment to California’s Homestead Exemption May Make Recovery On Personal Monetary Judgments More Difficult
- California Appeals Court Increases Creditor Protections, Limits Protections for a Debtor’s Out-Of-State Transfers.
- Government Watchdog Advises Division of U.S. Treasury Department Against Use of GPS Cell Phone Data Without a Warrant
- President Biden’s Administration Halts Department of Labor’s Final Rule for Worker Classification
- PAGA: Here, There, Anywhere?
- Union-Backed Challenge to Proposition 22 Rejected by California Supreme Court
- COVID Class Action Report: Nike Settles Class Action By Providing Retail Employees with Transparent Face Coverings
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