Calif. supreme court saves consumer class actions

In a major victory for consumers, the California Supreme Court has unanimously cut back on corporations’ ability to toss out class actions.

Emergent LLP’s Peter Roldan served as counsel to Emergent’s client, Diana Nieves Noel, along with Public Justice, a nonprofit dedicated to consumer and worker rights.

The decision handed down in Noel v. Thrifty Payless, Inc., held that the "ascertainability" requirement for class certification does not require plaintiffs, including consumers and employees, to show all class members can be identified through official records in order to gain class action certification. The ascertainability standard defendants had advocated would have made it all but impossible for consumers to win class certification in the California courts

“This is an important ruling for consumers and employees. Corporations have used the stricter version of the ascertainability doctrine adopted by the California Court of Appeals a few years ago to eliminate plaintiffs’ right to use class actions. The result has been that corporate misbehavior has increasingly been ignored, as plaintiffs cannot afford to try these actions on individual basis.  We're glad the California Supreme Court has rejected this unfair standard,” said Mr. Roldan.

The suit at issue focused on the purchase of a $60 backyard pool from a Rite-Aid store. The pool was one-half the size of the product’s packaging. While the group of potential plaintiffs was easily ascertainable – 20,000 other California consumers bought the product from Rite-Aid – the trial court threw out the case claiming that because some purchasers used cash and didn’t keep receipts, Rite-Aid would not be able to identify them.

The Supreme Court reversed this decision, noting the importance of having a realistically obtainable class action certification standard. The court noted:

“Thus the true choice in this case is not between a single class action challenging the packaging of the Ready Set Pool and multiple individual actions pressing similar claims; it is between a class action and no lawsuits being brought at all.”

Mr. Roldan noted the ultimate impact impact of this decision: “Consumers and employees will now have a better chance of getting their day in court for corporate misbehavior.”

Email Peter (peter@emergent.law) or contact us to learn more about how Emergent LLP can help clients with potential consumer fraud claims.


SETH ROSENBERG OBTAINS $4.5 MILLION JURY VERDICT AGAINST EDM DJ SKRILLEX

A Los Angeles jury on Nov. 20 awarded Jennifer Fraissl $4.5 million in damages against DJ and producer Skrillex (real name Sonny John Moore), his touring company, Lost Boys Touring Company, Inc., and the Belasco Theater in Los Angeles.

Fraissl alleged that on February 11, 2012, Skrillex stage dove at the end of his set, causing her to be struck in the back of her head and neck. Although she was unaware of it at the time, the blow caused her to suffer a rare vertebral artery dissection, followed by a catastrophic stroke 16 days later.

The jury voted 12-0, finding all defendants negligent and responsible for Fraissl’s stroke.  The jury found Skrillex 35 percent responsible, Lost Boys Touring, Inc. 40 percent responsible, and the Belasco Theater 10 percent liable.  The jury awarded Fraissl $4.5 million in damages, which will be reduced to over $3.8 million because the jury found Fraissl 15 percent at fault. 

Fraissl was represented by Seth I. Rosenberg of Emergent LLP, and B. Mark Fong of Minami Tamaki LLP. Fraissl’s attorneys believe this is the first successful jury award in a case involving injuries resulting from a performer’s crowd dive.

Fraissl’s case faced numerous obstacles, including asking the jury to find the defendants liable for a blow that could not be seen on videos of the show, and which occurred in a setting where many people assume stage diving occurs. Fraissl’s attorneys also had to convince the jury that her stroke being caused by the blow to her head two weeks earlier was not only possible, but probable. Ultimately, credible expert and lay witnesses, plus a remarkably effective trial presentation prevailed.

“Skrillex caused Jennifer Fraissl to be injured, and the jury saw past his celebrity and wealth to hold him and the other defendants responsible,” said Rosenberg. “We presented a common-sense case despite attempts by the Skrillex team to blame the victim.”

Fraissl’s attorneys called experts from fields such as vascular neurology, interventional neuroradiology, security, and biomechanics to explain the complexity of arterial dissections and stroke, as well as crowd dynamics during a stage dive.

“Jennifer Fraissl showed that when the truth is on your side, David can beat Goliath,” said Fong. “We’re glad Jennifer persevered through this six-year-long case and are thankful to the jury and the judge for a fair and impartial trial.”

Jennifer Fraissl was represented by attorneys Seth I. Rosenberg of Emergent LLP and B. Mark Fong of Minami Tamaki LLP, and paralegal Brian Edgar, also of Minami Tamaki LLP.

The three battled a small army from international law firm Baker McKenzie, including five attorneys, a dedicated technology specialist, substantial litigation support, and endless resources.  The trial took five weeks and the jury deliberated for two days.

Email or call Seth (seth@emergent.law | (415) 894-9284 x104) or contact us to learn more about how Emergent LLP is helping clients navigate the field of complex litigation.

Emergent LLP Partner Peter Roldan Publishes Article on Use of Bitcoin by Law Firms

Emergent LLP partner Peter Roldan heads Emergent’s Blockchain and Digital Currency practice group, which draws on the firm’s expertise in corporate and securities law, regulatory compliance, FinTech, intellectual property, privacy law, and cybersecurity.  Peter recently published an article in the Spring 2018 issue of San Francisco Attorney magazine entitled “Bitcoin: A Primer for Attorneys.”  The article, which can be found here, provides guidance to attorneys regarding the use of bitcoin in their practices.

Email Peter (peter@emergent.law) or contact us to learn more about how Emergent LLP can help clients involved in the burgeoning blockchain industry.

Supreme Court of California Grants Review of Emergent Class Action Case

On February 28, 2018, the Supreme Court of California granted the petition of Emergent LLP client James Noel to review the appellate decision denying certification of his class action lawsuit against Rite Aid, which sold Noel and 20,000 other California consumers an inflatable “Ready Set Pool” using packaging that deceptively exaggerated the size of the pool.  A copy of the petition, which includes photographs of the pool and packaging, is here.

The Supreme Court’s decision on Noel’s petition could affect numerous class actions brought under California’s consumer protection laws.  Rite Aid argued, and the appellate court agreed, that a class of pool purchasers could not be certified, because Noel had not shown that Rite Aid’s records contained enough contact information for the court to personally notify each class member of the lawsuit. 

This rationale would apply to every consumer class action and, Noel argued, would spell the end of consumer class actions in California.  Large retailers and manufacturers often do not retain individualized data about the sales of their products, and if consumer class actions could be defeated by an absence of contact information, companies likely to be sued for deceptive advertising, defective products, or any other mass consumer harm could insulate themselves by purging their purchase records or anonymizing those records so they retained the demographic information companies use to target their advertising, but eliminated the identifying information that would permit a class action.

The parties will submit their briefs to the Court between March and May, and the Court will then set a date for argument, likely in 2019.  Emergent partners Peter Roldan and Christopher Wimmer represent the late Noel, who passed away in 2016, and his widow.

Emergent LLP has an active appellate practice, representing parties in the Court of Appeals for the Ninth Circuit, California Court of Appeal, and Supreme Court of California, as well as amici curiae in the Supreme Court of the United States.  To find out whether Emergent can handle your appeal, contact us.

Emergent Partner Peter Roldan Argues High Profile D&O Insurance Appeal in the Ninth Circuit

Emergent LLP partner Peter Roldan represents corporate and individual policyholders in insurance coverage and bad faith litigation.  On February 13, Peter appeared before the Ninth Circuit for oral argument in HotChalk, Inc. v. Scottsdale Ins. Co., a much-discussed case that commentators believe “is likely to shape the scope of professional services exclusions.”  Law360 named it one of the three key D&O insurance cases to watch in 2018. 

Appearing on behalf of Emergent’s client, HotChalk, Inc., a leading online education platform that serves universities and students across the United States, Peter advocated for a reversal of the district court’s holding that HotChalk could only be liable for the claims alleged against it because of the professional services that it provided, even if, as was the case here, there was only a minimal causal connection or incidental relationship between the claim and HotChalk’s professional services.  This standard, if upheld, would essentially eviscerate D&O coverage for HotChalk and other professional service companies.

Peter argued that the professional services exclusion should only apply to claims arising out of a company’s provision of services to its clients and customers, and that it was not meant to exclude claims arising out of an insured’s internal business practices and management decisions.  Otherwise, professional service companies would find that their coverage was effectively swallowed up by the exclusion because almost everything they do is in some way tied to the services they provide.

Video of Peter's argument is available through the Ninth Circuit's YouTube channel.

Emergent also received support from policyholder advocacy group United Policyholders, which filed an amicus brief in connection with the appeal, seeking to reverse the trend of insurers stretching the professional services exclusion beyond its intended scope.

Peter's Ninth Circuit oral argument is the second Emergent partners have presented in the past three months; over that same period, the firm also argued two cases before the California Court of Appeal.  To find out whether Emergent can handle your appeal, contact us.

In Broad Terms, California Court of Appeal Finds No Insurance Coverage in Opioid Lawsuit

Emergent LLP partner Peter Roldan represents corporate and individual policyholders in high-value insurance coverage and bad faith litigation, including a significant pending appeal before the Court of Appeals for the Ninth Circuit.  Below, he discusses a recent California Court of Appeal decision rejecting coverage for a drug manufacturer sued for causing addiction and other harms of the opioid crisis, in terms that insurers are likely to apply broadly to future claims.  If you believe your insurer is resisting paying your insurance claim, email Peter (peter@emergent.law) or contact us.

Sued for Promoting Opioids, Drug Manufacturer Actavis Is Denied Coverage by Its Insurer

Well before the nation’s opioid crisis was declared a public health emergency by President Trump, numerous states, counties, and municipalities were launching investigations and bringing lawsuits against the pharmaceutical manufacturers and distributors who are alleged to be responsible for the epidemic.  In defending against these actions, the targeted companies have sought coverage under their commercial general liability (“CGL”) insurance policies for their mounting defense costs and for indemnity against any judgments, while insurers have sought to limit their duties.

The question of whether insurance coverage exists for these suits was recently addressed by the California Court of Appeal in Traveler’s Property Casualty Co. of America v. Actavis, Inc., No. GO53749, 2017 WL 5119167 (Nov. 6, 2017).  The court concluded that Travelers had no duty to defend various pharmaceutical manufacturers who were alleged to have engaged in a “common, sophisticated, and highly deceptive marketing campaign” designed to increase sales of opioid products.

The County of Santa Clara and the County of Orange brought a lawsuit against Actavis and other pharmaceutical companies who were involved in promoting opioid products for treatment of long-term chronic pain (the “California Action”).  The City of Chicago brought a separate action making essentially the same allegations (the “Chicago Action”). Travelers, which insured Actavis, Inc. and other related companies under a series of CGL policies issued by Travelers and St. Paul Fire and Marine Insurance Co., denied that it had any duty to defend Actavis in either action and brought a lawsuit to obtain a declaration that it had no obligation to defend or indemnify Actavis.

Actavis had purchased primary CGL policies from St. Paul which covered “damages for covered bodily injury or property damage” that are “caused by an event.”  “Event” is defined as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  Actavis was also covered under a series of policies issued by Travelers, which covered damages “because of ‘bodily injury’ or ‘property damage’ “caused by an “occurrence.”  “Occurrence” is also defined as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  Both sets of policies also contained products and completed work exclusions, which applied to bodily injury or property damage “arising out of” Actavis’ products and work, including statements or representations about the durability, fitness, handling, maintenance, operation, performance, quality, safety or use of its products.

Court Finds No Duty to Defend, Because Manufacturer’s Alleged Scheme Was Not an “Accident”

After a bench trial on stipulated facts, the trial court found (1) the California Action and the Chicago Action did not allege an “accident” as required by the definition of “occurrence” or “event” to create a duty to defend and (2) the products/work product exclusions precluded coverage for Actavis’ claims. 

The Court of Appeal agreed, finding that the allegations that Actavis engaged in “a common, sophisticated, and highly deceptive marketing campaign” aimed at increasing sales of opioid products could only be characterized as deliberate, intentional acts, meaning that they did not constitute an accident under a CGL policy.  The court then turned to the question of whether “some additional, unexpected, independent, and unforeseen happening” produced the injuries alleged in the California and Chicago Actions, or if the injuries were a direct result of the “flood of opioids that entered the market” as a result of Actavis’ marketing campaign.  It then concluded that the injuries, which included “(1) a nation ‘awash in opioids’; (2) a nationwide ‘opioid-induced “public health epidemic’”; (3) a resurgence in heroin use; and (4) increased public health care costs imposed by long-term opioid use, abuse, and addiction,” was not additional, unexpected, independent, or unforeseen.

Opioid Crisis Not a Normal Consequence; Misprescription Not an Independent Cause

The court rejected Actavis’ argument that the alleged injuries were not the “normal consequences of the acts alleged” and found that in order for Actavis’ opioid products to end up in the hands of abusers, it was necessary for doctors to prescribe the drugs to abusers.  The court noted that the role of doctors in prescribing or misprescribing drugs was not an independent or unforeseen happening.

Addiction Is a Bodily Injury, But a Result of Actavis’s Products, and So Excluded under the Policy

Although the trial court did not reach the question of whether the harms alleged in the California and Chicago Actions constituted “bodily injury,” the Court of Appeal found that the actions alleged two categories of such injuries: (1) overdose, addiction, death, and long-term disability arising out of the use and abuse of opioids; and (2) the resurgence of the use and abuse of heroin, which was allegedly triggered by use and misuse of opioids.  However, the court, applying a broad interpretation of the term “arising out of,” found that these two categories of injury “arose” out of Actavis’ opioid products.  Therefore, the claims—including the claims of injury due to heroin abuse—were excluded under the products exclusions contained in the Travelers and St. Paul policies.  The court also examined the split in federal and out-of-state authorities regarding the issue of whether products exclusions only applied to an insured’s defective products.  It agreed with the analysis of the Florida Supreme Court in Taurus Holdings v. U.S. Fidelity, 913 So. 2d 528 (Fla. 2005), which found that the products exclusion was not limited to defective products.

Policyholders Will Likely Need Assistance with Claims Arising from Opioid Lawsuits

The Court of Appeal’s decision will likely embolden liability insurance carriers to deny the claims of defendants in opioid lawsuits, unless the policyholders can distance themselves from manufacturing activities and from any allegedly deceptive marketing campaigns.  Otherwise, relying on the Actavis case, insurers will likely take the position that coverage is barred either because there is no “occurrence” or because liability arises out of the insured’s products (unless separate products/completed operations coverage exists).

For policyholders in general, the decision is a reminder to carefully examine all lawsuits to determine whether the basis for a covered “accident” exists, as this will always depend on the specific facts alleged in the complaint.  Furthermore, although the Actavis court applied a broad interpretation of the phrase “arising out of” in the context of an exclusion, California courts continue to be divided on this issue, and the question of whether a broad or narrow interpretation of this key phrase should apply is also likely to remain a fact-dependent issue.  To get the value out of your policy, be sure to have your claim reviewed by an experienced attorney who understands policy interpretation well.