Litigation Tip: Settlement vs. Trial

Author: David Nied

It has been almost eight years since the Journal of Empirical Legal Studies published “Let’s Not Make A Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations.” The study compared verdict outcomes with pre-trial settlement negotiations in over 2,000 cases between 2002 and 2005. The results of the study support the conclusion that it usually is better to settle a case than to go to trial. In support of this conclusion, consider the following:

  • Plaintiffs recovered less at trial than they would have recovered by settling in 61% of the cases;
  • Defendants did worse by going to trial rather than settling in 24% of cases;
  • Both sides made the right decision to go to trial in only 15% of the cases (i.e., the verdict was between plaintiff’s last settlement demand and defendant’s last offer);
  • On average, plaintiffs who made the wrong decision to go to trial recovered $43,000 less than the defendant’s last offer;
  • On average, defendants who made the wrong decision to go to trial ended up liable for $1.1 million more than they had offered;
  • Plaintiffs were more likely to make “poor” decisions to go to trial in contingency fee cases; and
  • Defendants were more likely to make “poor” decisions to go to trial where insurance coverage was generally unavailable.

So, although defendants make fewer bad decisions to go to trial, a bad decision is much more expensive on average. Interestingly, the study also found that making the wrong decision to go trial has actually increased over time based on a study of trial outcomes over 40 years through 2004. (You can read more about the study in a New York Times article. You also can purchase a copy of the article at Wiley.)

We do our best to help our clients understand the risks of proceeding to trial. That includes explaining that no two juries are the same and that not all jurors will see a case the same way a client might see it. And, especially for plaintiffs, it includes the likelihood of making the wrong decision. In most cases, it is better to make a deal.

California Fair Pay Act Expansion – AB 46

Author: Trina Clayton

As an important reminder, in 2016, California enacted the Fair Pay Act, which revised and expanded previous state law relating to gender pay inequality – the Fair Pay Act was expanded in 2017 to address racial/ethnic wage disparity.

The current law prohibits a private employer from paying any of its employees wage rates that are less than the rates paid to employees of another gender, race or ethnicity, for substantially similar work.  If such a wage differential exists, an employer must be able to show that specific and reasonably applied factors account for the entire differential. These factors include:

  • Seniority systems
  • Merit systems
  • Systems that measure quality or quantity of production; or,
  • A “bona fide factor” other than sex, race, or ethnicity such as education, training, or experience.

In addition, the Fair Pay Act states that prior salary cannot, by itself, justify a disparity in compensation.  Unlike FEHA, the California Fair Pay Act does not require an employee show that the employer had any discriminatory intent.

Beginning January 1st, 2018, AB 46 will expand the Fair Pay Act to also cover public employers.  Public employers will not, however, be subject to the Labor Code provision applicable to private employers that makes willful violation of the Fair Pay Act a misdemeanor.   For specific legal advice regarding the California Fair Pay Act or any other employment issue, please contact Ad Astra for guidance.

Familial Status Discrimination – Part III: Potential Liability for Landlords

Author: Trina M. Clayton

There has been a marked increase in familial status suits over the past several years, with many more that settle under confidential agreements for monetary damages, making the potential for these claims quite serious.  A landlord found to be in violation of familial status housing laws could incur any number of penalties including:

  • Civil penalties of up to $16,000 for a first violation and $65,000 for future violations;
  • Actual damages to reimburse a tenant or prospective tenant for costs incurred because of the alleged discrimination such as paying for the tenant’s out-of-pocket expenses for finding alternative housing or rent fees associated with alternative housing;
  • Damages to compensate a tenant or prospective tenant who has suffered humiliation, mental anguish or other psychological injuries as a result of the alleged discrimination;
  • Punitive Damages; and
  • Attorney fees

A landlord may also be ordered by the court to take specific action to reverse the alleged discrimination (such as renting to a family which the landlord had initially rejected), and participate in fair housing training.

It is imperative a landlord abide by federal, state and local laws regarding Fair Housing.  For specific legal advice on familial status or other types of housing discrimination, please contact Ad Astra for guidance.

Federal Judge Holds California’s Death Penalty Unconstitutional

Author: Wendy Hillger

The Honorable Cormac J. Carney ruled on July 16, 2014 that the death penalty system in California is unconstitutional.  In a 29-page opinion, Judge Carney noted the system in California serves no penological purpose because of the extended period of time it takes to enforce it.  Most Death Row inmates die of natural causes rather than at the hands of the state.  There are nearly 750 inmates currently on Death Row, including San Quentin’s Ernest Dewayne Jones, the petitioner in this case.  Given the problems with lethal injections, executions have been halted in California since January 2006.

The case at present only gives a reprieve to inmate Jones, but an appeal to the Ninth Circuit Court of Appeals by the Attorney General Kamala Harris is under review.  A statewide order could come from the Ninth Circuit, and then the case could make its way to the United States Supreme Court.  The death penalty was ruled unconstitutional in 1972 by the U.S. Supreme Court, but the Court later reinstated capital punishment nationwide four years later.  Thereafter, the voters of California have instituted capital punishment three times.

If affirmed, Judge Carney’s ruling could end capital punishment in the state (temporarily if not permanently).  Inmates on California’s Death Row, including Polly Klaas’ and Laci Peterson’s killers as well as other notorious serial killers, could see their penalties commuted to life in prison sentences.

We do not take a position on capital punishment.  However, we do note that appeals in civil lawsuits take over 12 months to adjudicate.  All appeals in death penalty cases are automatically presented to the California Supreme Court.  The Supreme Court, like other courts, are struggling to keep up with the pace of cases filed.  It is axiomatic that removing the need to review prisoner death penalty appeals would speed up all other appeals.

The United States District Court for the Central District of California opinion can be found here.

Wendy Hillger Provides Pro Bono Eviction Defense for Needy Tenants in San Francisco

Author: Wendy Hillger
As part of Ad Astra’s pro bono pledge , Ms. Hillger volunteers for the Housing Negotiation Project. Recently, Ms. Hillger represented a tenant who was having trouble following the house rules. The landlord wanted to evict for these lease violations. The unlawful detainer trial was set for the very next Monday. At the Settlement Conference, Wendy Hillger was able to resolve the landlord’s objections and allow the tenant to stay. The tenant and his Clinical Social Worker were very grateful to avoid imminent eviction.

Salary Inquiry Ban – AB 168

Author: Trina Clayton

Women – Have you ever felt that you were being paid less money than the men sitting right next to you, doing pretty much the same work?   Were there times where you actually knew this to be the case?  You are not alone!

Several studies reflect the unfortunate reality that women have historically been paid less than their male counterparts for performing substantially similar work.  AB 168 was enacted to try and fix this persistent gender pay disparity.  The rationale for AB 168 being that pay inequities are perpetuated when current pay is based on past employer decisions that could have been discriminatory.

Everyone is familiar with the situation – you are applying for a new job.  Maybe you are applying online, maybe you are talking to a recruiter or the director of Human Resources.  Inevitably, the question is asked – “How much were you making at your last job?”  The reason for asking this question might be benign, but, unfortunately, it has been shown to have a notable discriminatory effect.  If a female applicant had been discriminated against at her prior place of employment (by receiving less pay than her male counterparts), the new employer might feel justified in offering her a lower salary at the new job since, “that is what she was making before.”

AB 168 makes it unlawful for California employers, including state and local governments, to ask applicants about their prior salary, compensation, and benefits.  Additionally, the employer cannot, either directly or indirectly (for instance, by asking a former employer), seek this type of information about the applicant.  The employer may consider prior salary information the applicant voluntarily and without prompting discloses, in setting pay.   However, as noted in our earlier blog post, prior salary cannot, by itself, justify gender compensation disparity.  For specific legal advice regarding gender equality regulations or any other employment issue, please contact Ad Astra for guidance.

Attention (Again) California Restaurant Employers: Congress Changes the Tip Pool Rules

Author: Sean Gentry

Earlier in the year, we reported that the Department of Labor was proposing to rescind prior Federal restrictions on tip-pool arrangements, and that we expect a related decision from the U.S. Supreme Court on those rules.

In a somewhat unexpected turn, Congress decided to directly intervene on the tip-sharing agreements under the Fair Labor Standards Act as a part of a recently-passed spending bill.

Under the new federal law, employers with regularly tipped employees may include a broader group of employees in employer-mandated tip-pool arrangements, including any employees who provide “direct table service” or who are in the “chain of service.”

Read More >

Demurrers to Answers: Changing the Practice of Drafting Defenses

Author: Scripta Ad Astra Staff

Usually, when answering an unverified complaint in California Superior Court, counsel for the defendant will file a general denial, along with a laundry list of “boilerplate” affirmative defenses that might apply to the plaintiff’s claims.  More often than not, the defendant’s answer will fail to include any specific facts supporting those defenses.

At first blush, this common practice may appear to be the result of sloppy or lazy work.  However, vagueness in the defendant’s answer is often a result of the fact that most defendants do not have the ability to prove their defenses at the initial answering phase, usually well-before conducting any discovery.  In addition, the defendant has significant incentive to be over-inclusive when it comes to affirmative defenses, as a party waives un-pled defenses.  An argument can be made that requiring specific facts at the preliminary answering phase of the proceeding may result in significant prejudice and a miscarriage of justice to the defendant who is unable to specifically plead all of its potential affirmative defenses.

On the other hand, the defendant’s inclusion of copious amounts of affirmative defenses that are not likely to ever be used in the case may be so excessive it borders on abuse.  More and more plaintiffs’ attorneys are bringing demurrers to the affirmative defenses in answers.  These demurrers are based upon the respective defendant’s failure to state facts sufficient to constitute a defense pursuant to the requirements of California Code of Civil Procedure Section 430.20.

Many practitioners on both sides do not realize that the affirmative defenses stated in the answer must aver facts as carefully and with as much detail as the facts which constitute the cause of action alleged in the complaint: the defendant is required to plead ultimate facts, rather than evidentiary matters or legal conclusions.  See Doe v. City of Los Angeles, (2007) 42 Cal. 4th 531, 550, and FPI Development Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384.  However, even where a defense is defectively pled, it may be allowed if the defendant’s pleading gives sufficient notice to enable the plaintiff to prepare to meet the defense, in part because un-pled defenses are waived.  See Harris v. City of Santa Monica (2013) 56 Cal. 4th 203, 240.

When the defendant has filed a factually unsupported answer, there is a strong probability that a judge will sustain the plaintiffs’ demurrer to the answer, but will simultaneously grant the defendant leave to amend.  Therefore, it is best practice to determine whether the demurrer is necessary.   The plaintiff’s attorney should ask whether the motion will ultimately save costs on discovery by eliminating meritless affirmative defenses at the outset, or whether it is going to burn attorney’s fees with little benefit to the client.  In cases with a “burning limits” insurance policy or with a defendant with limited funds, creating more work for your opponent ultimately reduces the funds available for settlement.  Expedient trial scheduling may also be adversely affected by a demurer to the answer.  Many courts have a considerable backlog for dates to hear demurrers, and, as result, the demurrer may still be pending at the time of the initial case management conference. When that happens, because the case is not at issue, the likelihood of obtaining the earliest-possible trial date is slim to none.  The defendant’s attorney faced with a demurrer to the answer must determine whether it is cost-effective to oppose a motion that will likely be granted, or to offer to amend the answer.  Although unlikely, a court could potentially sustain the demurrer as to some or all of the affirmative defenses without leave to amend.

The answering defendant is in the position of avoiding the situation altogether by being more careful in drafting affirmative defenses.  However, if there is a dispute as to the factual sufficiency of affirmative defenses in an answer, the most expedient solution is to simply attempt to informally resolve the dispute by meeting and conferring with opposing counsel to discuss the defenses.  If possible, the parties should agree to amend the answer to remove unnecessary affirmative defenses and include some facts within the defendant’s knowledge to give notice of the bases for the meritorious defenses.
If the parties can be reasonable and informally resolve their dispute, they will: (1) avoid unnecessary attorneys’ fees (which the clients will appreciate), (2) advance the case beyond the pleading phase (which the attorneys should appreciate), and (3) prevent excessive motion practice in the already-over-burdened courts (which the judge will appreciate).

In Times of Divorce, You Still Need to Properly Disclose the Financials

Author: Regina Franco

By law, spouses are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. Family Code § 721. This fiduciary duty arises on the date of marriage and does not end just because divorce proceedings have begun.

Among the issues requiring resolution through divorce is property division. In order to effectuate a division of property within the parameters of the law, parties must comply with the disclosure requirements of the Family Code. Parties are required to exchange complete and accurate declarations of disclosures listing all assets and debts in which a party has an interest regardless of whether the characterization of the asset or debt is separate or community property. When making disclosures, parties must uphold their fiduciary duties owed to each other and once disclosures are exchanged, the fiduciary duty requires that the parties update and augment their disclosures to the extent there have been any material changes so that when the parties enter into an agreement regarding property division, each has full and complete knowledge of the relevant underlying facts.  Family Code § 2100.

The Court will not enter a judgment of divorce unless the disclosure requirements have been met. Completing and exchanging declarations of disclosures are not only a technical step to getting divorced, but a very serious requirement. A violation of the disclosure requirements or a breach of the fiduciary duty could result in an award of 100% of the undisclosed asset to the complying spouse or a set aside of a judgment of divorce. There is no question that full disclosure is not only best practice, but also is mandated by law.


LGBT Rights for Long-Term Care Facility Residents

Author: Trina Clayton

Along with SB 396 , another new law expanding transgender rights in California is SB 219 – the Lesbian, Gay, Bisexual, and Transgender (LGBT) Long-Term Care Facility Resident’s Bill of Rights – will go into effect on January 1, 2018.  The catalyst for this bill comes from the unique needs of California’s senior LGBT population.  Studies have indicated that many older LGBT adults do not have children and report a higher-than average incidence of poor physical health, which includes living with HIV or AIDS.  As a result, many LGBT seniors have a heightened need for care when compared to seniors in California generally, but often lack the family support networks available to non-LGBT seniors and will likely rely more heavily on long-term care facilities.

SB 219 makes it unlawful for a facility or its staff to take certain actions because of a person’s actual, or perceived sexual orientation, gender identity, gender expression, or HIV status, including:

  • Denying admission to a long-term care facility,
  • Transferring or refusing to transfer a resident within a facility or to another facility;
  • Evicting or discharging a resident;
  • Willfully and repeatedly failing to use a resident’s preferred name or pronoun;
  • Prohibiting residents from wearing clothing that is allowed for any other resident; and
  • Restricting the right to associate with other residents.

For specific legal advice regarding gender identity/expression regulations or any other employment issue, please contact Ad Astra for guidance.