The following is our summary of the Supreme Court’s actions on petitions for review in civil cases from the Court’s conference on Wednesday, January 14, 2015. The summary includes those civil cases in which (1) review has been granted, (2) review has been denied but one or more justices has voted for review, or (3) the Court has ordered depublished an opinion of the Court of Appeal.
Solus Industrial Innovations v. Superior Court, S222314—Review Granted—January 14, 2015
The question presented is whether federal law preempts a district attorney’s attempt to recover civil penalties under California’s Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.) based on an employer’s violation of workplace safety standards that resulted in the deaths of two employees. The district attorney brought an action seeking civil penalties for the UCL violations. The defendant demurred, arguing an award of UCL penalties to a prosecutor is not part of California’s federally-approved workplace safety plan. The trial court overruled the demurrer.
The Court of Appeal initially denied the defendant’s petition for writ of mandate but the Supreme Court granted review and transferred the case back to the Court of Appeal. The Court of Appeal, Fourth Circuit, Division Three, then held in a published opinion, Solus Industrial Innovations, LLC v. Superior Court (2014) 224 Cal.App.4th 17, that (1) state regulation of workplace safety standards is explicitly preempted by federal law under the Occupational Safety & Health Act and (2) California is entitled to exercise its regulatory power only in accordance with the terms of its federally approved workplace safety plan.
926 North Ardmore Avenue v. County of Los Angeles, S222329—Review Granted—January 14, 2015
The question presented is whether Revenue and Taxation Code section 11911 authorizes a county to impose a documentary transfer tax based on a change in ownership or control of a legal entity that directly or indirectly holds title to real property.
BA Realty LLP owned 926 North Ardmore Avenue LLC (Ardmore), a single member entity made to hold and manage an apartment building. BA Realty sold 90 percent of its partnership interests to two trusts. The County of Los Angeles asserted that the sale constituted a “change of ownership” within the meaning of Revenue and Taxation Code section 64, subdivision (c) or (d), thereby triggering a documentary transfer tax. After a bench trial, the trial court entered judgment in favor of the County, holding that a documentary transfer tax could be collected even though the apartment building was owned by the lower tier entity, Ardmore, and not BA Realty.
The Court of Appeal, Second District, Division Seven, held in a published opinion, 926 North Ardmore Avenue v. County of Los Angeles (2014) 229 Cal.App.4th 1339, that the sale constituted a “change of ownership” under Revenue and Taxation Code section 64, subdivision (d), and thus section 11911 because the subtrusts that owned BA Realty collectively sold over 50 percent of its interest in the property.
Network Capital Funding Corp v. Papke, S222638—Review Granted & Held—January 14, 2015
The question presented is whether the trial court or the arbitrator decides whether an arbitration agreement provides for class arbitration if the agreement itself is silent on the issue.
The plaintiff corporation filed a declaratory relief action asserting that the defendant was required to arbitrate his wage and hour dispute on an individual basis rather than a class basis. The parties agreed to arbitration but there was no explicit language showing that the parties agreed to class arbitration. The trial court held that it, rather than an arbitrator, must decide whether the arbitration agreement authorized class arbitration.
The Court of Appeal, Fourth District, Division Three, affirmed in a published opinion, Network Capital Funding Corp. v. Papke (2014) 230 Cal.App.4th 503, holding that both parties must agree to class arbitration. Such an agreement cannot be inferred from the existing of an arbitration agreement, as held in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. 662, 683. The Supreme Court granted review but ordered briefing deferred pending its decision in Sandquist v. Lebo Automotive, Inc., S220812.
Review Denied (with dissenting justices)
Baek v. Continental Casualty Company, S222622—Depublished Court of Appeal Opinion—January 14, 2015
In an underlying action, a massage therapist was accused of sexually assaulting a client during a massage. In the present action, the therapist filed suit against his employer’s general liability insurer, alleging it owed a duty to defend and indemnify him in the underlying action. He alleged that the insurer’s failure to do so constituted breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud. The trial court sustained the insurer’s demurrer to all causes of action, concluding as a matter of law that the therapist was not entitled to a defense under the insurance policy.
In a published opinion, Baek v. Continental Casualty Company (2014) 230 Cal.App.4th 356, the Court of Appeal, Second District, Division Four, affirmed. The court held that, because the intentional sexual assault alleged in the underlying action could not be characterized as within the scope of employment or having occurred while performing duties related to the employer’s business, the therapist was not insured under the policy and the insurer had no duty to defend or indemnify.
The Supreme Court denied the therapist’s petition for review and directed the Reporter of Decisions not to publish the Court of Appeal’s opinion in the Official Appellate Reports. (Cal. Const., art. VI, section 14; Cal. Rules of Court, rule 8.1125(c)(1).)