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June 2000 
Vol. 6 No. 6 ISSN 1087-6219
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The California Supreme Court has invoked the common law right of fair procedure to deny summary judgment to an insurer that removed a doctor from its preferred provider list. A private organization's actions against one of its members must be substantively rational and procedurally fair, if the organization has power so substantial that its actions significantly impair the member's ability to practice his or her profession in a particular geographic area.
In 1990, Metropolitan Life agreed to include Dr. Louis Potvin on two of its preferred provider lists. The agreement provided that either party could terminate it without cause on 30 days notice. Metropolitan Life purported to terminate the agreement in 1992 without cause. When pressed, it explained that Dr. Potvin did not meet its current standards for selection and retention.
Metropolitan Life wished to restrict its list to doctors who had not been sued more than twice. Dr. Potvin had been sued four times. After the insurer refused to grant him a hearing, Dr. Potvin sued for damages, claiming that its actions devastated his practice.
The Supreme Court ruled that there was a factual issue as to whether Metropolitan Life had the power necessary to trigger the common law right to fair procedure. The removal of a doctor from a major insurer's preferred provider list may also be imbued with the public interest.
The without cause provision in Metropolitan Life's agreement could not constitute a waiver of the right to fair procedure. If the circumstances require fair procedure, it would offend public policy to enforce a waiver.
Three justices, led by Justice Brown, dissented. They accused the majority of declaring a public policy that California doctors are entitled to a minimum income. That policy announcement should have come from the legislature. Further, the court should have enforced the “without cause” clause in the agreement. There is no statutory or constitutional provision that renders it in violation of public policy.
Potvin v. Metropolitan Ins. Co., 95 Cal. Rptr. 2d (2000).
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The Ninth Circuit has ruled that employers may not take adverse action against applicants or employees because of concerns about their health or safety. The “direct threat” defense to Americans with Disabilities Act (ADA) liability is limited to threats to other persons in the workplace.
Mario Echazabal worked for a maintenance contractor at Chevron's oil refinery in El Segundo. In 1992, Echazabal's application to work directly for Chevron was turned down because of a physical examination that showed his liver was releasing enzymes at an abnormal rate. Subsequently, he was diagnosed with asymptomatic, chronic active hepatitis C. He continued working for the maintenance contractor without difficulty.
In 1995, Chevron again turned down Echazabal's application after a physical examination. It also barred him from working at the refinery as an employee of the maintenance contractor. Chevron feared that he would suffer liver damage from exposure to solvents and chemicals at the refinery. However, none of Echazabal's doctors had ever told him that he should stop working at the refinery because of his medical condition.
The ADA provides that an employer may impose as a qualification standard a requirement that an employee “shall not pose a direct threat to the health or safety of other individuals in the work place.” The EEOC and the Eleventh Circuit have opined that the provision applies to threats to the employee's own health and safety. Moses v. America Nonwovens, Inc., 97 F.3d 446 (11th Cir. 1996); 29 C.F.R. §§ 1630.2(r), 1630.15(b)(2).
The Ninth Circuit ruled that the statute cannot be stretched to establish a defense for direct threats to the employee's own health and safety. There is nothing in the legislative history to show that Congress intended to allow the employer to consider the employee's health and safety.
The literal reading of the statute also coincides with the announced principles that underlie the ADA and other employment discrimination statutes. Congress intended to combat the overprotective paternalism that it perceived as having burdened the disabled. Decisions under Title VII have similarly inveighed against paternalistic discrimination against women. Disabled individuals must have the freedom to determine for themselves whether to put their own health and safety at risk.
If it stands, the Ninth Circuit's decision will create a conflict between state and federal disability law. California's disability statute expressly provides that there is no liability if the employee “cannot perform those duties in a manner that would not endanger his or her health or safety or the health or safety of others even with reasonable accommodations.” Cal. Gov't Code § 12940(a)(1).
Echazabal v. Chevron USA, Inc., 2000 WL 669137 (9th Cir. May 23, 2000).
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The Second District Court of Appeal in Los Angeles has ruled that the “firefighter's rule” does not bar a police officer's claim against the spouse of a dangerous individual who shot the officer. The spouse affirmatively misrepresented the situation when the police officer arrived on the scene.
Officer Donald Boon responded to a 911 call at the home of Reynaldo Rivera and his wife Milagro. According to Officer Boon's complaint against Milagro, she knew that Reynaldo was dangerous and had threatened to kill the first police officer to show up at the house. Nonetheless she told Officer Boon that Reynaldo was not dangerous. In reliance on Milagro's statement, Officer Boon responded with nonlethal force. Reynaldo shot and severely injured him. If Officer Boon had known the actual situation,, he would have responded with different tactics, and with lethal force.
The “firefighter's rule” bars claims by emergency personnel against those who caused the event to which the emergency personnel were summoned. Firefighters, police officers and other emergency personnel generally assume the risk of injury when they respond to emergencies.
The rule does not apply where the injury is caused by independent acts of misconduct that occur after a police officer arrives on the scene. The officer does not assume the risk of being misled as to the nature of the danger that he is confronting.
Milagro also argued that she did not owe a duty to Officer Boon to control Reynaldo's criminal acts. Although there would be no duty for a mere failure to warn, here Officer Boon alleged that Milagro affirmatively misrepresented the danger that he confronted.
Boon v. Rivera, 2000 WL 676220 (Cal. Ct. App. May 25, 2000).
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The Ninth Circuit has affirmed a $5.4 million jury verdict against Michael Bolton. There was sufficient evidence of access and substantial similarity to support a finding of copyright infringement.
The Isley Brothers rhythm and blues group wrote and recorded “Love Is A Wonderful Thing” in 1964. It was released as a single in 1966, making it to No. 110 on a Billboard chart called “Bubbling Under the Hot 100.”
When the Isley Brothers released “Love Is A Wonderful Thing,” Bolton was a teenager in Connecticut, where the song received some play on television, and on a New York City radio station. Bolton admitted that he was a huge fan of the Isley Brothers, and a collector of their music. When Bolton saw Ronald Isley at a concert in 1988, he said: “I know this guy. I go back with him. I have all his stuff.” At trial Bolton denied that he had ever heard “Love Is A Wonderful Thing.”
In 1990, Bolton and a co-writer wrote a song called “Love Is A Wonderful Thing.” It was released as a single, and on an album in 1991. The single finished 1991 at No. 49 on Billboard's year-end pop chart. On a tape of a recording session, Bolton wondered aloud whether the song that he and his co-writer were composing had already been done by Marvin Gaye, who had actually recorded a song called “Some Kind of Wonderful.”
The Copyright Act prohibits copying of the protected elements of a copyrighted work. The owner of the work may prove copying circumstantially by establishing (1) that the infringer had access to the copyrighted work, and (2) that the two works are substantially similar. Proof of access may rest on evidence that the copyrighted work was widely disseminated.
Although Bolton's alleged copying came more than twenty years after the release of the Isley Brother song, there was sufficient evidence from which a reasonable jury could conclude that he had subconsciously copied the song.
Three Boys Music Corp. v. Bolton, 2000 WL 557967 (9th Cir. May 9, 2000).
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The California Supreme Court has ruled that a prevailing party on a claim covered by a contractual attorney's fee clause may recover reasonable attorney's fees for its in-house counsel. The situation is distinguishable from an attorney appearing in propria persona, who cannot collect attorney's fees in similar circumstances.
PLCM Group was the administrator for the professional malpractice insurance issued to David Drexler. The policy had a $20,000 deductible, and provided that the insurer could recover its attorney's fees and costs in any action necessary to recover amounts within the deductible.
After Drexler was sued for malpractice, PLCM Group retained a law firm that he selected, and settled the case. Although the attorney's fees exceeded the deductible,Drexler only paid $9,680. In a lawsuit handled by its in-house counsel, PLCM secured a jury verdict for the full amount of the remainder. It then sought attorney's fees in the amount of $61,050, based on the commonly employed lodestar method, using a rate of $185 per hour.
In Trope v. Katz, 11 Cal. 4th 274 (1995), the Supreme Court had held that an attorney who represented himself could not recover attorney's fees under Civil Code section 1717. The Court reasoned that the term “attorney fees” implied the existence of an attorney-client relationship. A different interpretation would have constituted disparate treatment of nonattorney litigants, under a statute that was meant to establish mutuality of remedy.
This case is different. There is an attorney-client relationship between a corporation and its in-house counsel. The payment of a salary to in-house counsel is analogous to hiring a law firm on a retainer.
Drexler also argued that PLCM should only recover the actual cost of its in-house counsel, based on a precise calculation of the actual salary, costs and overhead for in-house counsel. In Trope, the Court had said that attorney's fees generally meant the amount that a litigant actually pays, or become liable to pay, for legal representation. The Court ruled that the lodestar method was the presumptively reasonable way to determine the fee award. The cost method is cumbersome and costly to apply. In “exceptional circumstances,” a court might use another methodology.
PLCM Group, Inc. v. Drexler, 95 Cal. Rptr. 2d 198 (2000).
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Subsequent treatment of decisions reported on in earlier issues:
Aguilar v. Avis Rent A Car Sys, Inc. (September 1999 issue), cert. denied, 2000 WL 652909 (May 22, 2000).
Valencia v. Michaud (April 2000 issue), petition for review filed (May 8, 2000).
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