September 2003 Vol. 9 No. 7 ISSN 1087-6219
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In This Issue

• First Amendment no obstacle to injunction against publication of trade secrets on the Internet
• Swim coach may be liable for lack of instruction to novice diver
• School's duty of supervision extends to non-instructional time
• Psychiatrist who releases dangerous patient for lack of insurance faces liability to any member of the public
• Withdrawals from a joint account constitute a gift to the withdrawer
• UPDATES

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First Amendment no obstacle to injunction against publication of trade secrets on the Internet

The California Supreme Court has ruled that a Web site operator does not have a free speech right to post another's trade secrets on the Internet. The Court declined to decide whether there was in fact a trade secret violation.

The movie industry relies on Content Scrambling System (CSS) to prevent unauthorized copying of movies released on DVD. All authorized users of the technology must agree to maintain the confidentiality of the proprietary information.

Someone without authorization used reverse engineering to develop software that defeated CSS encryption. He posted the program on an Internet web site, whence it eventually made its way to Andrew Bunner, who posted it on his Web site to help "Linux" users enjoy DVDs.

When Bunner refused to remove the program from his web site, the association that administers CSS licensing obtained a preliminary injunction against him. The Court of Appeal reversed on First Amendment grounds. The Supreme Court disagreed, and directed the lower court to determine whether there was in fact a trade secret violation.

The preliminary injunction was content neutral, because it was not aimed at the subject matter of Bunner's posting or his viewpoint about CCS encryption. Therefore, the issue was whether the injunction burdened no more speech than necessary to serve the significant government interest in trade secret protection. It did not, because it only required removal of the trade secrets embodied in CSS. Bunner remained free to express his views about CSS and encryption. That also defeated any argument that the injunction ran afoul of the prior restraint doctrine, which only applies to content-based restrictions on speech prior to its occurrence.

Justice Moreno concurred in the Court's opinion, but would also have determined that there was no trade secret violation because the "secrets" of CSS were readily ascertainable from publicly available information.

DVD Copy Control Association v. Bunner, 2003 WL 21999000 (Cal. Sup. Ct. Aug. 25, 2003).

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Swim coach may be liable for lack of instruction to novice diver

The California Supreme Court has ruled that the primary assumption of risk doctrine does not bar a high school swimmer from pursuing a negligence claim for injuries she claimed to have suffered as a result of her coach's reckless conduct.

Olivia Kahn broke her neck while making a practice racing dive into a shallow pool. She claimed that her swim coach did not provide her with any instruction about how to dive safely in a shallow pool, and that he insisted that she dive despite her objections, her lack of expertise and her fear of diving.

The primary assumption of risk doctrine bars a sports participant from pursuing claims that arise out of the range of ordinary activity involved in the sport. Limits on claims against instructors for such injuries are necessary to avoid a chilling effect on teaching. Instructors must be free to challenge their students. There is no duty to eliminate all the risks associated with learning the skills necessary to play sports.

Instructors may be liable for reckless conduct that is totally outside the range of ordinary activity involved in coaching the sport of competitive swimming. In this case, Kahn denied that she had received any training, although a Red Cross manual laid out a step-by-step training program for avoiding injuries. There was also evidence that her coach knew that she had a deep-seated fear of diving, and that he had threatened to remove her from the swim team for not diving after previously promising that she would not have to dive.

If believed, Kahn's evidence would establish that the coach's actions were totally outside the range of the ordinary activity involved in coaching competitive swimming. Such recklessness would defeat the assumption of the risk defense.

Kahn v. East Side Union High Sch. Dist., 2003 WL 22019919 (Cal. Sup. Ct. Aug. 28, 2003).

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School's duty of supervision extends to non-instructional time

The Fifth District Court of Appeal in Fresno has ruled that schools may be held liable for failure to provide adequate supervision before classes begin.

M.W. was a 15-year old eighth grader enrolled in special education at a junior high school operated by the School District. School staff typically unlocked the gates to the campus at 7:00 a.m., but classes did not begin until 8:15 a.m. From 7:00 a.m. to 7:45 a.m. the District only provided "general" supervision, where every adult on campus had broad responsibility for supervising any students that were present. At 7:45 a.m., adult staff members assumed responsibility for specific areas of the school campus.

Chris J. was a student at the same junior high school who had severe discipline problems. He and other students subjected M.W. to constant harassment. Although M.W. complained, nothing was done.

At 7:15 a.m. one morning, Chris tricked M.W. into entering the men's restroom, where he sodomized M.W. M.W. suffered devastating injuries to his psyche. A jury awarded M.W. $2,165,171 on his negligence claim against the District. The Court of Appeal affirmed the award.

The court rejected the District's argument that it did not have a duty to protect M.W. from Chris, because it had no prior knowledge of any propensity to commit the assault. School districts have well-established statutory duties to protect students entrusted to their care. That duty extends to protection against sexual assaults.

The court also rejected the District's argument that any negligence there may have been was not the actual cause of M.W.'s injuries. There was sufficient evidence to establish that the District could have prevented the attack if it had not acted negligently. Having sufficient visible supervision when the campus was open to students would have had a deterrent effect. The District could also have required students who arrived early to congregate in a particular area where they could be watched.

M.W. v. Panama Buena Vista Union Sch. Dist., 110 Cal. App. 4th 508 (2003).

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Psychiatrist who releases dangerous patient for lack of insurance faces liability to any member of the public

The Second District Court of Appeal in Los Angeles has ruled that a psychiatrist who releases a dangerous patient for lack of insurance, and not under the belief that the patient no longer needed to be held, may be sued by any member of the public whom the patient injures.

Joshua Daniel Lee was involuntarily admitted to a hospital for a 72-hour detention, evaluation and treatment because he was a danger to himself and others. After the 72-hour hold, Dr. Valdez and Dr. Movsesian determined that Lee remained a danger to himself and others, and certified him to receive treatment for another 14 days. The next day the doctors released him because he did not have insurance. Three weeks later, Lee murdered Diane Bragg.

Bragg's heirs sued the doctors for breach of their duty to control the behavior of their patient. The trial court sustained the doctors' demurrer without leave to amend, but the Court of Appeal reversed.

The Lanterman-Petris-Short Act establishes the procedure for involuntary detention of mentally ill persons who are dangers to themselves or to others. It also bars claims against any treating physician who releases a confined patient because he or she believes that the patient is no longer a danger. That immunity was of no assistance to the doctors in this case, because they released Lee for lack of insurance, not because he was no longer a danger.

In Tarasoff v. Regents of the University of California, 17 Cal. 3d 425 (1976), the California Supreme Court recognized a limited exception to the general rule that a person is not liable for failure to control the actions of a third person. A treating physician may be liable for failing to warn where his patient had confided his intention to kill the plaintiffs' decedent.

Although the doctors in this case argued that they could not be held liable because Lee did not identify a particular victim, the court ruled that the Tarasoff limitations did not apply. This case involved failure to carry out the duties under the Lanterman-Petris-Short Act, not a failure to warn.

Bragg v. Valdez, 2003 WL 21959523 (Cal. Ct. App. Aug. 18, 2003).

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Withdrawals from a joint account constitute a gift to the withdrawer

The First District Court of Appeal in San Francisco has ruled that a person who withdraws money from a joint account receives a gift of her fellow owner's interest, unless there is an agreement that restricts her right to apply the funds for her own interest.

Holden Lee and Janet Yang began dating in Hong Kong in 1996. In 1997, Holden moved to San Francisco to start a new job. In 1999, the couple became engaged, and Holden added Janet as a signatory to his bank accounts in San Francisco. Both Holden and Janet deposited funds in the accounts, but there were more of Holden's funds than there were of Janet's. The couple purchased a condominium as joint tenants and began living together.

Several weeks before the scheduled wedding in September 1999, Janet discovered love letters written to Holden by different men from various parts of the world. She was shocked, felt betrayed and made several suicide attempts. She also withdrew substantial funds from the joint accounts.

Janet and Holden cancelled the wedding, and went their separate ways, trailing a lawsuit in their wake. The principal issue on appeal was whether Janet owed Holden some of the funds that she withdrew from the joint accounts.

The California Multiple-Party Accounts Law provides that the funds in a joint account belong to the parties in proportion to the net contributions by each, but authorizes the bank where the account is maintained to pay all funds to any of the parties under the terms of the account.

Drawing on federal gift tax regulations, the court ruled that a depositor who leaves funds on deposit in a joint account with no restrictions on use by a co-depositor makes a gift of his interest when the co-depositor withdraws more than her proportionate share of the total funds on deposit. Donative intent is apparently not required.

A dissenting justice would have required the withdrawing party to prove a gift.

Lee v. Yang, 2003 WL 21963079 (Cal. Ct. App. Aug. 19, 2003).

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UPDATES

Subsequent treatment of decisions reported on in earlier issues:

Carter v. California Department of Veterans Affairs (June 2003 issue), review granted (Aug. 13, 2003).

Doe v. State of Hawaii Department of Education (June 2003 issue), now reported at 334 F.3d 906 (9th Cir. 2003).

Escalante v. Wilson's Art Studio, Inc. (June 2003 issue), rehearing denied (Jul. 30, 2003), petition for review filed (Jul. 21, 2003).

Intel Corp. v. Hamidi (June 2003 issue), now reported at 30 Cal. 4th 1342 (2003).

Johnson v. State of California (March 2003 issue), rehearing denied (Jul. 28, 2003).

Levy v. Skywalker Sound (May 2003 issue), rehearing denied (Jun. 4, 2003).

McManus v. CIBC World Markets Corp. (May 2003 issue), review denied (Aug. 13, 2003).

Wiener v. Southcoast Childcare Centers, Inc. (April 2003 issue), review granted (Jul. 30, 2003). The decision may no longer be cited. Cal. R. Ct. 976(d), 977.

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