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August 1996 Vol. 2 No. 8 ISSN 1087-6219
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In This Issue

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Two cases apply litigation privilege to non-judicial proceedings

California Civil Code section 47(b) establishes an absolute privilege for statements in legislative, judicial or other official proceedings authorized by law. It applies to communications related to an anticipated proceeding. Rubin v. Green, 4 Cal. 4th 1187 (1993). Two recent court of appeal decisions explore the application of the privilege in non-judicial official proceedings.

In Dove Audio, a law firm wrote letters to solicit endorsements for a complaint to the Attorney General about royalties that Dove Audio promised to charity. The company claimed the letters were defamatory. It argued that the litigation privilege did not apply, because the Attorney General does not act in an adjudicatory capacity.

The Second District Court of Appeal in Los Angeles rejected the argument, and ruled that the privilege applied to the letters. The communications were in preparation for sending a complaint to the Attorney General. The court also upheld an attorneys' fee award under the anti-SLAPP statute-Code of Civil Procedure section 425.16. Reports on cases involving the anti-SLAPP statute appeared in the September 1995 and March 1996 issues of Appellate Decisions Noted.

In Stacy & Witbeck, a contractor invoked the litigation privilege as a defense to San Francisco's suit under the False Claims Act. The contractor argued that it had submitted its allegedly false claim as part of an administrative procedure that preceded its lawsuit against San Francisco for breach of contract.

The First District Court of Appeal ruled that the litigation privilege was not a defense. While the claim did precede litigation, it "had a life of its own wholly apart from any judicial action." The contractor's agreement with San Francisco required submission of the claim to qualify for payment of overages. The court concluded:

"Where, as here, a public contractor delivers a contract claim for overages according to the administrative procedures prescribed by the contract and the public agency, that claim does not become privileged simply because the contractor also anticipated suing the agency for the sums detailed in the contract claim."

Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, 1996 WL 401874 (Cal. Ct. App. Jul. 18, 1996); City and County of San Francisco v. Stacy & Witbeck and Nationwide, 54 Cal. Rptr. 2d 530 (Cal. Ct. App. 1996).

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Ninth Circuit, reversing itself, rules suspension for threat no violation of student's rights

The Ninth Circuit has ruled that a school district did not violate a 15-year old's constitutional rights when it suspended her. The decision replaces an earlier one in the same case, which came to the opposite conclusion.

Frustrated at the difficulties encountered in trying to change her class schedule, Sarah Lovell told her guidance counselor, "If you don't give me this schedule change, I'm going to shoot you." The school suspended her for three days.

In its initial decision in March 1996, a divided panel affirmed a judgment for Lovell. The court ruled that a reasonable person would not have interpreted the statement as a "true threat." The school sought review in the United States Supreme Court. The panel withdrew its initial decision on June 7, 1996.

Noting the "backdrop of increasing violence among school children today," the panel ruled in its new decision that the First Amendment did not protect the threat. It was an unequivocal statement that conveyed a "true threat" of physical violence.

Lovell v. Poway Unified Sch. Dist., 1996 WL 400457 (9th Cir. Jul. 18, 1996).

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Plaintiff in defamation action must prove falsity

The First District Court of Appeal in San Francisco has ruled that a plaintiff must prove falsity to prevail on a defamation claim involving a matter of public interest. First Amendment principles negate the common law presumption of falsity for defamatory statements.

Various city employees made derogatory statements about survey work by civil engineers Aldine and Masso. The jury awarded Aldine $650,000 and Masso $125,000. The Court of Appeal reversed the judgment.

The trial court instructed the jury that the city had to prove that the defamatory statements were true. The instruction was consistent with the common law rule that presumes the falsity of defamatory statements. See, e.g., Fairfield v. Hagan, 248 Cal. App. 2d 194, 203 (1967).

In Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767 (1986), the United States Supreme Court held that the First Amendment required a plaintiff to prove falsity in a defamation lawsuit. The engineers argued that Hepps should not apply to non-media defendants. The Court of Appeal followed decisions in other jurisdictions, which rejected such a limitation.

The court also rejected the engineers' argument that the defamatory statements did not relate to a matter of public interest. The statements constituted a discussion of governmental affairs. In addition, the local community had shown an interest in the dispute over boundary lines that provoked the statements.

Nizam-Aldine v. City of Oakland, 1996 WL 392550 (Cal. Ct. App. Jul. 15, 1996).

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No conspiracy claim against non-employer for wrongful termination

The Second District Court of Appeal in Los Angeles has ruled that employees may not pursue conspiracy claims for wrongful termination against non-employer defendants. Such defendants are legally incapable of committing the underlying wrong.

George Weinbaum, an audit manager, alleged that Goldfarb, Whitman & Cohen fired him in violation of public policy. He claimed to have objected to the preparation of false financial reports. His wrongful termination complaint asserted conspiracy claims against various defendants affiliated with Goldfarb's client-Republic Factors Corporation.

Imposition of tort liability under a conspiracy theory requires that the alleged conspirator be potentially liable for breach of a duty owed to the plaintiff. Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503 (1994). The duty on which the wrongful discharge tort rests arises out of the employer-employee relationship. Republic could not commit the tort. Therefore, it could not be liable on a conspiracy theory.

Weinbaum v. Goldfarb, Whitman & Cohen, 54 Cal. Rptr. 2d 462 (1996).

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Work product privilege protects identity of interviewees

The Third District Court of Appeal in Sacramento has ruled that a party need not answer Judicial Council form interrogatories seeking the names of witnesses interviewed by counsel. The result is consistent with federal decisions on the subject. See, e.g., Laxalt v. McClatchy, 116 F.R.D. 438 (D. Nev. 1987).

Form Interrogatory No. 12.2 asks for the names of anyone interviewed concerning the incidents underlying a lawsuit. Answering the question would reflect counsel's evaluation of the case by revealing which witnesses were worth interviewing.

Form Interrogatory No. 12.3 asks for the names of all those from whom statements were obtained. If counsel obtained the statements during interviews, the identities would be protected. They would not be protected if the witnesses prepared the statements independently, and then turned them over to counsel.

Nacht & Lewis Architects, Inc. v. Superior Court, 1996 WL 378331 (Cal. Ct. App. Jun. 19, 1996).

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Deaf prisoner may pursue ADA claims

The Ninth Circuit has ruled that a deaf prisoner may pursue claims based on refusal to provide a certified interpreter at prison hearings. Both the Rehabilitation Act and the Americans with Disabilities Act may afford protection to disabled prisoners.

On remand, the prisoner will have to prove that denial of the interpreter prevented adequate communication at the hearings. Under applicable Ninth Circuit standards, prison officials may defeat the claim by showing their practices were "reasonably related to legitimate penological interests." Gates v. Rowland, 39 F.3d 1439 (9th Cir. 1994).

Duffy v. Riveland, 1996 WL 366442 (9th Cir. Jul. 3, 1996).

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Title company not liable for claim based on preliminary title report

The Second District Court of Appeal in Los Angeles has explained that a title company acting as an insurer cannot be liable to one who does not purchase title insurance. The decision notes that parties to real estate transactions continue to misunderstand the role of preliminary title reports and title policies.

Edward and Howard Siegel purchased their half-brother's interest in real property owned by all three of them. The escrow company instructed Fidelity National Title to provide a policy insuring the lender that provided financing for the Siegels. No policy was provided to the Siegels.

Fidelity prepared a preliminary title report that did not disclose a judgment lien against the half-brother. The title policy did not mention the lien. The Siegels asserted a claim for negligence against Fidelity.

The law distinguishes among an "abstract of title," other reports related to the condition of title, and title policies. An abstract is a representation of the condition of title, which the abstractor intends the party who has contracted for it to rely on. Cal. Ins. Code sec. 12340.10. A preliminary title report is an offer to issue a title policy with the listed exceptions. Cal. Ins. Code sec. 12340.11. A title policy is a promise to pay the insured for any losses suffered from an unlisted defect. Fidelity National Title Ins. Co. v. Miller, 215 Cal. App. 3d 1163 (1989).

The Siegels did not purchase an abstract nor a title policy for themselves. Therefore, Fidelity's failure to disclose the judgment lien breached no duty to the Siegels.

Siegel v. Fidelity National Title Ins. Co., 54 Cal. Rptr. 2d 84 (Ct. App. 1996).

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No summary adjudication of individual claims of damage

Code of Civil Procedure section 437c(f)(1) provides that a party may seek summary adjudication of "one or more claims for damages," if the party contends that there is no merit "to a claim for damages as specified in section 3294 of the Civil Code." The defendant in a legal malpractice action sought summary adjudication of plaintiffs' right to recover "lost opportunity" damages. The Second District Court of Appeal in Los Angeles ruled that summary adjudication was not appropriate.

In the original version of subdivision (f), the quoted phrases appeared in the opposite order. That made it clear that only claims for punitive damages were subject to summary adjudication. The Court of Appeal ruled that the 1993 amendment changing the sentence structure did not change the meaning.

DeCastro West Chodorow & Burns, Inc. v. Superior Court, 1996 WL 395114 (Cal. Ct. App. Jul. 16, 1996).

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UPDATES

Subsequent treatment of decisions reported on in earlier issues:

Janken v. GM Hughes Electronics (July 1996 issue), now reported at 46 Cal. App. 4th 55 (1996).

Lisa P. v. Bingham (April 1996 issue), review denied and official reporter directed not to publish the decision (Jun. 26, 1996). The decision may no longer be cited. Cal. R. Ct. 976(d), 977.

Masson v. The New Yorker Magazine (July 1996 issue), now reported at 85 F.3d 1394 (9th Cir. 1996).

Quelimane v. Stewart Title Guaranty Co. (July 1996 issue), now reported at 54 Cal. Rptr. 2d 364 (1996).

Reynolds v. County of San Diego (July 1996 issue), now reported at 84 F.3d 1162 (9th Cir. 1996).

Scott v. CIBA Vision Corp. (October 1995 issue), probably overruled by Medtronic, Inc. v. Lohr, 64 U.S.L.W. 4625 (Jun. 26, 1996).

Stoner v. Williams (July 1996 issue), now reported at 54 Cal. Rptr. 2d 243 (1996).

Van Dyke v. Dunker and Aced (July 1996 issue), now reported at 46 Cal. App. 4th 446 (1996).

Western Telcon, Inc. v. California State Lottery (July 1996 issue), now reported at 13 Cal. 4th 475 (1996).

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