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September 1996 
Vol. 2 No. 9 ISSN 1087-6219
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In two related cases arising out of the failure of Imperial Savings Association (ISA), the Ninth Circuit has applied res judicata principles to a shareholder derivative suit settlement. The ISA receiver's claims against former officers and directors were barred, but those against the attorneys who arranged the settlement were not.
In February 1990, the District Court approved the settlement of a derivative suit against the officers and directors of ISA and its parent. The settlement released the officers and directors from any claims that ISA and its parent might have brought against them.
On the day of the settlement, the Office of Thrift Supervision seized ISA, and the RTC became its receiver. ISA's parent filed a bankruptcy petition. The RTC filed actions against ISA's officers and directors. On December 31, 1995, the FDIC took over the RTC's functions. The District Court ruled that the earlier settlement precluded the receiver's claims.
Ronald Durkin, a shareholder of ISA's parent, sued Shea & Gould, the company's law firm, for malpractice. Durkin alleged that Shea & Gould helped arrange a settlement that was unfair to the parent company. The District Court denied Shea & Gould's motion for summary judgment based on issue preclusion. It certified the decision for interlocutory appeal under 28 U.S.C. sec. 1292(b).
The Ninth Circuit affirmed both decisions. The settlement resolved all claims that might have been asserted on ISA's behalf. Even though ISA was not a named party, its parent was. The parent served as ISA's "virtual representative." As ISA's receiver, the RTC was bound by the resolution of the earlier lawsuit, which shared a "transactional nucleus" with the RTC's lawsuit.
Because Shea & Gould was not a party to the earlier action, it relied on issue preclusion, rather than claim preclusion. However, the issues were not the same. When it approved the settlement, the District Court did not determine that Shea & Gould had adequately represented the interests of ISA's parent. The malpractice action did not accrue until the settlement was final.
In re Imperial Corp. of America Related Litigation, 1996 WL 467062 (9th Cir. Aug. 19, 1996); Durkin v. Shea & Gould, 1996 WL 467053 (9th Cir. Aug. 19, 1996).
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The California Supreme Court has ruled out claims for property damage allegedly caused by electric and magnetic fields (EMF) from an electric utility's powerlines.
The Covalts owned a single-family residence in San Clemente. They sued San Diego Gas & Electric, which ran electric currents through powerlines on adjacent property.
The Covalts alleged five personal injury causes of action based on emotional distress arising from fear of cancer. In the Supreme Court, they did not contest the lower court's decision that those claims were barred by Potter v. Firestone Tire & Rubber Co., 6 Cal. 4th 965 (1993). Potter required that a plaintiff prove that such fear stemmed from "knowledge, corroborated by reliable medical or scientific opinion, that is more likely than not that the plaintiff will develop cancer in the future due to toxic exposure."
The Supreme Court affirmed dismissal of the property damage causes of action:
1. Trespass. Trespass requires physical damage to the property, or invasion by tangible matter. EMF radiation is intangible. The Covalts alleged no physical damage.
2. Nuisance. The Court assumed that the Covalts could establish that EMF radiation substantially and unreasonably interfered with use of their property. However, permitting such a cause of action would interfere with the Public Utility Commission's policy on powerline EMF. That violates Public Utility Code section 1759.
3. Inverse Condemnation. Because EMF radiation is an intangible intrusion, the Covalts had to allege a "direct and peculiar and substantial" burden on their property. EMF radiation does not create such a burden.
San Diego Gas & Electric Co. v. Superior Court, 1996 WL 475250 (Cal Sup. Ct. Aug. 22, 1996).
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The Second District Court of Appeal in Los Angeles has reaffirmed a line of cases holding that the Workers' Compensation Act preempts work-related Fair Employment and Housing Act (FEHA) disability discrimination claims. Recent amendments to the FEHA did not eliminate the preemption.
Labor Code section 132a provides a workers' compensation remedy for discrimination based on work-related injuries. Labor Code sections 3600-02 provide that workers' compensation is the exclusive remedy for work-related injuries. A line of cases decided under pre-1993 law held that section 132a preempted FEHA disability claims. See, e.g., Langridge v. Oakland Unified Sch. Dist., 25 Cal. App. 4th 664 (1994).
In 1993, the Legislature amended the FEHA to provide that it did not repeal other anti-discrimination provisions, "unless those provisions provide less protection to the enumerated classes of persons covered." Cal. Gov. Code sec. 12993(a). Although section 132a remedies are less extensive than FEHA remedies, section 12933(a) did not repeal section 132a. There was no reference to section 132a in the legislative history, nor any intent to revise the entire subject of workplace discrimination based on work-related injuries.
In March 1996, the Ventura division of the Second District had held that section 12933(a) did repeal section 132a. City of Moorpark v. Superior Court, 50 Cal. Rptr. 2d 816 (1996). The opinion was depublished when the court granted rehearing on April 3, 1996. It may not be cited. Cal. R. Ct. 976, 977, 979. There is no new decision yet.
Cammack v. GTE Corp., 1996 WL 446349 (Cal Ct. App. Aug. 8, 1996).
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The Ninth Circuit has ruled that a community college's sexual harassment policy was unconstitutionally vague as applied to a professor who was disciplined for the offensive content of his classroom presentation.
Professor Cohen used a confrontational teaching style, assigned provocative essays, and discussed controversial subjects. San Bernardino Valley College's sexual harassment policy prohibits conduct that has the effect of creating "an intimidating, hostile, or offensive learning environment." The court expressly declined to determine the scope of First Amendment protection for classroom speech. However, the policy was too vague to provide Cohen with notice that his long-standing teaching style was inappropriate.
The Ninth Circuit affirmed the District Court's ruling that the college officials had qualified immunity from section 1983 damages claims. However, it remanded the case for the District Court (1) to enjoin the college officials from imposing further discipline, and (2) to require them to remove all references to the disciplinary decision from Cohen's personnel file.
Cohen v. San Bernardino Valley College, 1996 WL 467050 (9th Cir. Aug. 19, 1996).
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The Ninth Circuit has ruled that a deputy prosecutor has only qualified immunity for claims arising from a falsified arrest warrant application. The prosecutor was performing an investigatory function. Absolute immunity only applies to performance of advocatory functions.
In Imbler v. Pachtman, 424 U.S. 409 (1976), the Supreme Court afforded prosecutors absolute immunity for functions "intimately associated with the judicial phase of the criminal process." In Burns v. Reed, 500 U.S. 478 (1991), the Court upheld absolute immunity for presenting evidence at a probable cause hearing for a search warrant. The prosecutor was not immune for giving the police legal advice about the existence of probable cause to arrest. In Buckley v. Fitzsimmons, 509 U.S. 259 (1993), the Court held that there was no absolute immunity for fabricating evidence during an investigation by retaining a dubious expert.
Here, the Ninth Circuit relied on Malley v. Briggs, 475 U.S. 335 (1986). Malley held that a police officer did not have absolute immunity for securing an arrest warrant without probable cause. Such conduct is further removed from the judicial phase of criminal proceedings than the conduct of a prosecutor seeking an indictment. "To hold that [the prosecutor] is absolutely immune for performing the same task would be inconsistent with the [Supreme] Court's functional analysis." Qualified immunity is sufficient protection.
Fletcher v. Kalina, 1996 WL 473880 (9th Cir. Aug. 21, 1996).
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In October 1992, Sidney Sanders underwent surgery for cancer. In December 1992, a psychiatrist determined that he had a psychological impairment arising from his cancer. Sanders went on leave. In March 1993, the psychiatrist said that Sanders could return to work on April 5, 1993, with no further psychological restrictions or complications. Arneson did not allow him to return.
The Americans with Disabilities Act bars discrimination against "a qualified individual with a disability." 42 U.S.C. sec. 12112(a). A "disability" is "a physical or mental impairment that substantially limits one or more of the major life activities of the individual." 42 U.S.C. sec. 12102(a)(A). The EEOC's regulations state that "temporary non-chronic impairments of short duration, with little or no long term or permanent impact, are usually not disabilities." 29 CFR sec. 1630.2(j).
Sanders's temporary psychological impairment, from December 1992 to April 1993, was not of sufficient duration to fall within the ADA's definition of disability.
Sanders v. Arneson Products, Inc., 1996 WL 438918 (9th Cir. Aug. 6, 1996).
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Proper use of the Doe fictitious party procedure may afford plaintiffs up to three extra years to identify and serve additional defendants. Claims against the additional defendants relate back to the original filing for limitations purposes, if they arise from the same general set of facts alleged in the original complaint.
Susanna Jeffrey's 1986 Chevrolet Blazer was rear-ended in November 1992. Her seat belt did not break, but she hit her face on the steering wheel. She sued the driver of the other car in October 1993, and named Does 1-20. In 1995, her attorney associated additional counsel who knew about a possible defect associated with General Motors seat belts. Jeffrey substituted GM as Doe No. 1, and added a product liability cause of action.
The Second District Court of Appeal in Los Angeles ruled that the Doe amendment was proper. Code of Civil Procedure section 474 provides for the naming of fictitious defendants "[w]hen the plaintiff is ignorant of the name of the defendant." A plaintiff is "ignorant" if he or she lacks knowledge of a known person's connection with his or her injuries. The plaintiff does not lose ignorance until he has knowledge of sufficient facts to cause a reasonable person to believe liability is probable. When Jeffrey filed her complaint, she knew that the GM seat belt did not prevent her face from hitting the steering wheel. She did not know that there was something wrong with the seat belt.
General Motors Corp. v. Superior Court, 1996 WL 461879 (Cal. Ct. App. Aug. 15, 1996).
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Subsequent treatment of decisions reported on in earlier issues:
Camenisch v. Superior Court (June 1996 issue), review denied (Jul. 31, 1996).
DeCastro West Chodorow & Burns, Inc. v. Superior Court (August 1996 issue), now reported at 47 Cal. App. 4th 410 (1996).
Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (August 1996 issue), now reported at 54 Cal. Rptr. 2d 830 (1996).
Duffy v. Riveland (August 1996 issue), now reported at 88 F.3d 1525 (9th Cir. 1996).
Kennedy v. Collagen Corp. (November 1995 issue), cert. denied, 116 S.Ct. 2579 (1996).
Lovell v. Poway Unified Sch. Dist. (August 1996 issue), now reported at 90 F.3d 367 (9th Cir. 1996).
Nacht & Lewis Architects, Inc. v. Superior Court (August 1996 issue), now reported at 47 Cal. App. 4th 214 (1996).
Nizam-Aldine v. City of Oakland (August 1996 issue), now reported at 47 Cal. App. 4th 364 (1996).
Rosenbaum v. Security Bank Corp. (April 1996 issue), review denied (Jun. 26, 1996).
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