Short take-away - Animal control must release, rather than euthanize, dogs (Santa Paul Animal Recue v. County of LA)

 

Short take-away - Animal Control does not have discretion to refuse to release dogs to pre-approved animal rescue group

The Second Appellate District, Division Five, has held that under California statute the Los Angeles County Animal Control Dept. does not have the discretion to refuse to release a dog to an animal rescue group. (Santa Paul Animal Rescue v. County of Los Angeles (August 21, 2023) B318954.)  Plaintiff animal rescue group wanted to adopt dogs which animal control defined as "unadoptable" due to behavioral problems.  Plaintiff filed a Petition for a Writ of Mandate with the Los Angeles County Superior Court, and Judge James C. Chalfont entered an order of dismissal following a demurrer by the County.  

Writing for the court, Justice Moor explained that while the County could decide who was an approved animal rescue organization, once they approved the organization they had no discretion to refuse to release a dog to it rather than proceed with euthanization.  The Hayden Act, and, in particular, Food and Agriculture Code section 31108, et seq., provide for what it termed a "ministerial duty" to release a dog whether or not the dog has been determined to be adoptable.  

Simply put, as long as the animal rescue organization has been approved by the County -- and the County does indeed have discretion in initially approving animal rescue organizations --  animal control has no discretion to refuse to release an animal to such an organization.  The only exception is for animals who are "irremediably" suffering from illness or injury.  This result comports with California public policy that all "adoptable" dogs be adopted.

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Notwithstanding Federal admiralty law, California worker’s compensation Law applies to Injury at yacht club (Ranger v. Alamitos Bay)

State courts have concurrent tort jurisdiction under admiralty and maritime law but plaintiff is limited to worker’s compensation recovery 

Plaintiff Ranger fell at the Alamitos Bay Yacht Club in Long Beach, California, while lowering a boat into the water.  He sued in state court but his tort claims were dismissed as worker's compensation was determined to be his exclusive remedy. (Ranger v. Alamitos Bay Yacht Club (September 6, 2023) B315302.)  Specifically, the Hon. Mark C. Kim of the Los Angeles County Superior Court sustained, without leave to amend, a demurer on the grounds that plaintiff Ranger could not state a tort claim in California Superior Court.  The Second District, Division Eight, affirmed the trial court but held it did not need to decide the issue of whether or not admiralty jurisdiction applied.

As set forth in both the Constitution and maritime statutes [1], Federal courts have exclusive jurisdiction over certain claims.  At the same time, state courts may adjudicate in personam “maritime claims” as they have “concurrent jurisdiction” over such suits. (Id., p. 2.)  

As the Ranger court explained, this means the issue of whether admiralty jurisdiction applies is “supernumerary,” or excess, to deciding whether California worker’s compensation is the exclusive remedy for a worker such as Ranger injured at a Yacht Club. (Id.)

This is because Ranger was an "employee" excluded from "maritime jurisdiction" under 1984 amendments to the Longshoremen’s and Harbor Worker's Act (“Longshore Act”) found at 33 U.S.C. section 902(3) and (3)(b).  This act established Federal worker’s compensation for what Ranger termed “maritime employment.” (Ranger, p. 3, citing 33 U.S.C. sections 902 and 905.)  More specifically, workers at a “club” are defined as such “employees,” as discussed in more detail below. 

In terms of interpreting this statute vis a vis common law precedent, Ranger explained that while what it called “admiralty courts” [2] are ostensibly “common law” courts, they look primarily to legislative enactments for guidance. (Ranger, p. 3; emphasis deleted.)  At page three, Ranger therefore summarized what it called “admiralty law" including "general maritime law:"

To set out our analysis in more detail, we begin by defining admiralty law. The Constitution implicitly directed courts sitting in admiralty to proceed as common law courts. Where Congress has not prescribed specific rules, these courts developed an amalgam of traditional, modified, and new common law rules. That amalgam is the general maritime law, which is no longer the exclusive province of federal judges. Congress and the states legislate extensively in these areas. When exercising their common law authority, admiralty courts look primarily to legislative enactments for policy guidance. (Citations omitted.)

Key to deciding Ranger were the 1984 amendments to the Longshore Act.  This act excluded many persons defined as an “employee” from Federal worker’s compensation, expressly providing the employee of a “club” is such an excluded employee:

In 1984, Congress responded by introducing a degree of clarity: Congress sharpened the Longshore Act’s focus to exclude employees who, although they happened to work on or next to navigable waters, lacked a sufficient nexus to maritime navigation and commerce. In response to the experiences of many witnesses, Congress adopted what it called a “case-specific approach.”

We now quote the textual result: the pertinent provision— subsection three of section 902 of the Longshore Act—as it stands after the 1984 amendments. Our italics highlight key words.

“The term ‘employee’ means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, . . . but such term does not include—

. . . 

 “(B) individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet. . .  (Ranger, p. 4-5; original emphasis.)

The Second District therefore disregarded oft-cited Federal common-law precedent that did not adequately address the 1984 language quoted above even though such cases have not been expressly overruled by Federal courts.  These included Green v. Vermilion Corp. (5th Cir. 1998) 144 F. 3d 332, and Southern Pacific Co. v. Jensen (1917) 244 U.S. 205, the Ranger court noting the later featured a “celebrated” dissent by Justice Oliver Wendell Holmes.

Justice Wiley, writing for the Ranger court, succinctly summed up the court’s holding that, pursuant to California’s Labor Code sections 3351 and 3600, Ranger’s remedy was limited to a worker’s compensation claim:  

 . . . California’s workers’ compensation law is Ranger’s exclusive remedy. Congress in 1984 decreed this state law aptly covers his situation. A core part of the state workers’ compensation bargain is that injured workers get speedy and predictable relief irrespective of fault. In return, workers are barred from suing their employers in tort. The trial court correctly dismissed Ranger’s tort suit against his employer. (Ranger, p. 13.)

Tips for practitioners

Those prosecuting or defending tort claims should remember the concurrent jurisdiction of state courts in regard to a personal injury involving “navigable waters” which may fall under Federal Maritime Law.  They should likewise note that despite what their law school professors may have stressed as to the supremacy of Federal law, the modern — though by no means recent — trend is to recognize “concurrent” state court jurisdiction as to personal injuries even if the claim would otherwise fall under admiralty law.  

At the same time, Ranger reminds us that tort claims that otherwise fall under this “concurrent” jurisdiction and might otherwise be decided by a state court may be pre-empted by worker’s compensation exclusivity.  Counsel on both sides should therefore look to the Longshore Act, as amended in 1984, and their state law to determine if such a tort claim is instead within the exclusive purview of the worker’s compensation scheme in their state.

_____________________________________

1 — Article Three, Section Two of the United States Constitution states in part:

The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;--to all cases affecting ambassadors, other public ministers and consuls;--to all cases of admiralty and maritime jurisdiction;--to controversies to which the United States shall be a party;--to controversies between two or more states;—between a state and citizens of another state;--between citizens of different states;--between citizens of the same state claiming lands under grants of different states, and between a state, or the citizens thereof, and foreign states, citizens or subjects. (Emphasis added.)

By virtue of the Judiciary Act of 1989, Federal Courts have exclusive jurisdiction over admiralty and maritime Law claims but state courts retain their own jurisdiction over common law claims:

The district courts shall have original jurisdiction, exclusive of the courts of the States, of . . . [a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled. (28 U.S.C. section 1333(1); emphasis added.)

2 — While the terms “admiralty” and “maritime” are often used interchangeably, the Constitution expressly gives Federal courts jurisdiction over admiralty "and" maritime law. (See note one.)  "Maritime law" may be said to have global application and encompasses international waters, while "admiralty law" encompasses commercial maritime activities and therefore includes disputes involving coastal areas and inland waterways which may be defined as “navigable waters.”

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Short take-away: Agent's admissions are not "deemed admitted" by principal (Inzunza v. Naranja)

 

Short take-away - it was error to preclude the principal from contesting factual matters deemed admitted as to the agent

The Second Appellate District, Division Four, has held that factual matters deemed admitted as to an agent do not preclude the principal from contesting liability. (Inzunza v Naranja (August 21, 2023) B318956.)  Naranja, the driver of the vehicle involved in a fatal collision with Inzunza, had factual matters "deemed admitted" against him because he failed to respond to requests that he, for example, admit he was entirely at fault and the driver of the other vehicle was not comparatively negligent.  Inzuna's heirs moved by way of a motion in limine to prohibit any party from introducing any evidence at trial that was contrary to these party admissions, effectively precluding the principal, employer CRGTS, from fully defending the action. In an opinion written by Justice Currey, the Second District held with clarity that admissions pertaining to an agent did not preclude the principal from contesting liability:

We begin with the plain language of the statute. . . section 2033.410 provides, in relevant part, that any matter deemed admitted “is conclusively established against the party making the admission” and is “binding only on that party.” (§ 2033.410, subds. (a) and (b), italics added.) It is undisputed that Inzunza failed to respond to plaintiffs’ requests for admission propounded on him, and the trial court correctly deemed the matters in the requests admitted by Inzunza. It is also undisputed, however, that CRGTS timely responded to plaintiffs’ requests for admission, and denied some of the same requests as those deemed admitted by Inzunza. . . .  The basis of plaintiffs’ action against CRGTS is vicarious liability arising from the acts of Inzunza. Vicarious liability of an employer is wholly derivative of the employee’s fault. If the employee is not at fault, the employer is not vicariously liable. [Citation.]  Thus, by precluding CRGTS from introducing evidence contesting liability, the trial court saddled it with Inzunza’s deemed admissions—making his admissions of fault binding not only on Inzunza, but also CRGTS, in violation of section 2033.410. (Id., pp. 7-8.)

Inzunza noted that while an agent's actions bind the principal, the agent's actions in failing to respond to discovery were not within the "course and scope" of employment.  The appellate court also noted that CACI No. 210 provided guidance in this area, providing in brackets that the jury, where appropriate, should be instructed, ". . . these matters must be considered true only as they apply to the party who admitted they were true.” Moreover, the directions for CACI 210 provide plainly that “The bracketed phrase should be given if there are multiple parties.” 

 

The jury should be told the agent's admissions do not bind the principal

The Second District expressly instructed the Superior Court that upon retrial the jury should be told the employee's admissions do not bind his employer.  Therefore, the text quoted above, which the jury was not given during the first trial, must be read to the jurors.

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Short-takeway - Agent of employer on hook for asking illegal questions of job applicants (Raines v. US Healthworks)

 

Short Take-away:  Agent of employer who asked invasive questions as part of a pre-employment screening may be sued under California's FEHA

Responding to a question from the Ninth Circuit Court of Appeals, the California Supreme Court has held the agent of an employer may be sued under the Fair Housing and Employment Act (FEHA) when it acts on behalf of an employer and asks intrusive questions prohibited by law. (Raines v. US Healthworks (August 24, 2023) S273630.)  Questions from defendant US Healthworks Medical Group to potential employees of the hiring employer included:

. . . USHW required job applicants to complete a written health history questionnaire that included numerous health-related questions having no bearing on the applicant’s ability to perform job-related functions. According to plaintiffs, these questions covered details of the applicant’s health history including “whether the applicant has and/or has ever had: 1) venereal disease; 2) painful or irregular vaginal discharge or pain; 3) problems with menstrual periods; 4) irregular menstrual period; 5); penile discharge, prostate problems, genital pain or masses; 6) cancer; 7) mental illness; 8) HIV; 9) permanent disabilities; 10) painful/frequent urination; 11) hair loss; 12) hemorrhoids; 13) diarrhea; 14) black stool; 15) constipation; 16) tumors; 17) organ transplant; 18) stroke; or 19) a history of tobacco or alcohol use.” In addition, the questionnaire asked whether the job applicant was pregnant, sought information regarding medications taken, and required the job applicant to disclose prior job-related injuries and illnesses. (Id., pp. 2-3.)

Justice Jenkins wrote for a unanimous court, which held that instead of the rules of common-law agency, the relevant and applicable authority was Government Code section 12940 of the FEHA.  This section provides that "[e]mployer’ includes. . .  any person. .  acting as an agent of an employer. . . ."

The Supreme Court  explained this result is supported by public policy because it makes liable the entity who (allegedly) violated FEHA, and indeed, the entity who no doubt drafted the offensive questionnaire:

If a business entity contracts with an employer to provide services that will affect that employer’s employees, and if, in providing those services, the business-entity agent violates FEHA’s antidiscrimination policies, causing injury to the employer’s employees, it is consistent with sound public policy to treat the business entity as an employer of the injured employees for purposes of applying the FEHA. This interpretation imposes FEHA liability not only on the employer but also extends it to the entity that is most directly responsible for the FEHA violation. (Id., p. 27.)

As a final comment, it is difficult to understand how US Healthworks could even consider asking such improper questions, such as whether female employees are pregnant, and not run afoul of California law.  The idea that US Healthworks may escape liability by claiming they are merely an agent of the employer seems to border on subterfuge, and, indeed may appear to be an attempt by the hiring employer and its agent to evade rules forbidding employers from asking questions that clearly violate California law.

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Plaintiff who did not have to pay for drug may not make unfair competition claim (Williamson v Genetech)

 

A plaintiff may not use the “collateral source rule” to “borrow” an insurer’s injury so as to state a claim under California’s Unfair Competition law 

Plaintiff Williamson paid only his prescription-drug deductible, which he would have paid no matter the price of his medicine.  Nonetheless, he sued the drug maker, defendant Genetech, both individually and as representative of a putative class, alleging they overcharged for a leukemia drug. (Williamson v. Genetech (August 11, 2023) A164426.)  Despite his lack of actual harm, the plaintiff plead the novel theory that under the “collateral source” rule the harm to his insurer in having to overpay for a drug could support his individual claim:

Williamson later sued Genentech, on behalf of himself and a putative class of similarly situated individuals, alleging that Genentech violates the unfair competition law by selling Rituxan (and three other medications) in excessively large single-use vials.

In his operative (third amended) complaint, Williamson alleges that, because the appropriate dosage varies based on a patient’s body size, Genentech’s vial sizes are too large for most patients. He insists Genentech should be required to offer smaller vial sizes. . . to reduce waste of expensive medicine. . . . . However, Williamson alleges that he took only Rituxan, not the other three medications, and that, to do so, he paid a $231.15 deductible. He admits that “[a]ll remaining payments” were made by his health insurer. . . . (Id., p. 2.)

Genetech’s demurer was sustained without leave to amend by the Hon. Daniel S. Murphy of the Los Angeles County Superior Court and plaintiff appealed.  The Second District agreed with the trial court that under the facts plead plaintiff could not state an Unfair Competition claim:

The obvious problem here is that Williamson suffered no injury. He paid a deductible of $231.15 to obtain Rituxan; his insurer paid the remaining cost. He concedes that he would have paid the same deductible regardless of the size of Genentech’s vials. Thus, Genentech’s alleged unfair business practice—using excessively large vials—has not injured Williamson in any way. (See Kwikset, supra, 51 Cal.4th at pp. 323, 326.) Williamson does not dispute this point.

. . . Williamson wants to borrow an injury from somebody else to establish standing, using the collateral source rule. . . .

It is a creative argument. The collateral source rule concerns the amount of money owed by a tortfeasor to the injured victim: “if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.” (Id., pp. 4-4.)[2] 

Therefore, the Williamson panel outright rejected plaintiff’s “collateral source” theory:

The collateral source rule has no application here. First, in both tort and criminal restitution cases, the rule applies when a defendant injured a victim, and the issue is simply how much compensation the defendant owes to the victim in light of payments from an insurer or other collateral source. Williamson cites no cases in which the rule applied to a plaintiff who suffered no injury. (Id., p. 6.)

Williamson therefore held plaintiff simply had no“Article III standing” [1] to bring suit. 

The appellate court also rejected plaintiff’s argument that permitting him to bring a claim would “encourage” others to buy insurance, succinctly noting “people with insurance, like Williamson, are not injured, and people without insurance are injured.” (Id., p. 7; emphasis added.)

The appellate court further agreed with the trial court that plaintiff should not, as he requested, be granted leave to amend to add another class representative who may have suffered actual harm.  Not only are rulings regarding leave to amend left to the sound discretion of the trial court, meaning such decisions will not be disturbed absent an “abuse of discretion,” but the Second District found it relevant that plaintiff had not identified even one other potential plaintiff to take the place of Williamson. (Id., p. 8.)

Lessons for practitioners

In a suit such as this it is, of course, counsel rather than the client who “drives the train,” so to speak, as counsel defines the scope of the potential class claiming injury and must decide who is the named “representative.”  For the reasons stated above, plaintiff Williamson was not a suitable party, either as an individual or such a representative.  Presumably, there may have been another plaintiff who in fact suffered actual injury and who therefore would be better-suited to be the named plaintiff.  Indeed, one could argue that counsel admitted such in maintaining the complaint could be amended to add such another lead plaintiff.  But, as noted, counsel did not propose any specific person to take the place of Williamson.

1 - Plaintiff had no “actual injury” and therefore no Constitutional "standing" under Unfair Competition law.  Williamson explained that California law requires such an injury.  Moreover, standing, as defined by Federal law, and, in particular, Article III of the United States Constitution, requires an injury that is “(a) concrete and particularized, and (b) actual or imminent, not ‘conjectural’ or ‘hypothetical.’” (Williamson, p. 4, citing Kwikset Corp. v. Superior Court (2011) 51 Cal. 4th 310, at 232.) 

2 - On this and other points Williamson cited Helfend v. Southern California Rapid Transit Dist. (1970) 2 Cal.3d 1, as the leading case defining the scope of the “collateral source” rule in California. 

Equitable tolling may apply due to prior foreign actions (Metabyte v Technicolor)

“Equitable tolling” applies broadly so that prior civil and criminal complaints in France alleging similar harm may save a California suit filed beyond the statute of limitations

Justice Stratton, Presiding Justice of the Second Appellate District, Division Eight, explained that the legal saga in Metabyte v. Technicolor (August 9, 2023) B319338, had involved no less than four separate actions, two in the United States and two in France:

In a case which seems destined for the pages of a civil procedure casebook, Metabyte, Inc., appeals from the trial court's judgment of dismissal and order sustaining Technicolor's demurrer without leave to amend. This 2021 action represents Metabyte's fourth attempt to hold Technicolor liable for Technicolor's allegedly improper auction of a patent portfolio in 2009. The first two actions were brought in France, where Technicolor is headquartered. Metabyte brought a proceeding under Article 145 of the French Code of Civil Procedure (Article 145 proceeding), and then filed a criminal “plainte” against Technicolor. After the French courts ruled they lacked jurisdiction in the criminal action, Metabyte brought an action in United States District Court in California alleging a federal RICO claim and several state law causes of action. After the district court ruled that equitable tolling did not apply to its RICO claim as a matter of federal law, Metabyte dismissed the federal action and brought its state law claims in Los Angeles County Superior Court. (Id., p. 2; footnote omitted.)

These claims, of course, included fraud and related torts.  The Hon. Daniel S. Murphy of the Los Angeles County Superior Court granted Technicolor's demurrer without leave to amend, finding the Article 145 proceeding was dissimilar in the relief it sought and therefore equitably tolling did not apply.  The California action was therefore barred by the Statute of Limitations.

The genesis of Metabyte’s claims was that after obtaining a majority interest in a portfolio of patents owned by its subsidiary MNI, Technicolor then auctioned them off in a process that resulted in payment being made to preferred shares only and thus nothing to common shareholders such as Metabyte.

Metabyte is a California corporation. Metabyte's subsidiary Metabyte Networks, Inc (MNI) owned patents on digital video recording (DVR) technology used by cable television companies in set top boxes. Metabyte and its CEO and principal shareholder Manu Mehta owned the stock of MNI. At some point, Metabyte sold shares in MNI to an entity eventually known as Technicolor USA, but it retained majority ownership of MNI's stock. When MNI needed additional financing, it sold shares to Canal+ Technologies, a corporation in which Technicolor S.A. was a minority shareholder. An entity which became Technicolor International then purchased a controlling interest in Canal+ Technologies, giving Technicolor majority ownership of MNI stock.

At some point, Technicolor decided to liquidate MNI. In July 2001, liquidation preferences were set. Common shareholders such as Metabyte could not receive any money from the liquidation of assets until the preferred shareholders received over $16.4 million. In December 2009, Technicolor forced an auction of MNI's patent portfolio. A Technicolor subsidiary bought the patents for $1 million. In October 2010, Technicolor dissolved MNI. (Id., pp. 3-4.)

Metabyte later learned of allegations that Technicolor was being investigated in France for wrongfully acquiring assets of another company in which it invested, driving it into bankruptcy and then acquiring its assets for less than market value.  Metabyte alleged Technicolor committed similar fraud here in that it valued the patent portfolio originally owned by MNI for less than it was worth so that Metabyte received nothing. 

In 2010 Metabyte initiated an Article 145 proceeding in France, the result of which appears to have been mixed at best.  Metabyte obtained an order to have a bailiff appear unannounced at Technicolor to seize documents from Technicolor, but was then denied access to some of these documents.  While the Cour D’Appel and the Cour de Cassation (respectively, the Court of Appeal and Supreme Court) both ruled in favor of Metabyte, it appears Technicolor’s threats and an order it obtained from the Paris Bar discouraged the Bailiff in the section 145 proceeding from releasing documents to Metabyte.

Metabyte also initiated a criminal complaint in France.  However, the Prosecuting Magistrate found France lacked jurisdiction to prosecute French entity Technicolor on behalf of the American entity Metabyte.

Metabyte then filed a RICO complaint in the United States District Court for the Northern District of California.  The District Court granted Technicolor’s Rule 12(b) motion to dismiss, noting equitable tolling did not apply because the Article 145 proceeding did not seek the same relief and the statute of limitations barred the action.  Metabyte then voluntarily dismissed the District Court action but without prejudice.

When Metabyte filed the present suit in the Superior Court of Los Angeles County, Technicolor adopted the District Court’s reasoning as its chief defense argument.  Technicolor filed a demurrer based, inter alia, upon the statute of limitations which, as noted, was sustained without leave to amend.

Metabyte should have been given the opportunity to state additional facts showing equitable tolling might apply

Technicolor not only argued that equitable tolling did not apply to save the last-filed California court action, but also that judicial estoppel applied to bar the new California complaint.  Specifically, Technicolor argued the dismissal of the RICO action barred any subsequent state law claims by Metabyte.  The Second District disagreed, noting that where a demurrer is sustained with leave to amend (and, of course, the Rule 12(b) motion was akin to a demurrer), any subsequent dismissal “without prejudice” is not dispositive, and thus not res judicata on the claims dismissed so as to preclude these claims.  In a footnote, the appellate  court explained that even where a complaint is dismissed “with prejudice,” the res judicata effect is limited and a subsequent claim is not barred if “new or additional facts are alleged that cure the effects in the original pleading. . . .” (Metabyte, p. 12, citing to Wells v. Marina City Properties (1981) 29 Cal. 3d. 781, at 789.)

        

Having disposed of Technicolor’s argument that claim preclusion did not apply to bar the action, it turned to Metabyte’s argument that equitable tolling applied save the otherwise timely claims for fraud dating from the 2009 patent auction.  Technicolor argued the dissimilarity in the prior French actions meant the doctrine did not apply.  However, the appellate court stressed this was not the proper test; rather, in order to extend the statute of limitations by way of “equitable tolling,” a court must conduct a three-part analysis:

To determine whether equitable tolling may extend a statute of limitations, courts must analyze whether a plaintiff has established the doctrine's three elements: timely notice to the defendant, lack of prejudice to the defendant, and reasonable and good faith conduct by the plaintiff. (Metabyte, p. 16, quoting from Saint Francis Memorial Hospital v. State Dept. of Public Health (2020) 9 Cal. 5th 710, pp. 725–726.)

Metabyte then discussed the nature of this three-part analysis, calling it “fact-intensive” and concluding such issues are more properly resolved by way of a motion for summary judgment. (Id., pp. 16-17.)  Towards this, the Second District rejected Technicolor’s argument that the Article 145 procedure was so dissimilar as to make it impossible for plaintiff Metabyte to show a lack of prejudice to Technicolor, noting that the original French civil proceeding gave Technicolor sufficient notice to begin a defense to Metabyte’s claims.

The appellate court therefore held the trial court had improperly failed to grant leave to amend, explaining Metabyte should be given an opportunity to plead further facts which indicate it is entitled to equitable tolling, such as that it acted reasonably and in good faith in bringing the French actions before the California suit.  The Second District found this “good faith” had not been sufficiently plead, but also held Metabyte should be permitted to plead such facts.  In summary, the Metabyte court found that equitable tolling could, at least in theory, be based upon the section 145 proceeding:

We reverse the order insofar as it requires a legal remedy which seeks to lessen damages and which holds that Article 145 proceedings can never satisfy the requirements for equitable proceedings. (Id., p. 20.)

Lessons for practitioners

Perhaps an overly-simplistic way in which to view this foregoing is to note the “home court” advantage which Technicolor obtained in France, where the Bailiff would not turn over documents despite multiple orders to do so, and, at the same time, the advantage Metabyte obtained in California, where the appellate court revived claims of fraud based on a 2009 patent sale.  

Whether one agrees with this somewhat cynical view, the opinion offers other lessons for practitioners.  The Second District appears to have taken a broad view of when leave to amend should be granted, giving the plaintiff the benefit of the doubt as to facts which one could plead on the issue of equitable tolling so that the suit might survive claims it was untimely.  On this point one may speculate the actions of Technicolor in effectively blocking the Article 145 action and preventing the Bailiff from providing documents to Metabyte may have had some bearing on the issue of whether equitable tolling — with an emphasis on the word “equitable’ — applied in the California action

A more jaundiced view might be that a party who has plead a claim since 2009 on two continents has already been given sufficient opportunity to plead whatever it might plead.  Nonetheless, Metabyte was given leave at this late date to state additional facts to meet the test for the application of equitable tolling.  

Also relevant is the appellate court’s discussion of res judicata, giving a nuanced approach as to when the doctrine applies. Therefore, those who encounter an argument that dismissal with prejudice bars all future claims might want to cite Metabyte in support of their counter-argument that newly-discovered facts may in fact be an exception.