Author: Lewis

A few weeks ago, in A.M. v. Ventura Unified School District, et al., 2016 WL 5936851 (Cal. Ct. App. Oct. 12, 2016), the Court of Appeal overturned a trial court decision limiting the ability of childhood sexual abuse victims to file suit.  The Court of Appeal found that California Government Code section 905(m), which waives the requirement that a tort claim be filed before suing a public agency for childhood sexual abuse, is not limited to cases in which the alleged abuser was employed by the public agency.  In other words, if a child files suit alleging that he or she was abused by his or her fellow students, no tort claim form is required.

The underlying complaint in A.M. alleged that the victim was bullied, battered, and sexually abused by some of her fellow students.  Even though her mother complained to the school district, no action was taken.  The trial court granted summary judgment in favor of the student defendants, finding that the plaintiff had failed to file a claim form and, therefore, was barred from filing suit against them.  The Court of Appeal rejected this narrow interpretation of the statute and reversed the trial court’s decision.

This decision is a welcome development for victims of childhood sexual abuse, and removes another barrier for victims seeking recourse through the courts.

California Code of Civil Procedure section 2019.210 provides that, before the plaintiff in a trade secret lawsuit may commence discovery relating to its alleged trade secret(s), it must “identify the trade secret with reasonable particularity.”  This provision provides defendants with a powerful tool, preventing a plaintiff from alleging the misappropriation of trade secrets in vague or generalized terms, and then back-filing the allegations after discovery starts.  The Ninth Circuit has yet to rule on its applicability in federal court, and California district courts conducting an Erie analysis are split on the issue.  However, even district courts that hold section 2019.210 does not apply often require plaintiffs, pursuant to a federal court’s inherent Rule 26 powers, to disclose their trade secrets with particularity before obtaining discovery from defendants.  In sum, section 2019.210 can be a powerful tool, and in deciding whether to file a trade secret action in federal or state court, plaintiffs should expect that they will have to disclose their trade secrets with “reasonable particularity” – either pursuant to section 2019.210 or the court’s Rule 26 order – before they can begin discovery.

The California Automatic Renewal Law (ARL) was passed in 2010 in order to prevent companies from locking consumers into renewal payment contracts without any ability to cancel.  Unfortunately, the ARL has created a difficult business environment, riddled with pitfalls for unsuspecting companies.  Most importantly, the regulatory framework created by the ARL provides for an incredibly precise set of rules detailing what all companies which have recurring payment contracts must do before, and after, signing up a customer.

The penalties for failing to comply are severe.  If a company fails to follow the ARL’s very specific and detailed rules, the law deems all “goods, wares, merchandise or products” sold as “unconditional gifts.”  This has allowed plaintiffs’ attorneys to argue that a company which violates the ARL must return 100% of its proceeds to every single California customer since 2010.

While the law was largely ignored at first, over the last few years, plaintiffs’ attorneys have begun aggressively pursuing class actions.  Since 2015, plaintiffs have filed putative class action lawsuits agains Birchbox, Dropbox, Google, Spotify and Tinder, just to name a few.  Nor are these class actions limited to large companies.  We have seen, and defended, relatively small subscription-based companies that have been targeted by plaintiffs’ counsel.

Due to the ARL’s broad language, few companies have opted to test its limits.  Based on a study of publicly available information, we have seen a large trend of defendants, or even would-be defendants, settling based on a demand letter or complaint alone.  However, the few companies that have engaged plaintiffs in litigation over the ARL have found some success, especially at the federal level.

On May 11, 2016, the Defense of Trade Secrets Act (“DTSA”) became effective, establishing the first civil federal trade secrets law.  Importantly, the DTSA does not preempt state law, meaning a plaintiff alleging trade secret misappropriation can assess which law is more favorable before bringing suit and could also, depending on the case, opt to assert claims under both laws.  While the substantive elements of trade secret claims under the DTSA are similar to those under California law, the DTSA differs in several key respects.  For example, in contrast to California law, the DTSA does not, on its face, require a plaintiff to disclose its purported trade secrets with particularity before commencing discovery.  Because the particularity requirement can be a powerful tool for defendants, depending on the nature of its case, a plaintiff should consider whether to file suit under the DTSA to potentially avoid this procedural hurdle to obtaining discovery.  Moreover, the DTSA contains a civil seizure remedy, which, under certain circumstances, allows a plaintiff to obtain an ex parte order providing for the seizure of property necessary to prevent the dissemination of the trade secrets.  Depending on how courts apply the seizure provision, this remedy could be a reason in and of itself to bring suit under the DTSA.