San Francisco, CA

Wilson Elser attorneys present the current statutory framework, recent changes to the law in response to the novel coronavirus pandemic.

Past litigation has taught us that unsubstantiated public concern may expose an entire industry to waves of product liability lawsuits and settlement payments in the range of billions of dollars. It is therefore important that producers and companies in the chain of distribution of vaping liquid and devices closely monitor the scientific developments on any possible associations between vaping and COVID-19, and consider making risk management arrangements in anticipation of future lawsuits.

Manufacturers and diagnostic laboratories need to remain aware of decisions and actions taken by the FDA and take corresponding measures to comply. Insurance carriers also should be alert to impacts on the manufacture and shipment of their covered products as well as the FDA’s reaction to these impacts, as both could precipitate the need for changes in their policies.

Effective January 1, 2020, the California Tenant Protection Act (AB 1482), which affects  an estimated 2.4 million rental units in the state, will extend rent control and eviction control protections to certain qualifying rental units statewide.

After a December 1, 2016, ruling by the California Supreme Court, defendants in “take-home” cases may now anticipate that “no duty” defenses at the pleadings or summary judgment stages will be significantly more difficult to prevail upon. The analysis now turns on a fact-dependent “reasonable foreseeability” test, as opposed to the bright-line “no duty” rules permitted by prior cases.

In addition to tailoring prescription drugs to the needs of particular classes of patients, 3D printing opens the possibility of tailoring each tablet to the needs of one specific patient, regardless of the physical location of the printer. Until now, this has not been financially feasible with mass-produced medications.

In California, most fee disputes involving independent counsel will be resolved by the parties either informally or through the fee arbitration set forth in Civil Code section 2860(c). A recent case before the California Supreme Court presented a new possibility by noting that section 2860 fee arbitrations are not limited to disputes between the insurer and the insured, but can also be between the insurer and Cumis counsel.

California’s proposed Asbestos Tort Claim Trust Transparency Act, if passed, would require asbestos plaintiffs to disclose all asbestos bankruptcy trust claim documents in asbestos tort actions. In addition, plaintiffs would be required to submit a sworn statement identifying the status of each claim, including all monies requested and received.

When insurers are sued by plaintiffs seeking monetary recovery, and at some point it becomes clear that the claim has no merit, plaintiffs often reason that an insurer would rather settle than expend more resources and money. But what if an insurer or its counsel had another recourse? A charge of malicious prosecution, in the appropriate circumstance, might be just what’s needed.

On April 7, 2015, the Superior Court of the State of California for the County of Los Angeles issued its “Case Management Order Requiring Disclosure of Bankruptcy Trust Claims, Claims-Related Materials, and Asbestos Exposure Facts.” Coupled with a 2014 North Carolina decision, unprecedented in its scope and detail about the secrecy shrouding asbestos bankruptcy submissions, the case management order gives defendants a powerful new argument in support of transparency regarding plaintiffs’ asbestos bankruptcy claims.

In an opinion issued on January 22, 2015, the Fourth District Court of Appeals left the door open for an insured in a multi-carrier insurance coverage case to attempt the allocation of settlement monies away from defense costs and essentially “pocket” settlements – attributing them to Brandt fees – while continuing its efforts against non-settling carriers.

On January 1, 2015, an amendment to California’s privacy and breach law goes into effect that may have a significant impact on the way entities respond to data breaches. In advance of the law’s effective date, in addition to evaluating their information security protocols and policies, entities that possess the personal information of California residents should review their insurance policies, first to make sure they have cyber insurance that provides data breach coverage, and second to determine if their policies will cover the potentially significant cost associated with notification and identity protection or mitigation services.

New Jersey’s Legislature has approved a bill that is expected to come before the Governor’s Office in November 2014. If enacted, the bill’s prohibition against the production or manufacture of personal care products containing microbeads would commence January 1, 2018. The measure prohibits the sale, offer for sale or promotion of these items on or after January 1, 2019. In addition, no person will be able to sell, offer for sale or offer for promotion over-the-counter drugs containing synthetic plastic microbeads in the state beginning January 1, 2020.

On July 3, 2014, the California Supreme Court held that, based on common law principles, an architect owes a “duty of care” to future homeowners in the design of a residential building. To what extent the design professional must assume a role of principal architect or become involved in the construction phase before a duty will run to the ultimate purchaser of the condominium remains an open question.

A recent decision by the California Court of Appeal for the Second District holds that a landowner owes no duty of care to a third party who was exposed to asbestos through a person who worked on the landowner’s premises, where the only cause of action is for premises liability. This decision came just over two weeks after the First District held that an employer owed a duty of care to a third party for exposure to asbestos through contact with its employee where the foreseeability of harm was substantial, based on negligence and products liability.

In weighing the foreseeability of harm as a significant factor, the California Court of Appeal found that there is a high degree of foreseeability of harm from take-home asbestos exposure to those whose contact with an employer’s workers “is not merely incidental, such as members of their household or long-term occupants of the residence.”

An insurer is not liable under California law for failing to settle a liability claim when no settlement demand has been made and there was no evidence that the insurer knew or should have known the claimant was interested in settlement.

A recent California Court of Appeal case confirms the limited duty of an insurance broker only to use reasonable care, diligence and judgment in procuring the insurance requested by an insured. The court rejected arguments that the duty of an insurance broker to its client should be expanded for policy reasons.

While a recent decision by the California Court of Appeal is unfavorable to defendants, it does not completely close the door to the viability of the “sophisticated intermediary” defense. The Court says it is not enough for a supplier defendant to simply show the plaintiff was an employee of a sophisticated intermediary to avoid liability. The supplier must also show it had sufficient reason to believe the ultimate user knew or should have known of the hazards.

The California Court of Appeals (Fourth District) has held that the Right to Repair Act does not provide the exclusive remedy to homeowners in cases where actual damage has occurred because of construction defects, thereby upholding a homeowner’s common law rights and remedies to seek actual damages despite noncompliance with the terms and conditions required for relief under the Act.

On May 8, the Supreme Court of California heard oral arguments in a case that could decide whether an insured can bring a cause of action against its insurer under the Unfair Competition Law and if previous case law bars such an action.

California’s First District Court of Appeal finds common law and statutory duties extend from design professionals to ultimate purchasers of residential construction. Despite the extensive analysis by the court, there remain open questions regarding the extent of the duty of care of design professionals to ultimate purchasers.

While a California Appellate Court extended the “completed and accepted” doctrine to architects’ field operations, it limits application of the doctrine to patent defects and activities in the field – the doctrine does not apply to claims of error in the development of plans and specifications.

California’s governor has signed Assembly Bill 1875, which limits the length of depositions in civil cases. The new law will go into effect on January 1, 2013.

In Pinnacle Museum Tower Association v. Pinnacle Market Development, the California Supreme Court’s opinion demonstrates a strong public policy in favor of the mandatory arbitration of disputes. This case has clear implications regarding the enforceability of mandatory arbitration provisions in many other areas as well.

A recent California Supreme Court decision reaffirmed the need for clients to communicate with counsel early concerning the investigation conducted after an accident. The attorney can then direct the necessary investigation and analyze the manner in which witness information should be obtained to provide the necessary work product protection should the matter result in litigation.

A Pennsylvania District Court and the Third Circuit concur that an explanation for failing to provide accurate answers on an application for insurance coverage does not prevent a finding of fraud when the undisputed evidence establishes that the applicant chose to provide an inaccurate response.

DRI - the Defense Research Institute – has published an article on Section III of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) written by Meg Gambino, Steve Joffe and Maria Caruana in the April 2012 issue of For The Defense.

In Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Insurance Services West, Inc., a case of first impression, the court held that an insurance broker, after procuring a policy of insurance for a developer on a construction project, does not owe a duty to apprise a subcontractor that was later added as an insured under that policy of the insurance company’s subsequent insolvency, absent the assumption of a contractual duty to do so.

The California Supreme Court held that the doctrine of strict liability was never intended to impose absolute liability, which would place an excessive and unrealistic burden on product manufacturers who should not be required to insure and warrant against the potential risks involved with another manufacturer’s product.

Recent California Court of Appeal decision alerts insurers who want to seek contribution from other insurers to the risk that any claims should be asserted during the two-year limitations period or risk having the claim lost.

Legal Insights has published two articles by California-based Wilson Elser attorneys in its winter 2012 issue.

SB 474, recently signed into law by Governor Edmund G. Brown, Jr. bans so-called “Type I” indemnity agreements that require subcontractors to assume liability for general contractors’ negligence.

On August 22, 2011 the California Supreme Court made claims by injured workers against general contractors more difficult when it held in Seabright Insurance v. U.S. Airways that the hirer of a subcontractor presumably delegates to the subcontractor any duties that arise regarding a safe workplace for the subcontractor’s employees.

Today, the Supreme Court of California held that unpaid medical expenses are not economic damages and therefore not recoverable. Plaintiffs may be awarded no more than the amount the medical providers accepted as full payment for their services.

As with any decision of this magnitude, it will take years for the full impact of this ruling to be appreciated. However, a large number of potential securities fraud defendants may now rest a little easier, knowing that so long as they do not have the “ultimate authority” to actually “make” a statement, they are shielded from at least one form of exposure and sometimes cripplingly expensive litigation.

On January 1, 2011, the exception to state licensing requirements for "temporary and incidental" accounting practice within the Golden State was eliminated. Practice Privilege Notifications, with the attendant fees, must now be filed with the California Board of Accountancy (CBA) for services within California that are "temporary and incidental" to serving an out-of-state client.

What law governs disputes that are subject to binding arbitration in the Financial Industry Regulatory Authority (FINRA)?  The State of Utah has advised securities broker-dealers doing business there that they expect FINRA arbitrators to apply Utah's Uniform Securities Act in deciding issues of liability and damages.  The Act allows investors to recover the amount they paid to purchase the securities at issue, plus 12% annual interest, costs, and reasonable attorneys' fees, less any income received from the securities.

The Federal Trade Commission's "Red Flags" Rule is designed to protect personally identifiable information from data thieves.  Insurance brokerage firms and other service providers that receive payment after their services have been delivered are required to comply.  The compliance deadline is November 1, 2009—data breaches on or after that day may be subject to penalties of up to $3,500 per violation, and could also result in prosecution for violation of state consumer protection or deceptive trade practices laws.  Such laws may permit private individuals to sue and recover treble damages, attorney's fees and/or litigation costs.

Securities brokers, financial planners and other professionals are facing serious repercussions from the current Credit Crisis and downturn in the economy in the form of increased and widespread investor claims. It would benefit these professionals to understand the Financial Industry Regulatory Authority (FINRA) arbitration process in order to better manage risk and prevent future claims, to bring disputes to early and economical resolutions, and to fully defend matters that should be contested on the merits. Looking ahead, 2009 may be a record-setting year for new FINRA claims due to the generalized bear market.