Ever since the Great Recession ushered in drastic cuts to state-court budgets, litigators have grown accustomed to the absence of court reporters in California courts. For trials and potentially dispositive motion hearings (and for all court hearings in unusually significant matters) lawyers have learned to arrange for their own court reporters, in order to make a complete record for appeals. This is an inconvenience for practicing lawyers and a regrettable expense for their clients. For indigent litigants, however, it can effectively imperil the right to appeal, as the California Supreme Court recently held.
California practitioners generally know that they cannot cite or rely upon unpublished or depublished California opinions in California courts, except when relevant to law of the case, res judicata, etc. (Cal. Rules of Court, Rule 8.1115(a).) Violations of the “no-citation rule” can even be sanctionable. (People v. Williams (2009) 176 Cal.App.4th 1521, 1529; Alicia T. v. County of Los Angeles (1990) 222 Cal.App.3d 869, 885-886.)
Recently, though, there has been an underground debate as to whether the judicial notice statute, Evid. Code, § 452(d)(1), might trump Rule 8.1115. (See Gilbert v. Master Washer & Stamping Co. (2001) 87 Cal.App.4th 212, 218, fn. 14; Rafi Moghadam, Judge Nullification: A Perception of Unpublished Opinions (2011) 62 Hastings L.J. 1397; Scott Talkov, Citing Unpublished Opinions: The Conflict Between the No-Citation Rule and Judicial Notice, California Litigation Attorney Blog.)
On Monday, December 4, 2017, the California Supreme Court issued its decision in City of San Buenaventura v. United Water Conservation District. The case partially resolved a long-running dispute regarding the validity of fees the United Water Conservation District charges all groundwater pumpers in its jurisdiction. While this case has been followed most closely in the community of water-rate nerds (myself included), there are broader impacts on government revenue and constitutional interpretation in general.
I’ve been watching the ripple effects of People v. Sanchez (2016) 63 Cal.4th 665, which has been labeled “a paradigm shift” regarding out-of-court statements and expert testimony under California hearsay law. (People v. Ochoa, 7 Cal. App. 5th 575, 588 (2017).) Sanchez boils down to the difference between an expert relying on hearsay case-specific facts (which has always been permissible) and an expert relating those facts to the jury (which Sanchez now prohibits unless the hearsay problem is solved). But what about summary judgment motions?
In People v. Sanchez (2016) 63 Cal.4th 665, the California Supreme Court held that expert testimony involving case-specific facts is subject to exclusion as hearsay—just like any other testimony. In so holding, the Court overruled its prior decisions, including People v. Montiel (1993) 5 Cal.4th 877, which permitted courts wide latitude in allowing experts to base their opinions on case-specific facts that are hearsay. Montiel’s relaxed approach rested upon the use of limiting instructions informing the jury that they could consider hearsay as going to the basis of the opinion, but not for the truth. Thus, under Montiel, “there was no longer a need to carefully distinguish between an expert’s testimony regarding background information and case-specific facts.” (Sanchez, 63 Cal.4th at p. 679.)
According to Sanchez, Montiel ignored an undeniable truth, that “when any expert relates to the jury case-specific out-of-court statements, and treats the content of those statements as true and accurate to support the expert’s opinion, the statements are hearsay. It cannot logically be maintained that the statements are not being admitted for their truth.” (Id. at p. 686.) As a result, if an expert will testify to case-specific out-of-court statements as part of the facts supporting the opinion, then “like any other hearsay evidence, such statements will only be admitted through an applicable hearsay exception.” (Ibid.)
Winning on appeal can sometimes spawn further litigation, including the launching of a malicious prosecution action. Indeed, if your client has prevailed in defeating a Uniform Trade Secrets Act (“UTSA”) case, been awarded attorney fees because the trial court found that action was brought in bad faith by the former employer, and the trial court’s decision upheld on appeal, malicious prosecution jumps out as the next logical step, right?
Maybe not. According to the California Supreme Court’s recent decision in Parrish v. Latham & Watkins, 2017 DJDAR 7724 (8/10/17), it all depends on whether your client (the former employee) brought a motion for summary judgment (or other ruling on the merits but not on technical or procedural grounds) which the former employer defeated on the merits (made a minimal showing of issues of fact requiring trial). In Parrish, a former employer sued former employees for misappropriation of trade secrets under the UTSA. After defeating the employees’ motion for summary judgment on flimsy evidence but albeit arguably meritorious, the employer lost a full evidentiary trial because the employer was shown to have no factual basis for bringing the action and did so for anti-competitive reasons. The former employees obtained substantial attorney’s fees on the grounds of bad faith as defined in the UTSA. Then, of course, they filed a malicious prosecution action against the employer’s lawyers. But that action was dismissed by way of an anti-SLAPP motion.