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LAWRENCE C. YEE (84208)
DANIELLE A. LEE (223675)
OFFICE OF GENERAL COUNSEL
THE STATE BAR OF CALIFORNIA EEee TReNieey.
180 Howard Street FILED
San Francisco, CA 94105-1639 Supertor Court of Calffornia,
Tel: (415) 538-2517 Coun ft San aneee
Fax: (415) 538-2321 06/23/: 2015
Danielle.lee@calbar.ca.gov By Aede Pascua:
Deputy Clerk
Attorneys for Defendants
CHARLES NETTLES, DANIELLE A. LEE,
STARR BABCOCK, THE STATE BAR OF
CALIFORNIA, BOARD OF TRUSTEES OF THE
STATE BAR OF CALIFORNIA (erroneously sued
as BOARD OF GOVERNORS OF THE STATE
BAR OF CALIFORNIA), OFFICE OF CHIEF
TRIAL COUNSEL OF THE STATE BAR OF
CALIFORNIA, THE STATE BAR COURT OF
THE STATE BAR OF CALIFORNIA (erroneously
sued as the CALIFORNIA STATE BAR COURT),
JAMES E. TOWERY, DONALD STEEDMAN,
LUCY ARMENDARIZ, SCOTT J. DREXEL,
ALLEN BLUMENTHAL, JEFF DAL CERRO,
SUSAN I. KAGAN, and ARNE WERCHECK
Exempt from Filing Fees Pursuant to
Government Code Section 6103
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO,
ROBIN KAY, et al., Case No. CGC-14-540524
Plaintiffs, EXHIBITS LL PART 3 OF 3 TONN TO
v. REQUEST FOR JUDICIAL NOTICE IN
SUPPORT OF STATE BAR
CHARLES NETTLES, et al., DEFENDANTS’ DEMURRER TO
COMPLAINT
Defendants.
RESERVATION # 06190806-07
DATE: August 6, 2015
TIME: 9:30 a.m.
DEPT: 302
JUDGE: Hon. Ernest L. Goldsmith
Action Filed: July 14, 2014
Trial Date: TBD
RJN ISO STATE BAR DEFENDANTS’ DEMURRER TO COMPLAINT Case No, CGC-14-540524EXHIBIT LL.3fears, anxiety and other emotional distress, caused by UltraStar's conduct. (BAJI No. 12.88)
The trial court defined the term "emotional distress" to mean "mental distress, mental
suffering or mental anguish" including "all highly unpleasant mental reactions, such as
fright, nervousness, grief, anxiety, worry, mortification, shock, humiliation and indignity, as
well as physical pain." (BAJI No. 12.72.) The trial court also instructed the jury that there
was no standard by which to fix reasonable compensation for emotional distress, that no
witnesses needed to opine as to the amount of such reasonable compensation, that the
argument of counsel was not evidence of reasonable compensation, that jurors must exercise
their “authority with calm and reasonable judgment" and damages must be "just and
. reasonable in the light of the evidence." (BAJI No. 12.88.)
The parties agreed on the instructions regarding emotional distress damages and there
is no argument on appeal that the instructions were inaccurate or incomplete. Nonetheless,
the trial court granted the new trial motion because the evidence Plaintiffs presented did not
met the threshold for recovery in that it was not "severe, substantial and enduring." The trial
court, however, did not instruct the jury that in order to be compensable, the emotional
distress Plaintiffs suffered had to reach a particular threshold. Moreover, while a plaintiff
subjected to sexual harassment might suffer physical manifestations of emotional distress,
seek medical or psychological help or suffer a disruption of her everyday activities, there is
no authority to support the trial court's apparent conclusion that such evidence is required to
support an emotional distress claim. Because the trial court relied on an erroneous legal
principle, that portion of the order granting UltraStar a new trial on compensatory damages is
- 000169reversed and the jury's awards as to each plaintiff are reinstated. (Conner v. Southern Pacific
Co., supra, 38 Cal.2d at p. 637.)
(Sexual harassment is considered to be "outrageous conduct" sufficient to constitute
the outrageous behavior element of a cause of action for intentional infliction of emotional
distress (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 618) and an
essential element of such a claim is "severe" emotional distress suffered by the plaintiff
(BAJI No. 12.70), with "severe" defined as "substantial or enduring as distinguished from
trivial or transitory." (BAJI No. 12.73.) Plaintiffs, however, did not plead such a claim, nor
was the jury so instructed.)
Although we need not reach the issue, we note that even if the trial court had used the
correct standard, we cannot state as a matter of law that the evidence does not support the
damages awarded. Marcisz testified that Gustafson would "brandish [a knife at her] or any
other girls" and he once grabbed her arm and placed a three or four inch knife blade against
her throat for about 30 seconds. Marcisz was so scared by the incident that she could not
move. Gustafson waived a knife in Hora's face, used it to clean his fingernails and stab the
counters. He also scared Hora by holding-a knife blade to her throat and telling her that he
could kill her. Although Jessica and Blair did not have a knife placed against their throats,
Jessica testified that Gustafson frightened her by playing with a knife, jabbing at the counters
and pointing it at people and Blair testified that Wooten and Gustafson scared and
intimidated her by pointing at things with a knife.
Gustafson also subjected all Plaintiffs to “restraint holds" where he would come up
behind them, grab one of their arms, twist it behind their backs, forcing them to bend over to
B 000170avoid the pain and press his hips into their rear ends. Although he did not do this often to
Marcisz because she yelled at him, he did it "pretty frequent[ly]" to Hora and Blair stated
that Gustafson placed “all the girls" working in the theater in restraint holds. Despite
knowing that Marcisz had suffered an earlier shoulder injury, Gustafson dislocated her
shoulder when he placed her in a restraint hold, causing her to experience "excruciating
pain," fall off her stool and cry hysterically. Her mother took her to the emergency room and
she ultimately required shoulder surgery.
Plaintiffs variously stated that the restraint holds were "shocking," "very scary,"
"terrifying," "intimidating," "embarrassing," and "humiliating." Jessica was very nervous
working with Gustafson after he starting doing this and it was "really hard" to observe the
other girls being treated this way.
Gustafson also liked to tilt Marcisz, Jessica and Blair backwards as they sat in tall
stools in the box office, threatening to drop them and forcing their bodies against his chest.
He did this so frequently that Marcisz described the conduct as "a normal thing." Jessica
described feeling frightened and unsafe, experiencing knots in her stomach and feeling as if
Gustafson was trying to intimidate her by showing her that he had power over her and could
hurt her any second. Gustafson also hit Jessica in the face three or four times with a money
bag filled with money as she screamed at him to stop. Jessica went home crying after this
occurrence and quit a week later because she felt unsafe knowing that Gustafson could hit
her in front of Wooten and Wooten did nothing to stop the conduct.
Wooten told sexual jokes to Plaintiffs, causing them to feel insulted, humiliated,
embarrassed or disgusted. Gustafson bragged to Jessica and Blair that he liked to make all
: 000174the girls that worked at the theater cry. Blair recalled a specific instance where Gustafson
repeatedly hit another female employee in the face until she cried. Wooten and Gustafson
used profanity to communicate, including such words such as “fuck," "cunt," "bitch," and
“pussy." They also humiliated Marcisz by making her wear a name tag saying "ditz."
Gustafson threatened to fire Marcisz if she did not wear the name tag and she was
embarrassed when coworkers, customers and one of her teachers commented on the name
tag. Similarly, Gustafson required Hora to wear a name tag saying “jar head." When she
complained about this name tag, Wooten gave her another one saying "princess."
In all, Plaintiffs suffered from frequent conduct that could be described as outrageous
at best and criminal and terrorizing at worst. The jury could reasonably conclude that the
individual defendants subjected Plaintiffs to this conduct, including the knife displays and
restraint holds, because they were women. Compensable sexual harassment includes
physical harassment (Cal. Code Regs., tit. 2, § 7287.6, subd. (b)(1)(B)) and the trial court
cited no evidence to support its conclusion that Marcisz's shoulder injury and the emotional
distress resulting from the knife displays were not compensable or that the jury reached the
damage awards based on passion or prejudice. Although reasonable minds could certainly
differ on the propriety of the compensatory damage awards, the record does not support the
trial court's conclusion that different compensatory damages awards "clearly" should have
been reached. (Code Civ. Proc., § 657.)
» 000172B. Punitive Damages
1. Principles Regarding Punitive Damage Awards
The purpose of a punitive damages award is to punish the defendant and deter the
commission of similar acts. (Civ. Code, § 3294, subd. (a); Neal v. Farmers Ins, Exchange
(1978) 21 Cal.3d 910, 928, fn. 13 (Neal).) Under California law, three factors are considered
in reviewing whether a punitive damages award is excessive: (1) the reprehensibility of the
defendant's conduct; (2) the injury suffered by the victims; and (3)the wealth of the
defendant. (Neal at pp. 928-929.) "Because the important question is whether the punitive
damages will have the deterrent effect without being excessive, an award that is reasonable
in light of the first two factors ... may nevertheless 'be so disproportionate to the defendant's
ability to pay that the award is excessive' for that reason alone. [Citation.]" (Rufo v.
Simpson (2001) 86 Cal.App.4th 573, 620.)
The plaintiff bears the burden of producing "meaningful evidence" of a defendant's
financial condition as a prerequisite for awarding punitive damages. (Adams v. Murakami
(1991) 54 Cal.3d 105, 109, 123.) Ability to pay is the critical factor and “evidence of
liabilities should accompany evidence of assets, and evidence of expenses should accompany
evidence of income." (Baxter v, Peterson (2007) 150 Cal.App.4th 673, 680.) Ability to pay
is usually proved by net worth, but a jury may consider other factors (Zaxis Wireless
Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 583) and the
‘relevant time period for accessing the defendant's financial condition is the time of trial, not
the time of the injury. (Dumas v. Stocker (1989) 213 Cal.App.3d 1262, 1267.)
16 000173Under California law, a trial court can grant a new trial motion on the ground of
excessive damages (Code Civ. Proc., § 657) and it reviews a motion challenging the
excessiveness of a punitive damages award similar to other motions for new trial. (Boeken v.
Philip Morris Inc. (2005) 127 Cal.App.4th 1640, 1689; supra, section II, A, 1.) A punitive
damage award can also be challenged on federal due process grounds as being
constitutionally excessive, an issue that appellate courts determine independently. (Simon v.
San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1187.)
2. Analysis
As a preliminary matter, we reject Plaintiffs' assertion that the trial court based its
tuling solely on constitutional excessiveness grounds and not on their failure to prove
UltraStar's financial condition. The trial court found that the punitive damage awards were
excessive in light of the evidence presented at trial, noting that the awards raised
constitutional concerns and there was no special justification for the high ratios or "definitive
evidence" of UltraStar's net worth and that the jury might have acted to punish UltraStar for
changing its corporate structure and filing for bankruptcy. The trial court's statement that the
awards were excessive in light of the evidence presented at trial was, in effect, a finding that
the evidence of UltraStar's financial condition was insufficient to support the awards. (See
Dell'Oca v. Bank of New York Trust Co., N.A., supra, 159 Cal.App.4th at p. 549.) We also
reject Plaintiffs' contention that UltraStar waived any argument regarding the insufficiency
of the financial condition evidence when it did not respond to their valid discovery requests
because this contention is not supported by any references to the record showing that
UltraStar failed to respond to a valid court order to produce financial records. (Compare,
7
000174Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 608-609 ["by failing to bring in any
records which would reflect his financial condition, despite being ordered to do so, and by
failing to challenge that ruling on appeal, defendant has waived any right to complain of the
lack of such evidence"].)
Turning to the trial court's rulings under state law, we conclude that the trial court did
not abuse its discretion in granting a new trial on the ground that the punitive damages
awards were excessive based on the evidence presented at trial.
Plaintiffs' point out that UltraStar generated yearly revenues of over $20 million
dollars over the five years prior to trial, but ignore other evidence regarding UltraStar's
. overall financial condition. Roberta Jean Spoon, a certified public accountant, reviewed the
financial statements for UltraStar for a four-year period, bank statements from January 2004
to February 2005, income tax returns for four years, the financial ledgers for each of the nine
theaters for 2004 and a business evaluation conducted in November 2004. Spoon did a gross
profit analysis and concluded that from 2000 to the end of November 2004, UltraStar's nine
theaters generated $87.7 million in revenue and had a gross profit of about $50 million, but
that was only one-half of the equation. ‘She explained that the other half of the equation was
the cost to operate the company and that operating expenses of the company were larger than
its gross profits. Spoon testified that the business posted a net loss of income each year, but
that it was able to stay in business and still post a loss because some of its expenses were
noncash expenses. As of the November 2004 appraisal, the company had a negative net
worth of about $300,000.
7 000175Spoon also reviewed the February 2005 sale of asset documents from Movie Theatre
Entertainment Group, Inc. dba UltraStar Cinemas to UltraStar Cinemas, Inc. She could not
come to a conclusion as to the current value of UltraStar based on the documents she
reviewed because she did not review any documents after the sale. Spoon had no conclusion
regarding the financial condition of UltraStar and did not expect the jury to come to any
conclusion.
Based on this evidence, the $6 million punitive damages total far exceeded UltraStar’s
ability to pay and the jury clearly should have reached a different verdict. (Code Civ. Proc.,
§ 657.) Accordingly, the trial court did not abuse it discretion when it granted a new trial on
the ground that the punitive damages awards were excessive. This conclusion moots
Plaintiffs remaining arguments regarding the propriety of the punitive damages awards under
federal constitutional law.
Ul. Evidentiary Issues
Plaintiffs contend that the trial court made numerous evidentiary errors during trial
that resulted in a prejudicially incomplete record in deciding UltraStar's new trial motion,
that the erroneous rulings should be reversed and the matter remanded for a new trial with
instructions regarding the admission of certain evidence. To the extent Plaintiffs' arguments
pertain to evidence relevant to the jury's liability findings and the compensatory damages
awards, they are moot. Assuming, without deciding, that the trial court prejudicially
adinitted or excluded certain evidence at trial so as to render the record incomplete on the
punitive damages issue, the proper result would be to retry this issue, something that will
already be done. We decline to provide an advisory opinion on these evidentiary matters.
19
000176DISPOSITION
That portion of the new trial order granting a new trial on the amount of
compensatory damages is reversed and the original compensatory damage awards are
reinstated. That portion of the new trial order granting a new trial on punitive damages is
affirmed and the matter is remanded for a new trial on punitive damages. Plaintiffs are
ing
entitled to their costs on appeal.
NTYRE, J.
WE CONCUR:
Lrnbt-
BENKE, Acting P.J.
A Lig ora
HOFFMAN, I.
20
000177EXHIBIT 10
000178Westlaw.
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Pp
Only the Westlaw citation is currently available.
California Rules of Court, rule 8.1115, restricts citation
of unpublished opinions in California courts.
Court of Appeal, Fourth District, Division 1, California.
Dianne GOBER et al., Plaintiffs and Appellants,
v.
RALPHS GROCERY COMPANY, Defendant and
Respondent.
No. D0S0962.
(Super.Ct.No. N72142).
Sept. 30, 2008.
APPEAL from an order of the Superior Court of San
Diego County, Jacqueline M. Stern, Judge. Affirmed.
8 A. Bird, Luce, Forward, Hamilton & Scripps, San
Diego, CA, John W. Dalton, Law Office of John W.
Dalton, Solana Beach, CA, Philip Edward Kay, Law
Offices Of Philip Edward Kay, Sanford Jay Rosen, Rosen,
Bien & Galvan, LLP, San Francisco, CA, for Plaintiffs
and Appellants.
Karen M. Bray, Daniel J, Gonzalez Horvitz & Levy,
Encino, CA, Helene Joy Wasserman, Littler Mendelson,
Los Angeles, CA, for Defendant and Respondent.
McINTYRE, J.
*1 In 1996, Terrill Finton, Dianne Gober, Sarah Lang,
Talma (Peggy) Noland, Suzanne Papiro and Tina Swann
(collectively Plaintiffs) sued their employer, Ralphs
Grocery Company (Ralphs), for sexual harassment. In
their first appeal, we affirmed compensatory damages
awards in their favor, but remanded the matter for a new
trial on punitive damages. After a second jury awarded
Plaintiffs substantial punitive damages, we reduced the
award as constitutionally excessive and remanded the
matter for entry of judgment. The trial court entered
judgment and granted Plaintiffs' motion for an award of
attomey fees. In this appeal, Plaintiffs contend the trial
court erred in deciding their attorney fees motion when it
declined to award a multiplier and failed to issue a
statement of decision. We reject their contentions and
affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
We incorporate by reference our prior opinion in
Gober v. Ralphs Grocery Co. (2006) 137 Cal. App 4th 204
(Gober I). Accordingly, as the parties are fully familiar
with the facts and procedural background as set forth in
Gober II, we will not repeat them.
On remand from Gober II, Plaintiffs (among other
things) moved for an award of attorney fees for over ten
years of litigation. They sought $6,945,916 as the lodestar
amount for work performed on the merits of the case and
$373,244.50 for work performed toward the recovery of
fees (fees for fees). They also requested a 2.0 multiplier
for the merits work, a 1.5 multiplier for the fees for fees
work and that 2006 billing rates be used to calculate the
award.
Plaintiffs argued that the lodestar amount for merits
work should be doubled based on case complexity, the
excellent result obtained, counsel's inability to work on
other cases and the fact they had little assurance of
winning at the outset of the litigation. They pointed out
the numerous factual issues they needed to prove to
establish Raiphs's liability for compensatory and punitive
damages. They also asserted that a 1.5 multiplier should
apply to their fees for fees request because the history of
the litigation was extensive and much of the work
connected with the fee application was performed before
they were assured of prevailing party status.
In opposition to the motion, Ralphs did not contest
Plaintiffs' right to an attorney fee award. Rather, it argued
that the hourly rates Plaintiffs sought exceeded San Diego
market rates, the amount of time worked was
unreasonable, and that the requested multipliers should be
denied. In summary, Ralphs argued that Plaintiffs’
suggested lodestar amount be reduced by $2,722,628.53.
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In a three-page tentative ruling, the trial court
indicated that it had “carefully reviewed” all declarations
submitted in connection with the motion. In determining
the lodestar, the trial court awarded the 2006 fee rates
requested by Plaintiffs’ counsel for all work performed
since 1996 even though Plaintiffs had failed to submit
evidence that the rates were reasonable for San Diego. It
also reduced the number of hours requested and calculated
the lodestar amount at $6,759,249.77 for merits work and
$279,933.38 for fees work.
*2 After considering all relevant factors, the trial
court declined to allow any enhancements to the lodestar
amounts. The trial court noted that the case was not
“particularly novel or extraordinarily difficult,” the skill
displayed by Plaintiffs' counsel had been taken into
account in determining the lodestar, Plaintiffs‘ counsel had
not demonstrated that the case has such an impact on their
practices that they could not maintain their client base, and
the contingent nature of the litigation did not justify
enhancement “due to the fact the above lodestar figures
fully compensate the attorneys for undertaking
representation of Plaintiffs ‘at the risk of nonpayment or
delayed payment, in an amount approaching the market
rate for comparable legal services,’ “ The trial court also
awarded interest on the fees award from the date of the
judgment and declined to issue a statement of decision.
After hearing oral argument and taking the matter under
submission, the trial court affirmed its tentative ruling.
Thereafter, Plaintiffs sought and obtained, a supplemental
award of $444,248.77 for further fees for fees work.
Plaintiffs appealed after Ralphs paid all the attorney fees
and costs awarded.
DISCUSSION
1, Legal Principles and Standard of Review
In awarding attorney fees, the trial court must first
establish a lodestar figure, calculated by multiplying the
time spent by a reasonable hourly rate for private attorneys
in the community conducting noncontingent litigation of
the same type. ( Ketchum y. Moses (2001) 24 Cal.4th
1122, 1133 (Ketchum ).) After determining the lodestar
figure, the trial court may exercise its discretion to
increase or decrease the figure based on any number of
factors, typically including: (1) the novelty and difficulty
of the questions involved and the skill displayed in
presenting them; (2) the extent to which the nature of the
litigation precluded other employment by the attorneys;
and (3) the contingent nature of the fee award, based on
the uncertainty of prevailing on the merits or on the fee
claim. ( Thayer v. Wells Fargo Bank (2001) 92 Cal.App
Ath 819, 834.)
Normally, a contingent fee is higher than a non-contingent
fee because a contingent fee compensates the lawyer for
the legal services rendered and for the loan of those
services. ( Ketchum, supra, 24 Cal Ath at pp. 1132-1133.)
The interest rate on that “loan” must be higher than on a
conventional loan since a loss of the case will cancel the
client's debt to the attomey. (/bid.) The trial court,
however, is “not required” to enhance the basic lodestar
figure and party secking the enhancement bears the burden
of proof. (/d. at p. 1138, italics in original.) Additionally,
to the extent the trial court has already considered such
factors as attorney skill or contingent risk within the
lodestar, these factors should not be considered when
determining any appropriate enhancement. (Jd. at pp.
*3 The trial judge is in the best position to evaluate
the professional services rendered at trial and the amount
of attorney fees to award is a matter within its sound
discretion. ( PLCM Group, Inc. y. Drexler (2000) 22
Cal.4th 1084, 1095-1096.) We will not disturb that
determination unless convinced that the trial court's
judgment is clearly wrong. (/d. at p. 1095.)
IL. Analysis
A. Waiver
Ralphs argues that Plaintiffs waived their right to
challenge the lack ofa multiplier by accepting payment of
the amounts awarded because their challenge to the lack
of a multiplier necessarily implicated the lodestar
determination. Plaintiffs assert their appeal from that part
of the order denying any enhancement to the lodestar
amounts is severable and that they merely accepted the
lodestar amounts, a benefit of the order that was
indisputably owed. Ralphs has the better argument.
Asa general rule, a party who voluntarily accepts the
benefits of a judgment or order may not appeal from the
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judgment or order because the two acts “are wholly
inconsistent, and an election to take one is a renunciation
of the other. [Citations.]” ( Afativs v. Turner (1956) 46
Cal.2d 364, 365.) An exception to the general rule “exists
where the appellant is concededly entitled to the benefits
which are accepted and a reversal will not affect the right
to those benefits. [Citations.]” ([bid.)
Here, the trial court stated that the contingent nature
of the litigation did not justify enhancement because the
lodestar amounts fully compensated the attorneys for
undertaking Plaintiffs’ representation at the risk of
nonpayment. Should we decide that the trial court erred in
taking the contingent nature of the litigation into
consideration when calculating the lodestar amounts and
that contingent risk had to be compensated by means of a
multiplier, the entire fee award would need to be reversed
because the trial court would need to recalculate the
lodestar amounts without considering contingent risk.
Nevertheless, we decline to dismiss the appeal on this
basis because Plaintiffs’ arguments lack merit.
B. Compensation for Contingent Risk
As a threshold matter, we reject Plaintifis' assertion
that we should conduct a de novo review of the trial
court's findings because the trial court failed to apply the
proper principles of law in exercising its discretion and the
facts relevant to this appeal are undisputed. Nothing about
the fee motion was undisputed except for Plaintiffs’ right
to recover attorney fees. Rather, Ralphs contested the
hourly rates (taking into consideration the function, skills
and expertise of each timekeeper), the amount of time
worked (including time expended on unsuccessful issues
and alleged duplicative work and excessive conferencing)
and the requested multipliers. Additionally, as discussed
below, the trial court applied the proper principles of law
in exercising its discretion.
Plaintiffs assert that the trial court erred by refusing
to apply a multiplier because the use of multipliers for
contingent risk is mandated. Simply put, Plaintiffs are
wrong. ( Ketchum, supra, 24 Cal.4th at p. 1138 [“the trial
court is not required to include a fee enhancement to the
basic lodestar figure for contingent risk”); accord, Nichols
v. City of Taft (2007) 155 Cal. App. Ath 1233, 1240-1241;
Horsford_v. Board of Trustees of California State
University (2005) 132 Cal.App 4th 359, 395: Greene v.
Dillingham Construction, Ine. (2002) 101
Cal. App. 4th 418, 426-427.
*4 Plaintiffs concede that the substantial lodestar amounts
compensated counsel for delayed payment, their skill, the
difficulty, duration and intensity of the litigation and the
preclusion of other employment. They assert, however,
that the trial court did not compensate counsel for
contingent risk. The trial court, however, retained
discretion on the use of a multiplier; thus, any refusal to
award a multiplier is not error absent a showing that the
trial court abused its discretion. In any event, the trial
court here did not refuse to consider contingent risk or
state that counsel was not entitled to an adjustment for
contingent risk; rather, it stated that the lodestar amounts
“fully compensate[d] the attorneys ... ‘at the risk of
nonpayment or delayed payment...’ “ A fair reading of
this order indicates that the trial court took the contingent
nature of the litigation into consideration when it set the
lodestar amounts. ( Horsford v. Board of Trustees _of
California State University, supra, 132 Cal.App Ath at p.
395 [The contingency adjustment may be made at the
lodestar phase of the court's calculation or by applying a
multiplier to the noncontingency lodestar calculation (but
not both)”].)
Thus, the question is whether the trial court abused its
discretion when it determined that the lodestar amounts
adequately compensated counsel for contingent risk. We
conclude that the court's decision on this matter was well
within the ambit of its discretion based on the nature and
extent of the contingency.
While it is beyond dispute that Plaintiffs’ counsel incurred
contingent risk when they took this case, that risk erided
in August 2000 when the California Supreme Court
denied their petition for review of our decision upholding
the jury's finding of liability for compensatory and
punitive damages. Thereafter, the only uncertain issue was
the amount of punitive dama; On this issue, the trial
court could consider Plaintiffs’ limited success after four
of the Plaintiffs refused to consent to a punitive damage
award equal to 15 times their compensatory damage
recovery in July 2002. ( Sekolow v. County of San Mateo
(1989) 213 Cal.App.3d 231, 248 [degree of success must
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considered in determining amount of award].) By this
comment we do not imply that the work of Plaintiffs’
counsel after July 2002 was unnecessary or unreasonable.
We simply note that the decision of four Plaintiffs to
decline a punitive damage award equal to 15 times their
compensatory damage recovery appears to have been a
turning point in the litigation that the trial court may have
taken into consideration in deciding whether to enhance
the fees awarded to compensate Plaintiffs‘ counsel for
their work,
Moreover, the trial court awarded the 2006 rates requested
for all timekeepers despite its finding that Plaintiffs failed
to demonstrate the reasonableness of the rates. The award
of high 2006 rates more than adequately compensated
Plaintiffs’ counsel for any delay in payment and it was
within reason for the trial court to conclude that the award
also adequately compensated counsel for the risk they
undertook in prosecuting this litigation.
*5 Finally, we reject Plaintiffs’ contention that
because a fee award is discretionary (Gov.Code: § 12965,
subd. (b)), it was uncertain whether the trial court would
award them any fees. This assertion ignores case law
establishing that a plaintiff prevailing in an
anti-discrimination action “ ‘should ordinarily recover an
attorney's fee unless special circumstances would render
such an award unjust.’ “ ( Christiansburg Garment Cov.
E.£.O.C. (1978) 434 U.S. 412, 416-417. quoting Newman
uv. Piegie Park Enterprises (1968) 390 U.S. 406, 402;
accord, Stephens v. Coldwell Banker Commercial Group,
Inc, (1988) 199 Cal.App.3d_1394, 1405, overruled on
other grounds in White v. Ultramar, Inc. (1999) 21 Cal.4th
563,574, fn. 4.
In summary, the trial court acted within its discretion
in setting the fee award in this case after considering all
proper factors.
C. Statement of Decision
Plaintiffs argue that they timely requesteda statement
of decision and the trial court erred by failing to make
findings on all contested facts. They assert we should
“require” that trial courts issue written orders with
findings when making attorney fee awards and that if a
party has requested findings, the trial court must issue
them regardless of whether the technical requirement for
a statement of decision applies under Code of Civil
Procedure section 632.
Code of Civil Procedure section 632 governs statements
of decision and “[c]ases decided under [this section]
generally have held that a statement of decision is not
required upon decision of a motion.” ( Maria P. v. Riles
1987) 43 Cal.3d 1281, 1294 [statement of decision not
required on motion for attorney fees]; Ketchum, supra, 24
Cal.4th at p. 1140 [“The superior court was not required
to issue a statement of decision with regard to the fee
award”); Jn re Marriage of Feldman (2007) 153
Cal.App.4th 1470, 1497[“[W]e find no basis in statute or
case law for a rule requiring the trial court to exercise its
discretion to issue a statement of decision in instances
where Code of Civil Procedure section 632 does not
require it”].) Since a statement of decision was not
required, the trial court did not err by failing to issue one
and we decline to create a new rule of law requiring a
statement of decision when deciding attorney fee motions,
In any event, Plaintiffs have failed to explain why the
written order issued by the trial court was inadequate to
provide for meaningful appellate review as it touched
upon the controverted issues noted by Plaintiffs in their
request for a statement of decision.
D. Judicial Notice
Ralphs requests that we take judicial notice of various
documents from prior appeals and a related appeal that is
currently pending. The request is denied because Ralphs
has not shown that the documents are relevant to the
resolution of this appeal. ( Mangini v. RJ. Reynolds
Tobacco Co. (1994) 7 Cal. 4th 1057, 1063 [only relevant
matters may be judicially noticed], overruled on another
point in Ja re Tobaceo Cases 1! (2007) 4) Cal. Ath 1257,
127
DISPOSITION
*6 The order is affirmed. Ralphs is entitled to its costs
on appeal, Plaintiffs shall bear their own attorney fees on
this appeal.
WE CONCUR: HUFFMAN, Acting P.J., and
McDONALD, J.
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
000182Page 5
Not Reported in Cal.Rptr.3d, 2008 WL 4411656 (Cal.App. 4 Dist.)
Nonpublished/Noncitable (Cal, Rules of Court, Rules 8.1105 and 8.1110, 8.1115)
(Cite as: 2008 WL 4411656 (Cal. App. 4 Dist))
Cal.App. 4 Dist.,2008.
Gober v. Ralphs Grocery Co.
Not Reported in Cal.Rptr.3d, 2008 WL 4411656
(Cal.App. 4 Dist.)
END OF DOCUMENT
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
000183EXHIBIT 11
000184O02 YD nH Bw HY we
o
Philip E. Kay
736 43" Avenue
FILED
San Francisco, California 94121
(415)387-6622
(415)387-6722 (fax)
[In pro per]
JUN 18 201
STATE BAR COURT CLERK'S OFFICE
SAN FRANCISCO
THE STATE BAR COURT
HEARING DEPARTMENT - SAN FRANCISCO
In the matter of ) Case No. 11-O-11364
)
PHILIP EDWARD KAY ) RESPONDENT PHILIP E. KAY’S
) RESPONSE, MOTION TO DISMISS
) AND/OR ABATE NOTICE OF
) DISCIPLINARY CHARGES
In the Matter of Kay Response, Motion Dismiss
000185co OP IY Dw BR WwW WD
INTRODUCTION
Pursuant to Rules 5.43, 5.50 and 5.124 of the State Bar Rules of Procedure (SBRP),
respondent Philip E. Kay (Kay) responds and moves to dismiss and/or abate the Notice of
Disciplinary Charges (NDC). The NDC seeks to compel compliance with the probation
provisions of the Order of Suspension, which is void ab intio and unenforceable. Therefore,
compliance with the void Order of the Suspension cannot be compelled in the State Bar venue or
any article VI court, which is why the State Bar has not sought to enter and enforce the void
Order of Suspension as a judgment in the Superior Court and/or move for an order of contempt,
pursuant to Rule of Court (CRC) 9.20 and State Bar Act (Act)! - §6086.10.
The void Order of Suspension is subject to collateral attack, requiring dismissal of the
NDC with prejudice. (See In re Pyle, 3 Cal. State Bar Ct. Rptr. 929 (1998).) In the alternative,
there is a pending related Superior Court action, which was filed prior to the NDC. (See Ex. 1,
Verified Complaint, San Francisco Superior Court case no. CGC-11-510717.) The Complaint
seeks declaratory and injunctive relief, pursuant to in Canatella v. State Bar of California, 304
Fed.3d 843 (9th Cir. 2002), against the void Order of Suspension. The NDC should be abated
until that proceeding is final. Morever, Kay has an order from the San Diego Superior Court that
he is not required to comply with the void Order of Suspension. (See Ex. 2, Order tentative
ruling’ granting motion to withdraw as counsel in Marcisz v. UltraStar Cinemas, San Diego
Superior Court, case no, GIC 820896, which states:
“The California State Bar Decision, as published on its website, indicates the decision is
“pending.” Accordingly, it appears Kay has not yet been officially ordered to comply with
CRC 9.20(a).”
The State Bar seeks to “have its cake and eat it too,” by claiming it can enforce the Order of
Suspension, when it knows that it is void and cannot be entered as a judgment or enforced in the
Superior Court, pursuant to CRC 9.20 and §6068.10 .
' Section references are to the Act - Bus. & Prof. Code §§6000, et seq.
’ The tentative ruling granting the Motion Withdraw as Counsel was adopted as the order
of the court.
In the Matter of Kay 1 Response, Motion Dismiss
000186Only Orders or Judgments, which Can be Enforced, Are Valid Under the Law
Since the State Bar and its counsel have stated that they do not want to enter the judgment
in the only court [Superior Court], which can enforce the order and/or judgement, they have
admitted the Order of Suspension has no legal effect. (See Armstrong v. Armstrong (1976) 15
Cal.3d 942, 950 [Collateral attack is proper to contest [a judgment void on its face for] lack of
personal or subject matter jurisdiction or the granting of relief which the court has no power to
grant [citation omitted].") It has long been held that no court has the authority to validate a void
order. (U.S. v. Throckmorton, 98 U.S. 61 (1878); Valley v. Northern Fire & Marine Co., 254
USS. 348, 353-354 (1920). If the underlying order is void, the judgment based on it is also void.
(Austin v. Smith, 312 Fed. 2d 337, 343 (1962).)
The State Bar wants to shield the void order from review, while at the same time using it
as a sword against Kay in this proceeding, in which constitutional - due process rights and
privileges will again be denied and the record and law will have no meaning. However, until the
order is submitted to the Superior Court, [an actual article VI trial court, which is the only court
with original jurisdiction to enter and enforce the order] for the determination, this proceeding
should be dismissed and/or abated.
RELEVANT FACTS
The Superior Court Complaint (see Ex. 1), which is incorporated herein in response to the
NDC, establishes the original jurisdiction of the Superior Court, pursuant to Canatella, supra,
304 Fed.3d 843, for the claims for declaratory and injunctive relief and damages, which requires
abatement of this proceeding, based on the clear intent of the State Bar to violate Kay’s
constitutional - due process rights and privileges. Incredibly, this proceeding has been assigned
to the very administrative hearing judge [Hon. Lucy Armendariz], who orchestrated this denial of
constitutional rights and abuse of process. (See Ex. 3, Motion to Disqualify Hearing Department
Judge Lucy Armendariz Under Rule 5.46 of the State Bar Rules of Procedure and Verified
Statement, which is incorporated herein in response to the NDC.)
The trial in the Hearing Department before Judge Armendariz started mn March 2009.
Kay appeared and testified for eleven days. During his testimony, as required by §6068(e)(1) and
Response, Motion Dismiss
In the Matter of Kay 2
000187Cm IY DA HW Rw
10
Rule of Professional Conduct (RPC) 3-100(A), Kay objected to repeated questioning about his
clients’ communications and litigation actions on attorney-client and work-product grounds.
Although none of his clients had ever complained against Kay or otherwise waived these
privileges, Judge Armendariz demanded that Kay waive the privileges and, when Kay refused,
illegally admitted the unanswered questions into evidence as admissions of culpability. (BAJI
1,02; Wegner et al., Civil Trials & Evidence (Rutter 2009), §8:202 et seq.)
Since a refusal to comply with a trial subpoena is contempt (Code Civ. Proc. §1991), Kay
requested Judge Armendariz comply with §§6049, 6050 and 6051 and former SBRP 152(b) and
187, and pursue contempt proceedings in the Superior Court, where the article VI court would be
required under Jacobs v. State Bar (1977) 20 Cal.3d 191 to review the validity of her rulings on
his objections.
“The State Bar accordingly urges us to hold that the superior court's jurisdiction is
limited to cases in which enforcement of subpoenas is sought.” (Jacobs, at 196.)
“Section 6051, upon which Jacobs primarily relies, clearly seems restricted to contempt
proceedings initiated by the State Bar to enforce compliance with its subpoenas.”
(id, at 197.)
“we construe the use of the word “shal!” as directory in this context, for certainly the
Legislature did not intend to foreclose the State Bar or local committee from
exercising its discretion in determining whether or not to enforce a subpoena.” (/d.,
at 197.)
“we hold that, unless and until the State Bar seeks to enforce its subpoena,
superior courts have no jurisdiction to review the validity thereof.” (/d,, at
198.) (Emphasis.)
The State Bar both acknowledged and requested this legal holding in its petition for
review
to the Supreme Court in the Jacobs case. In its petition to the Supreme Court in Jacobs, the State
Bar argued:
While the State Bar is under a duty to report contempt of its subpoenas to the appropriate
superior court pursuant to section 6051, State Bar subpoenas may be issued at the request
of respondent attorneys as well as State Bar examiners or staff attorneys. (Petition, pg.
2,
It is evident from this original language of the State Bar Act that the Legislature did
not intend the State Bar to have power to enforce its own subpoenas. Instead, the
Legislature intended that the contempt powers of the superior courts be used to enforce
State Bar subpoenas and limited the State Bar's role to reporting the fact of contempt of a
State Bar subpoena to the appropriate superior court. (/d., 14.) (Emphasis.)
In the Matter of Kay 3 Response, Motion Dismiss
000188SOM IY AH B® wD
RB RPP PNR NN YB Be ewe we EB
Ser ryavrserR Bn eKH SE ewe UF ARTHAS
(See Ex. 4, State Bar Verified - Petition for Review, Appellate Brief, and Request for
Modification in Jacobs v. State Bar, supra, executed by former OCTC prosecutor and
State Bar Court judge Ronald Stovitz.)
Jacobs affords the State Bar two options: (1) refer enforcement of the subpoena to
the Superior Court or (2) waive enforcement. There is no third option allowing issuance of
terminating sanctions by default.
State Bar administrative hearing judges have no authority or power to enforce subpoenas
or to cite (charge), adjudicate, and/or sanction respondents and litigants appearing before them
for contempt. (Former SBRP 152(b) and 187; §§6049, 6050 & 6051; Jacobs, supra; Matter of
Lapin (Rev.Dept. 1993) 2 Cal. State Bar Ct.Rptr. 279, 295.) Regardless, the State Bar Court
judge [Armendariz] claimed non-existent judicial “inherent” authority and constitutional
contempt powers to enforce the subpoena by entering an illegal void default, with Kay’s Answer
on file and having appeared personally and through counsel, in compliance with former SBRP
201, and testified at trial. (See Heidary v. Yadollahi (2002) 99 Cal.App.4th 857, 863 ["Where a
defendant has filed an answer, neither the clerk nor the court has the power to enter a default
based upon the defendant's failure to appear at trial, and a default entered after the answer has
been filed is void"]; Wilson v. Goldman (1969) 274 Cal.App.2d 573, 576-578 [where answer
filed, default order based on failure to appear at trial is “void on its face” and thus subject to
direct or collateral attack at any time]. (See also Matter of Frazier (Rev.Dept. 1991) 1 Cal. State
Bar Ct.Rptr. 676, 697; In re Pyle, supra, 3 Cal. State Bar Ct. Rptr. 929.)
Instead of the constitutional - due process to be afforded in the Superior Court,
ultra vires terminating sanctions were entered against Kay, denying him a trial on the
merits, de novo appeal and a considered written opinion, as required by In re Rose, 22
Cal.4th 430, 439, 456-458 (2000). This seminal arrogation of subject matter jurisdiction is
the lynch-pin to the unlawful taking of Kay’s property interest in his professional license
and assessment of a criminal fine. (See Neblett v, State Bar (1941) 17 Cal.2d 77, 81 ["the
right to practice law is a valuable one which should not be taken away or cancelled under
circumstances that have even the slightest tendency to suggest any possible unfairness or
disadvantage"); Findley v. State Bar of California, 59 Fed.3d 248 (2010) [State Bar costs
In the Matter of Kay 4 Response, Motion Dismiss
000189have been determined to be a criminal fine (punishment) and non-dischargeable in
bankruptcy].)
Instead of providing this constitutional - due process, on May 11, 2009, claiming a
non-existent "inherent" authority to control the proceeding, and despite Kay's filed answer
and active appearance at trial, Judge Armendariz granted the State Bar's improper oral
motion (see former SBRP 200, 201) and in violation of §6088 [the only permitted
circumstances in which to enter a default] to enter Kay's "default," deeming the NDC
charges admitted, and precluding Kay from participating further in the proceedings.
On June 17, Judge Armendariz denied Kay's motion for reconsideration, rejecting
his entitlement under §§6051and 6088 to purge himself of the sanction because his
representations that he had recanted and would testify were not under oath, which Kay
immediately cured to no avail. Additionally, although her May 11 - Default Order [see Ex.
5] had explicitly declined to strike Kay's answer (rendering the default fatally defective),
Judge Armendariz, without notice, struck Kay's answer sua sponte.
Based solely on the wltra vires - void default, Judge Armendariz issued a Decision
(Ex. 6), which found all the unproven charges true, while denying Kay an opportunity to
contest the charges (except, ironically, the incompetent representation charges), found the
State Bar had proved all its charges by clear and convincing evidence, and recommended
suspending Kay for five years, with three years actual suspension and five years probation.
Kay timely petitioned the Review Department for review of the Decision. (Former SBRP
301.) Because Kay's default had been entered, the Review Department [clerk] rejected and
returned the petition. Thus, without a trial on the merits in the Hearing Department or de
novo review in the Review Department, [which the Supreme Court held in Jn re Rose,
supra, 22 Cal.4th at 457 was essential to providing constitutional - due process in the State
Bar], the void Decision was filed on February 17, 2010, as the Bar’s recommendation to
the Supreme Court. The Supreme Court then summarily denied Kay’s Petition for
Review. However, the summary denial of the petition does not render the void Decision
In the Matter of Kay 5 Response, Motion Dismiss
000190CD me YN DUH Bw Hw
valid.’
The central finding in the Decision found Kay guilty of the no longer existent
common law crime of “obstruction of justice” - depriving the Gober and Marcisz
defendants of a fair trial. California outlawed the use of “common-law” crimes in 1872,
when it adopted the Penal Code. Obstruction of justice has to be prosecuted and pled
through statutory law - not common-law terms of art. Moreover, the Bar cannot allege
statutory violations for obstruction of justice, because the required elements [e.g., violation
ofa valid order] don’t exist. (See In the Matter af Mapps (1990) 1 Cal. State Bar Ct. Rptr.
19, 24 [an attorney cannot be disciplined for uncharged Penal Code violations].) This
ultra vires finding is irreconcilable with the only final orders and judgments in those cases,
which rejected defendants' charges of attorney misconduct. Both cannot be true. In fact,
the former is true; whereas, the latter is a lie about the former. In other words, lying about
the record does not make it so.
The Falsification of the Article VI Court Record in the Decision
None of this fabricated misconduct actually occurred. If it had, the trial and/or
appellate courts would have reversed the approximate $40 million in verdicts based on
misconduct in new trial orders, pursuant to Code Civ. Proc. §657(1). (See e.g., Ex. 7,
Order Granting Defendant Bae Systems San Francisco Ship Repair, Inc’s Motion for New
Trial, San Francisco Superior Court case no. CGC-09-488061, which is replete with the
required record cites by the trial court documenting the existence of attorney misconduct.)
Contrary to the State Bar’s trumpeted “big lie” - no such orders exist. Contrary to the
Decision, no court, including those in the underlying cases for which Kay* was found
2 US. v. Throckmorton, supra, 98 U.S. 61 (1878); Valley v. Northern Fire & Marine Co.,
254 USS. at 353-354; Austin v. Smith, supra, 312 Fed. 2d at 343.)
‘ Kay has practiced law in California for almost 30 years, spending most of his career
fighting for and vindicating the workplace rights of women, minorities and whistleblowers,
acting as lead counsel in civil rights cases resulting in the largest non-class action sexual
harassment verdicts in the nation and the four largest California sexual harassment verdicts,
including Weeks v. Bake