Wednesday, February 28, 2018

Brown v. Cal. Unemployment Ins. Appeals Bd.

The question in this case is a narrow one, involving the correct rate of interest to be applied after a court determines that unemployment benefits have been wrongfully withheld by the Employment Development Department (EDD) and the California Unemployment Insurance Appeals Board (Board).  Appellant Mark Brown (Brown) argues that interest should be charged at the contract rate of 10 percent from the date that each benefit payment was due, in accordance with Civil Code section 3289, subdivision (b).  EDD, in contrast, asserts that the trial court correctly determined that any such interest should be calculated at the rate of 7 percent, as authorized by article XV, section 1, of the California Constitution and Government Code section 965.5, subdivisions (a) and (d).  We conclude that the trial court applied the incorrect interest rate to the wrongfully withheld benefits at issue.  Accordingly, we reverse for recalculation of interest, but affirm in all other respects.

Brown v. Cal. Unemployment Ins. Appeals Bd. (CA1/4 A145487 2/28/18) Unemployment Benefits Rate of Interest

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City of South San Francisco v. Workers' Compensation Appeals Board

An employer is not liable for a cumulative injury under Labor Code Sec. 5500.5(a) absent evidence that exposure during that employment was injurious. Labor Code Sec. 3212.1's presumption of industrial causation serves to protect an injured worker, not to allow for an allocation of liability between employers.

City of South San Francisco v. Workers' Compensation Appeals Board - filed Feb. 26, 2018, First District, Div. Five
Cite as 2018 S.O.S. 963

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Tuesday, February 27, 2018

Victaulic Company v. American Home Assurance Company

A defendant's responses to requests for admission denying an allegation is not admissible as evidence regardless of whether the denial is consistent or inconsistent with the testimony of a defense witness at trial. RFA responses represent legal strategy, not statements of fact. While a trial court has the power to examine witnesses, it cannot act as a cross-examiner. A trial judge committed reversible misconduct by grilling a witness, and openly mocking her. The Fifth Amendment privilege must be asserted with specific reference to particular questions asked or other evidence sought. A blanket refusal to testify is unacceptable. It is improper for a court to require a witness to invoke her Fifth Amendment privilege in front of a jury.

Victaulic Company v. American Home Assurance Company -
filed Feb. 26, 2018, First District, Div. Two
Cite as 2018 S.O.S. 927

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Local Joint Executive Board of Las Vegas v. NLRB (Archon Corp.)

The National Labor Relations Board abused its discretion in declining to award a union make-whole relief, which is the standard remedy when an employer unlawfully ceases a union's dues-checkoff, without providing a valid explanation for its decision. The board's decision to deviate from its standard remedy in light of the employer's reliance on board precedent was improper because that precedent had never been applied in a reasoned manner in the absence of a union security clause.

Local Joint Executive Board of Las Vegas v. NLRB (Archon Corp.) - filed Feb. 27, 2018
Cite as 2018 S.O.S. 15-72878

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Bel Air Internet, LLC v. Morales

This appeal requires us to consider the role of the pleadings and supporting declarations in deciding a motion to strike under the anti-SLAPP statute (Code Civ. Proc., § 425.16).  Section 425.16 protects the exercise of certain constitutional rights by permitting a motion to strike when a complaint targets specified conduct that involves the right to freedom of speech or the right to petition the government.  When a plaintiff’s complaint shows that a claim arises from communications that are protected under the statute, must the defendant support a motion to strike with declarations confirming that his or her actions fall within one of the categories of protected conduct?

We conclude that, when the complaint itself alleges protected activity, a moving party may rely on the plaintiff’s allegations alone in arguing that the plaintiff’s claims arise from an act “in furtherance of the person’s right of petition or free speech.”  (§ 425.16, subd. (b)(1).)  While section 425.16 requires a court to consider both the “pleadings” and the “supporting and opposing affidavits stating the facts upon which the liability or defense is based” (§ 425.16, subd. (b)(2)), it does not require a moving party to submit declarations confirming the factual basis for the plaintiff’s claims.  Otherwise, a defendant who disputes the plaintiff’s allegations (as appellants do here) might be precluded from bringing an anti-SLAPP motion.  That would have the perverse effect of making anti-SLAPP relief unavailable when a plaintiff alleges a baseless claim, which is precisely the kind of claim that section 425.16 was intended to address.  (See Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral) [the anti-SLAPP statute “provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity”].)

Here, plaintiff and respondent Bel Air Internet, LLC (Bel Air) alleges that defendants and appellants Albert Morales and Flavio Delabra (collectively, Appellants) encouraged fellow employees of Bel Air to quit and sue the company for alleged employment violations rather than sign a release of such claims that Bel Air requested.  Consistent with several decisions by our Supreme Court, we conclude that such prelitigation conduct encouraging third parties to sue is protected petitioning activity under section 425.16, subdivision (e).  In bringing a motion to strike under that section, Appellants could rely on Bel Air’s allegations that they urged other employees to quit and sue, even though Appellants denied engaging in this conduct. We therefore reverse the trial court’s order denying Appellants’ motion to strike.

Bel Air Internet, LLC v. Morales (CA2/2 B270268 2/26/18) Anti-SLAPP

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Cal Fire Local 2881 v. Public Employment Relations Bd.

This appeal has consumed nearly seven years of administrative and judicial resources in the pursuit of an untenable litigation position.  Plaintiff Cal Fire Local 2881 (plaintiff) is an employee association that acts as the exclusive representative of a bargaining unit of personnel in various classifications in the civil service who work throughout the state for appointing power Cal Fire (which is not a party to this case).  Plaintiff appeals from the denial of its petition for a writ of mandate directing defendant Public Employment Relations Board (the PERB) to issue a complaint on the unfair labor practice charge that plaintiff filed with it against real party in interest State Personnel Board for failure to meet and confer with plaintiff over the changes the State Personnel Board effected in the regulations governing its procedures for adjudicating disciplinary hearings and appeals, which apply uniformly to all employees in the civil service.

Both the PERB and the trial court have provided cogent decisions explaining why this challenge to the PERB’s dismissal of the charge is without any basis in law.  Plaintiff nonetheless persists.  Fortunately for plaintiff, neither the PERB (which appears in this court to defend the judgment) nor the State Personnel Board request imposition of sanctions for a frivolous appeal.  We accordingly affirm the judgment.

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Johnen v. MSPB

Johnen v. MSPB (9th Cir. 16-73427 2/16/18) Merit System Protection Board

The panel dismissed a petition for review as to the United States Merit Systems Protection Board; and denied in part, granted in part, and remanded the petition for review as to the United States Department of the Army in a case brought by a former civilian employee at Fort Hunter Liggett, a military base in California alleging that the Army terminated him and excluded him from his work site because he had made complaints that were protected by the Whistleblower Protection Act of 1989.

The Board affirmed the administrative law judge’s finding that the petitioner failed to make a prima facie case that his complaint to the Department of Defense Inspector General was a contributing factor in the Army’s decision to terminate him and exclude him from a work site.

The panel held that the Army was the only proper respondent in this case where petitioner brought a “mixed case” by challenging both jurisdictional or procedural matters and the merits of an adverse personnel action. The panel further held that because petitioner was seeking review of the Board’s decision on the merits of his termination and exclusion, the Board was not the proper respondent; and only the agency that took the action – the Army – was properly “the” respondent.

The panel also held that the petitioner received due process. The panel rejected petitioner’s argument that the Board violated his due process rights by deciding his appeal when only two Board members, instead of the usual three, held office.

Finally, the panel held that the Board’s decision on the merits was supported by substantial evidence and was procedurally proper.

In a separate memorandum disposition, the panel granted the petition in part and remanded the case for consideration of an additional issue.

Johnen v. MSPB (9th Cir. 16-73427 2/16/18) Merit System Protection Board

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Duggan v. Dept. of Defense

The panel denied a petition for review in an action brought by a senior auditor at the Defense Contract Audit Agency (“DCAA”) under the Whistleblower Protection Act against the Department of Defense, alleging that the Department took several adverse personnel actions against him in retaliation for his protected disclosures at the DCAA.

The panel held that substantial evidence supported the Merit Systems Protection Board’s ultimate determination that the DCAA’s personnel actions were not in retaliation for petitioner’s whistleblowing. Specifically, the panel assumed for purposes of its analysis that petitioner established a prima facie case that all seven of his communications were protected disclosures. The panel adopted the Federal Circuit’s test, outlined in Carr v. Social Security Administration, 185 F.3d 1318, 1323 (Fed. Cir. 1999), for determining whether the agency – the DCAA – carried its burden of proving by clear and convincing evidence that it would have taken the same personnel actions against petitioner in the absence of his protected disclosures.

The panel also held that the administrative law judge permissibly excluded disputed evidence.

Duggan v. Dept. of Defense (9th Cir. 16-73640 2/26/18) Whistleblower Protection Act

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Monday, February 26, 2018

Muro v. Cornerstone Staffing Solutions

Plaintiff Tony Muro entered into an employment contract with defendant Cornerstone Staffing Solutions, Inc. (Cornerstone).  The contract included a provision requiring that all disputes arising out of Muro's employment with Cornerstone to be resolved by arbitration.  It also incorporated a class action waiver provision.  In response to Muro's present action, which was styled as a proposed class action and alleged various Labor Code violations, Cornerstone moved to compel arbitration and dismiss the class claims.

Relying heavily on Garrido v. Air Liquide Industrial, U.S. LP (2015) 241 Cal.App.4th 833 (Garrido), the trial court concluded the contract was exempted from the operation of the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) and was instead governed by California law.  It further determined that the California Supreme Court's decision in Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry) (overruled on other grounds in Iskarian v. CLS Tranportation, Los Angeles, LLC (2014) 59 Cal.4th 348) continued to provide the relevant framework for evaluating whether the class waiver provision in the contract was enforceable under California law.  After applying Gentry to the record here, the court found the class waiver provision of the contract unenforceable and denied the motion to compel arbitration.  Cornerstone appeals, but finding no error, we affirm.

Muro v. Cornerstone Staffing Solutions - filed Feb. 23, 2018, Fourth District, Div. One
Cite as 2018 S.O.S. 871
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Santomenno v. Transamerica LIC

The panel (1) reversed the district court’s order denying defendants’ motion to dismiss an ERISA case alleging breach of fiduciary duties in connection with a retirement plan, and (2) vacated the district court’s subsequent class certification orders. The district court held that a plan service provider breached its fiduciary duties to plan beneficiaries first when negotiating with an employer about providing services to the plan and later when withdrawing predetermined fees from plan funds. An employer that forms an ERISA plan is a statutory fiduciary, and a plan service provider becomes a functional fiduciary under certain circumstances.

Joining other circuits, the panel held that a plan administrator is not an ERISA fiduciary when negotiating its compensation with a prospective customer. As to alleged breaches after the defendant became a plan service provider, the panel held that the defendant was not a fiduciary with respect to its receipt of revenue sharing payments from investment managers because the payments were fully disclosed before the provider agreements were signed and did not come from plan assets. Agreeing with other circuits, the panel held that defendant also was not a fiduciary with respect to its withdrawal of preset fees from plan funds. The panel concluded that when a service provider’s definitively calculable and nondiscretionary compensation is clearly set forth in a contract with the fiduciary-employer, collection of fees out of plan funds in strict adherence to that contractual term is not a breach of the provider’s fiduciary duty.

The panel remanded with instructions to the district court to dismiss the complaint.

Santomenno v. Transamerica Life Insurance Company - filed Feb. 23, 2018
Cite as 2018 S.O.S. 16-56418

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Friday, February 23, 2018

Area 51 Productions v. City of Alameda

A plaintiff's cause of action against a city for reneging on a long-standing arrangement to license an area for the plaintiff to hold private events does not arise from a protected activity for purposes of the anti-SLAPP statute. While conduct alleged to constitute breach of contract may qualify as constitutionally protected speech or petitioning, communicative acts that are merely collateral to a claim or evidence that may be probative of a breach do not qualify as protected speech. The anti-SLAPP statute can apply to the expressive conduct of individual representatives of a government body who are being sued for actions they took on behalf of that government body. Under Code of Civil Procedure Sec. 425.16(e)(2), the pendency of an issue before a government body is a proxy for its character as public in nature.

Area 51 Productions v. City of Alameda - filed Feb. 20, 2018, First District, Div. Four
Cite as 2018 S.O.S. 826

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Wednesday, February 21, 2018

Digital Realty Trust, Inc. v. Somers

Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Both Acts shield whistleblowers from retaliation, but they differ in important respects. Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U. S. C. §1514A(a)(1). Dodd-Frank defines a “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” 15 U. S. C. §78u– 6(a)(6). A whistleblower so defined is eligible for an award if original information provided to the SEC leads to a successful enforcement action. §78u–6(b)–(g). And he or she is protected from retaliation in three situations, see §78u–6(h)(1)(A)(i)–(iii), including for “making disclosures that are required or protected under” Sarbanes-Oxley or other specified laws, §78u–6(h)(1)(A)(iii). Sarbanes-Oxley’s anti-retaliation provision contains an administrative-exhaustion requirement and a 180-day administrative complaint-filing deadline, see 18 U. S. C. §1514A(b)(1)(A), (2)(D), whereas Dodd-Frank permits a whistleblower to sue an employer directly in federal district court, with a default six-year limitation period, see §78u–6(h)(1)(B)(i), (iii)(I)(aa).

The SEC’s regulations implementing the Dodd-Frank provision contain two discrete whistleblower definitions. For purposes of the award program, Rule 21F–2 requires a whistleblower to “provide the Commission with information” relating to possible securities-law violations. 17 CFR §240.21F–2(a)(1). For purposes of the anti-retaliation protections, however, the Rule does not require SEC reporting. See §240.21F–2(b)(1)(i)–(ii).

Respondent Paul Somers alleges that petitioner Digital Realty Trust, Inc. (Digital Realty) terminated his employment shortly after he reported to senior management suspected securities-law violations by the company. Somers filed suit, alleging, inter alia, a claim of whistleblower retaliation under Dodd-Frank. Digital Realty moved to dismiss that claim on the ground that Somers was not a whistleblower under §78u–6(h) because he did not alert the SEC prior to his termination. The District Court denied the motion, and the Ninth Circuit affirmed. The Court of Appeals concluded that §78u–6(h) does not necessitate recourse to the SEC prior to gaining “whistleblower” status, and it accorded deference to the SEC’s regulation under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837.

Held: Dodd-Frank’s anti-retaliation provision does not extend to an individual, like Somers, who has not reported a violation of the securities laws to the SEC. Pp. 9–19.

(a) A statute’s explicit definition must be followed, even if it varies from a term’s ordinary meaning. Burgess v. United States, 553 U. S. 124, 130. Section 78u–6(a) instructs that the statute’s definition of “whistleblower” “shall apply” “[i]n this section,” that is, throughout §78u–6. The Court must therefore interpret the term “whistleblower” in §78u–6(h), the anti-retaliation provision, in accordance with that definition.

The whistleblower definition operates in conjunction with the three clauses of §78u–6(h)(1)(A) to spell out the provision’s scope. The definition first describes who is eligible for protection—namely, a “whistleblower” who provides pertinent information “to the Commission.” §78u–6(a)(6). The three clauses then describe what conduct, when engaged in by a “whistleblower,” is shielded from employment discrimination. An individual who meets both measures may invoke Dodd-Frank’s protections. But an individual who falls outside the protected category of “whistleblowers” is ineligible to seek redress under the statute, regardless of the conduct in which that individual engages. This reading is reinforced by another whistleblower protection provision in Dodd-Frank, see 12 U. S. C. §5567(b), which imposes no requirement that information be conveyed to a government agency. Pp. 9–11.

(b) The Court’s understanding is corroborated by Dodd-Frank’s purpose and design. The core objective of Dodd-Frank’s whistleblower program is to aid the Commission’s enforcement efforts by “motivat[ing] people who know of securities law violations to tell the SEC.” S. Rep. No. 111–176, p. 38 (emphasis added). To that end, Congress provided monetary awards to whistleblowers who furnish actionable information to the Commission. Congress also complemented the financial incentives for SEC reporting by heightening protection against retaliation. Pp. 11–12.

(c) Somers and the Solicitor General contend that Dodd-Frank’s “whistleblower” definition applies only to the statute’s award program and not, as the definition plainly states, to its anti-retaliation provision. Their concerns do not support a departure from the statutory text. Pp. 12–18.

(1) They claim that the Court’s reading would vitiate the protections of clause (iii) for whistleblowers who make disclosures to persons and entities other than the SEC. See §78u–6(h)(1)(A)(iii). But the plain-text reading of the statute leaves the third clause with substantial meaning by protecting a whistleblower who reports misconduct both to the SEC and to another entity, but suffers retaliation because of the latter, non-SEC, disclosure. Pp. 13–15.

(2) Nor would the Court’s reading jettison protections for auditors, attorneys, and other employees who are required to report information within the company before making external disclosures. Such employees would be shielded as soon as they also provide relevant information to the Commission. And Congress may well have considered adequate the safeguards already afforded to such employees by Sarbanes-Oxley. Pp. 15–16.

(3) Applying the “whistleblower” definition as written, Somers and the Solicitor General further protest, will allow “identical misconduct” to “go punished or not based on the happenstance of a separate report” to the SEC. Brief for Respondent 37–38. But it is understandable that the statute’s retaliation protections, like its financial rewards, would be reserved for employees who have done what Dodd-Frank seeks to achieve by reporting information about unlawful activity to the SEC. P. 16.

(4) The Solicitor General observes that the statute contains no apparent requirement of a “temporal or topical connection between the violation reported to the Commission and the internal disclosure for which the employee suffers retaliation.” Brief for United States as Amicus Curiae 25. The Court need not dwell on related hypotheticals, which veer far from the case at hand. Pp. 16–18.

(5) Finally, the interpretation adopted here would not undermine clause (ii) of §78u–6(h)(1)(A), which prohibits retaliation against a whistleblower for “initiating, testifying in, or assisting in any investigation or . . . action of the Commission based upon” information conveyed to the SEC by a whistleblower in accordance with the statute. The statute delegates authority to the Commission to establish the “manner” in which a whistleblower may provide information to the SEC. §78u–6(a)(6). Nothing prevents the Commission from enumerating additional means of SEC reporting, including through testimony protected by clause (ii). P. 18.

(d) Because “Congress has directly spoken to the precise question at issue,” Chevron, 467 U. S., at 842, deference is not accorded to the contrary view advanced by the SEC in Rule 21F–2. Pp. 18–19.

850 F. 3d 1045, reversed and remanded.

GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, BREYER, SOTOMAYOR, and KAGAN, JJ., joined. SOTOMAYOR, J., filed a concurring opinion, in which BREYER, J., joined. THOMAS, J., filed an opinion concurring in part and concurring in the judgment, in which ALITO and GORSUCH, JJ., joined.

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Hurley v. California Department of Parks and Recreation

The Information Practices Act's definition of "record" and "personal information" does not restrict an agency's maintenance of qualifying personal information to only a single, official personnel file at a single location.

Hurley v. California Department of Parks and Recreation - filed Feb. 21, 2018, Fourth District, Div. One
Cite as 2018 S.O.S. 814

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Tuesday, February 20, 2018

CNH Industrial N.V. v. Reese

The U.S. 6th Circuit Court of Appeals erred in applying a series of inferences it laid out in a 1983 case called International Union, United Auto, Aerospace, & Agricultural Implement Workers of America v. Yard-Man that were later rejected by the U.S. Supreme Court in order to find that a collective bargaining agreement was ambiguous. A contract is not ambiguous unless it is subject to more than one reasonable interpretation and the 6th Circuit's "Yard-Man inferences" cannot generate a reasonable interpretation because they are not "ordinary principles of contract law."

CNH Industrial N.V. v. Reese - filed Feb. 20, 2018
Cite as 2018 S.O.S. 17-515_2c83

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Monday, February 19, 2018

Terris v. Co. of Santa Barbara

Campbell v. Regents of University of California (2005) 35 Cal.4th 311 holds that public employees must pursue appropriate internal administrative remedies before filing a civil action against their employer.  Labor Code section 244 does not require a litigant to exhaust administrative remedies before bringing a civil action.   Here we hold section 244 applies only to claims before the Labor Commissioner.  It has no effect on the Campbell rule.
          
Plaintiff Shawn Terris appeals a summary judgment in favor of her former employer, defendant County of Santa Barbara (County), in her wrongful termination action.  We conclude, among other things, that:  1) Terris did not exhaust her administrative remedies on her claims that the County terminated her job to discriminate against her in violation of sections 1101, 1102, and 1102.5; [[2) there are no triable issues of fact on Terris’s claim that she was terminated because of her sexual orientation (Gov. Code, § 12940, subd. (a), Fair Employment and Housing Act (FEHA));]] but 3) the trial court erred by awarding the County costs on the FEHA cause of action.  We affirm in part and reverse in part.

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Friday, February 2, 2018

Kenny v. Wal-Mart Stores

The panel vacated the district court’s order remanding a putative class action to California state court because the district court exceeded its statutory authority in remanding sua sponte based on a non-jurisdictional defect, and because Wal-Mart did not waive its right to remove the action to federal court; and remanded to the district court for further proceedings.

Plaintiff filed the putative class action in California state court, challenging Wal-Mart’s policy requiring employees who have suffered workplace-related injuries to submit to drug and/or urine testing. Wal-Mart removed the case to federal court based on jurisdiction under the Class Action Fairness Act (“CAFA”). The district court sua sponte remanded the action to state court, concluding that Wal-Mart had waived its right to remove the case by filing a demurrer in response to plaintiff’s First Amended Complaint (“FAC”) in state court.

The panel held that the district court lacked authority under 28 U.S.C. § 1447(c) to remand sua sponte based on a non-jurisdictional defect.

The panel noted that a defendant “may waive the right to remove to federal court where, after it is apparent that the case is removable, the defendant takes actions in state court that manifest his or her intent to have the matter adjudicated there, and to abandon his or her right to a federal forum.” Resolution Tr. Corp. v. Bayside Developers, 43 F.3d 1230, 1240 (9th Cir. 1994). The panel held that the district court erred in concluding that Wal-Mart waived its right to remove the case when the FAC did not reveal a basis for removal pursuant to CAFA. The panel also held that Wal-Mart’s choice to file a demurrer, rather than another form of responsive pleading, to plaintiff’s indeterminate FAC did not amount to a waiver of its right to remove. The panel further held that where Wal-Mart removed the case before plaintiff opposed the demurrer and before any hearing was held, clearly Wal-Mart did not manifest an intent to litigate in state court.

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Thursday, February 1, 2018

O'Malley v. Hospitality Staffing Solutions

A negligent undertaking claim could not be subjected to dismissal on summary judgment where it was possible for a reasonable trier to fact to find that a hotel had assumed a duty to have an employee check on a guest and there was a dispute as to whether it was reasonably foreseeable that the guest was incapacitated and needed assistance.

O'Malley v. Hospitality Staffing Solutions - filed Jan. 31, 2018, Fourth District, Div. Three
Cite as 2018 S.O.S. 574

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