Tuesday, October 19, 2010

Northern California Daily Digest

Here are some of the other recently decided cases in the U.S. District Court for the Northern District of California.

Murphy v. J.B. Hunt Transport, Inc. is an employment discrimination claim that also contains a wage and hour dispute.  J.B. Hunt seeks a stay pending the California Supreme Court's resolution of Brinker Restaurant Corp. v. Superior Court which asks whether employers are required to ensure employees take breaks under the California Labor Code. Judge William Alsup disagreed citing Clinton v. Jones as the benchmark to determining a stay:
The potential prejudice to plaintiff is large if a stay is granted and the impact on defendant of moving forward without a stay is minimal. The time has come to proceed with this case.
He denied the request for a stay.

Two cases consider whether Doe defendants defeat diversity jurisdiction.   The precedent on the point is not clear.  Garter-Bare Co. v. Munsingwear, Inc. (9th Cir. 1980) (Doe defendants "inclusion destroys [diversity] jurisdiction and the claim was properly dismissed, if only for this reason.") Bryant v. Ford Motor Co., 886 F. 2d 1526 (9th Cir. 1989) ("Congress obviously reached the conclusion that doe defendants should not defeat diversity jurisdiction.").

In Assurance Indus. Co. v. Snag Inc., Terrance Anton (“Anton”) and Walter Armstrong III (“Armstrong”) own patents on golf teaching products.  Anton reached out to Assurance to sell the products using through 3 G Gold Golf Ventures (owned by Anton and Armstrong).  Eventually, 3 G ceased operation, while still owing Assurance $320,751.78. Anton agreed that Assurance could continue to sell the patented products to pay down 3 G's debts. However, in 2008, Anton changed his mind leading to the present action for fraud and breach of contract where the court has diversity jurisdiction. Assurance also sued a number of unnamed "Doe" defendants, the defendants claim that this defeats diversity jurisdiction since it isn't clear if the Doe defendants are California residents or not.  Judge Saundra Brown Armstrong dismissed the case with leave to amend, finding Garter-Bare to be good law citing Hart v. Massanari ("Once a panel resolves an issue in a precedential opinion, the matter is deemed resolved, unless overruled by the court itself sitting en banc, or by the Supreme Court.")

Hao v. Chen is a similar case that poses the same issue and reaches a contrary result.  Hao is Chen's brother in law.  Mr. Hao alleges that he invested million of dollars two companies started by Mr. Chen in July 1998 and April 2000.  Sometime thereafter, Mr. Chen sold the companies and forged Mr. Hao's signature on the transfer agreement, defrauding him of $7,084,808.  Mr. Chen sees things differently, he claims that he crated an investment account under Mr. Hao and his wife's (Ellen) name, but that the money was really community property of him and Ellen.  Since Mr. Chen and Ellen's marriage is currently in dissolution proceedings, he claims the assets in question are under the jurisdiction of the state superior court and the federal court should abstain from dealing with it.  Judge Lucy Koh found that the complaint had many jurisdictional issues, but the Doe defendants were not one of them and stated that subsequent revisions to the diversity statute compel the result in Bryant.  She dismissed the case with leave to amend.

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