Saturday, November 13, 2010

Northern California Daily Digest

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

Wang v. Asset Acceptance, LLC is a consumer class action lawsuit predicated on a phone bill dispute.  Mr. Wang disputed his phone bill with Pacific Bells which went into collection.  Asset Acceptance reported his lack of payment to three Credit Reporting Agencies (CRAs), Mr. Wang argues that this violates the California Consumer Credit Report Agencies Act ("CCRAA").

In February 2010, Judge Samuel Conti held Mr. Wang's claim under California Civil Code Section 1785.25(a), which is part of CCRAA, actually arose under Section 1785.25(c) of that Act, and that the claim was preempted by the Fair Credit Reporting Act. FCRA preempts most state laws relating to the duties of persons who furnish information to CRAs, but expressly exempts from preemption claims under California Civil Code Section 1785.25(a). Judge Conti then recused himself from the case, turning it over to Judge Susan Illson. Mr. Wang alleges this is because Judge Conti owns stock in AT&T which has acquired Pacific Bell. Section 1785.25(a) forbids providing a CRA with innacurate or incomplete information. Section 1785.25(c) creates an obligation to notify CRAs of disputed debts.

Mr. Wang's current claim is identical to the one he raised in February - that Judge Conti's interpretation of Section 1785.25(a) is erroneous and that the California legislature intended to include the kind of conduct enumerated in Section 1785.25(c).  Judge Susan Illston explained that reading the requirements of Section 1785.25(c) into Section 1785.25(a) would render the statute superfluous and contrary to the intent of the legislature.  She denied Mr. Wang's motion for relief from judgment and did not allow an interlocutory appeal.

Sanchez v. Crescent City Housing Authority is a qui tam action arising under the False Claims Act.  Essentially, Ms. Sanchez is arguing that CCHA made false statements to the Department of Housing and Urban Development (HUD) so that it could obtain reserves of Section 8 housing voucher funds in excess of HUD regulations and spend that money on other city projects.  CCHA claims that the court lacks jurisdiction in the matter because it publicly disclosed the information of the excess reserves in a budget meeting in December 2006 and Ms. Sanchez did not become aware of the behavior until March 2007. Magistrate Maria-Elena James agreed and stated that a false claim cannot be based by information in the public domain unless it is filed by the source who released the information. She dismissed the claim with prejudice.

Nelson v. Ev3, Inc. is a shareholder derivative lawsuit.  Mr. Nelson was a shareholder of  Kerberos Proximal Solutions, Inc.  Kerberos merged with FoxHollow Technologies, Inc in an earnout agreement for $33M plus some proportion of the sale of certain medical devices based on components from Kereros and FoxHollow. Judge William H. alsup noted that "[t]he merger agreement obligated the surviving entity to 'use commercially reasonable efforts to market, promote, sell and distribute' Rinspirator." Mr. Nelson's claim is that Ev3, who bought the new entity, did not do so.  Judge Alsup found that this was enough for claims for breach of the implied covenant of good faith and fair dealing and breach of fiduciary duty to go into discovery.  He denied the motion to dismiss.

AIU Insurance v. Acceptance Insurance Co. is (perhaps unsurprisingly) an insurance coverage dispute.  AIU seeks a declaration that American Safety Indemnity Co. (and not it) is the primary insurer for the now defunct Rylock Company, Ltd.  Rylock is the defendant in 19 underlying suits for construction defects in windows it has manufactured. Judge Phyllis J. Hamilton stated she could not paint all of the 19 lawsuits with such a broad brush.
Nevertheless, the court agrees with American Safety that any determination of
coverage under either of the American Safety policies will require application of the policy terms to the specific facts of each Underlying Action, including the timing of Rylock’s work in connection with each construction project, the timing of any resulting “property damage” alleged, and the amounts incurred by AIU (if any) in defending the parties’ mutual insured, Rylock. Thus, the relief that AIU is seeking in this motion (re “duty to defend in the Underlying Actions”) is broader than is justified by the evidentiary showing.
She denied the motion for summary judgment.

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