LISA BURCH ET AL VS INTEX CORP ET AL

Tentative Rulings

Case Number: ****3396    Hearing Date: March 9, 2021    Dept: S27

1. Petition to Approve Compromise of Minor

   Plaintiff, Nina Burch, by and through her mother, Lisa Burch, filed this action against Defendant, Intex Recreation Corp. for products liability damages arising out of an allegedly defective pool and ladder. Plaintiff suffered severe, traumatic, and permanent brain injuries as a result of her use of Defendant’s product. At this time Plaintiff, by and through her GAL and attorney of record, has agreed to settle all of her claims against Defendant. Because Plaintiff is a minor, the settlement requires court approval.

   As an initial note, Petitioner filed voluminous papers in support of this application, and filed most of them only a week prior to the hearing. Compounding the matter, Counsel did not virtually tab the exhibits, as required by CRC 3.1110(f)(4). The Court asks Counsel to use the electronic tabs feature of eCourt in the future in connection with this and other actions.

   The parties have filed the petition to approve the compromise under seal, and have concurrently requested an order sealing the terms of the settlement from public view. The Court will therefore not, in this order, set forth the terms of the settlement. The Court has reviewed the proposed settlement, and finds it is fair and reasonable.

   The Court is concerned about the amount of attorneys’ fees sought. The proposed attorneys’ fees award is almost 40% of the gross settlement, which is well in excess of the 25% the Court typically allows in cases involving minors. Counsel’s declaration argues this amount is appropriate per the Texas Administrative Code. The Court understands that Plaintiff is located in Texas. Plaintiff chose, however, to litigate this personal injury case in California. It is not clear that Texas substantive law governs this case. Plaintiff’s attorney’s declaration does not include the information required by CRC 7.955(b). The Court wishes to hear from Petitioner and Counsel about the effort that went into this case, and the Court will consider reducing the attorneys’ fees award at the time of the hearing.

   Additionally, Petitioner indicates she seeks to have a portion of the settlement proceeds used to fund a special needs trust. The proposed trust was lodged with the Court on 3/08/21, the day before the hearing on the petition. The probate department needs to review the proposed special needs trust before the Court can issue a final ruling approving the petition. The probate department cannot review the proposed trust with only one day’s notice. The Court will therefore continue the hearing on the petition so the probate attorney can review the proposed trust.

2. Motion to Seal Records

   Petitioner moves to seal the various documents detailed above, contending the parties’ settlement agreement includes a confidentiality provision, such that all documents revealing the amount of the settlement, amount of attorneys’ fees, and healthcare records should be redacted.

1. Law Governing Motions to Seal

   (1) Scope of Rules. C.R.C., Rules 2.550 and 2.551 apply to trial court records sealed or proposed to be sealed by court order. They do not apply to discovery motions and records in discovery proceedings, but do apply to discovery materials used at trial or submitted for adjudication of matters other than discovery proceedings. (C.R.C., Rule 2.550(a).)

   (2) Records Presumed To Be Open. “Unless confidentiality is required by law, court records are presumed to be open.” (C.R.C., Rule 2.550(c).)

   (3) Findings Required To Seal Records. The court may order that a record be filed under seal only if it expressly finds facts that establish all of the following:

   (a) “There exists an overriding interest that overcomes the right of public access to the record.” (C.R.C., Rule 2.550(d)(1).)

   (b) “The overriding interest supports sealing the record.” (C.R.C., Rule 2.550(d)(2).)

   (c) “A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed.” (C.R.C., Rule 2.550(d)(3).)

   (d) “The proposed sealing is narrowly tailored.” (C.R.C., Rule 2.550(d)(4).)

   (e) “No less restrictive means exist to achieve the overriding interest.” (C.R.C., Rule 2.550(d)(5).)

   (4) What Constitutes an “Overriding Interest?” The Advisory Committee Comment to C.R.C., Rule 2.550 notes that the rule leaves the determination of what constitutes an “overriding interest” to case law and that, in appropriate circumstances, courts have found various statutory privileges, trade secrets, and privacy interests to be “overriding interests.”

   (5) Court Approval Required. A record may not be filed under seal without a court order or based solely on the agreement or stipulation of the parties. (C.R.C., Rule 2.551(a).)

   (6) Motion/Application To Seal Record. Sealing a record is requested by a motion or application for an order sealing the record, supported by a memorandum and a declaration of facts sufficient to justify sealing. (C.R.C., Rule 2.551(b)(1).) If necessary to prevent disclosure, the motion or application and supporting and opposing documents may be filed in a public redacted version and lodged in a complete version conditionally under seal. (C.R.C., Rule 2.551(b)(5).) A copy of the motion or application must be served on all parties who have appeared. A party who already possesses copies of the records to be placed under seal must be served with both a complete unredacted version and a redacted version. (C.R.C., Rule 2.551(b)(2).)

   (7) Lodging Records “Conditionally Under Seal.” When the motion or application is made, the record is lodged “conditionally under seal” unless the record has previously been lodged or good cause exists for not lodging it. (C.R.C., Rule 2.551(b)(4).) A record that may be filed under seal is lodged with the court in a sealed envelope or container labeled “conditionally under seal” with a cover sheet containing the information required on a caption page and stating that the record is subject to a motion or application to file the record under seal. The clerk endorses the cover sheet with the date of receipt and retains the record without filing. (C.R.C., Rule 2.551(d).)

   (8) Procedure for Confidential Documents. A party who files or intends to file documents disclosed during discovery that are subject to a confidentiality agreement or a protective order but does not intend to request sealing must (a) lodge the unredacted records and other documents that disclose their contents conditionally under seal, (b) file redacted copies that do not disclose the contents, and (c) give written notice to the party who produced the records that the records and documents lodged under seal will be placed in the public court file unless that party files a motion or application to seal the records. (C.R.C., Rule 2.551(b)(3)(A).) Within 10 days, the party who receives the notice may file a motion or application to seal the records or to extend the time to file. If the party does so, the documents remain conditionally under seal until the court rules on the application or motion. If the party does not do so, the clerk “promptly” places the documents in the public file. (C.R.C., Rule 2.551(b)(3)(B).)

   (9) Contents of Sealing Order. The order sealing a record must be narrowly tailored, “specifically set forth the facts that support the findings” and “[d]irect the sealing of only those documents and pages, or, if reasonably practicable, portions of those documents and pages, that contain the material that needs to be placed under seal.” All other portions of the documents must be placed in the public file. (C.R.C., Rule 2.550(e).) The order must state whether the order itself, the register of actions, any other court records, or any other records in the case are to be sealed and whether any person other than the court is authorized to inspect the record. (C.R.C., Rule 2.550(e)(2), (e)(3).) Unless the sealing order provides otherwise, the parties may not disclose the contents of any sealed materials in subsequently filed records or papers. (C.R.C., Rule 2.550(e)(4).)

   There must be no less restrictive means to achieve the overriding interests. These findings embody constitutional requirements for a request to seal court records, protecting the First Amendment right of public access to civil trials. (See NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1217-1218; Huffy Corp. v. Superior Court (2003) 112 Cal.App.4th 97, 104; People v. Jackson (2005) 128 Cal.App 4th 1009, 1026 – in determining whether to seal records, courts must weigh constitutional requirements for disclosure against such factors as privacy rights.)

   (10) Grant of Motion or Application. If the court grants the motion or application, the clerk replaces the cover sheet with a file-endorsed copy of the court's order and labels the record “sealed by order of the court on (date).” (C.R.C., Rule 2.551(e)(1).)

   (11) Denial of Motion or Application. If the motion or application is denied, the clerk returns the lodged record to the requesting party and does not place it in the case file unless that party notifies the clerk in writing within 10 days after denial that the record is to be filed. (C.R.C., Rule 2.551(b)(6).)

   (12) Custody of Sealed Records. Sealed records are securely filed and kept separate from the public file in the case. (C.R.C., Rule 2.551(f).) Where voluminous records in the possession of a public agency are to be sealed, the order may direct the agency to maintain the records in a secure fashion. (C.R.C., Rule 2.551(g).)

2. Settlement Agreement Confidentiality

   Pursuant to Hinshaw, Winkler, Draa, Marsh & Still v. Superior Court (1996) 51 Cal.App.4^th 233, 241, it is in the public interest to uphold the confidentiality of a private settlement. Petitioner lodged an unredacted version of the petition to approve minor’s compromise, and also filed a redacted version. The only difference between the redacted and unredacted version of the petition is the amount of the settlement. The Court finds the redactions are appropriately and narrowly tailored, and therefore grants the motion to seal the unredacted version of the petition. The Judicial Assistant will handle the records in accordance with the procedure detailed above.

1. Conclusion

   The motion to seal documents is granted.

   The Court will hear testimony from Petitioner and Counsel concerning the appropriate amount of attorneys’ fees to be awarded at the time of the hearing. If the Court is not inclined to grant the attorneys’ fees sought, Petitioner will be ordered to file an amended petition with an updated amount of fees.

   The hearing on the petition is continued for two months, to Tuesday, 5/11/21 at 8:30 a.m. in Department S27 of the Long Beach Courthouse to permit the probate attorney to review the proposed special needs trust. Today’s OSC re: dismissal (settlement) is also continued to 5/11/21.

Case Number: ****3396    Hearing Date: June 25, 2020    Dept: S27

I. FORUM NON CONVENIENS

This is a renewed motion based on developments subsequent to the original hearing (which was not before this court).

Defendants Intex Recreation Corp., Intex Corp. and Intex Group are hereafter collectively referred to as “Intex.”

Renewed motions are governed by CCP ;1008(b):

“(b) A party who originally made an application for an order which was refused in whole or part, or granted conditionally or on terms, may make a subsequent application for the same order upon new or different facts, circumstances, or law, in which case it shall be shown by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown. For a failure to comply with this subdivision, any order made on a subsequent application may be revoked or set aside on ex parte motion.”

The basic facts of the case are that Plaintiffs purchased an Intex-brand above-ground swimming pool. Nina Burch (a minor, and Plaintiff Lisa Burch is her guardian ad litem as well as an individual litigant) suffered injury to her spinal cord while using the ladder to access the pool. She alleges the ladder “was unstable as designed and manufactured” and that these alleged defects caused her fall. The essential gravamen of the case sounds in products liability.

Intex asserts that the Plaintiffs are all Texas residents, fact witnesses are located in Texas, Nina’s medical treatment was in Texas, and pool was not designed manufactured or sold in California. It therefore contends Texas is the most appropriate forum in which to litigate this action.

Intex’s Exhibit 6 is the ruling (April 5, 2018) denying the original motion, and it indicates Intex had not met its initial burden. As Intex notes, that was prior to undertaking discovery. The court’s records (the court takes judicial notice of its case file) indicate Intex applied for dozens of commissions to take depositions outside of California.

That Plaintiffs are Texas residents is undisputed and does not constitute a new fact – the complaint states the Plaintiffs are residents of Fort Bend County, Texas (Paragraphs 11 – 12).

The “new” facts gleaned from discovery subsequent to Judge Orozco’s denial of the original motion include:

1. All percipient witnesses to the accident are located in Texas contrary to a prior declaration by Plaintiff.

2. Fact witnesses have now been identified, most of whom cannot be compelled to testify in a California trial.

3. There are no California based designers or manufacturers of the product.

Intex also mentions that Plaintiff would not stipulate to admissibility of medical records requiring significant effort to subpoena and depose individuals in Texas. This is not a new fact supporting dismissal and the court does not consider it in its analysis.

The court is also dubious that the fact the product was not designed or manufactured in California is “new.” Intex is charged with such knowledge even if its attorneys were unaware of these facts. Defendant also assert the pool was not “invented” in California – these contentions are supported by the declaration of Matthew Whalen, Intex’s Director of Risk Management. He testifies that the pool was designed and manufactured in China by Intex Industries (Xiamen) Co. Ltd. – a separate legal entity from the three Intext defendants before the court. He denies that he designed or invented the pool or ladder.

In a statement without apparent foundation he states the subject pool was purchased by Wal-Mart from Intex Trading Ltd., which in turned purchased in from Intex Industries (Xiamen). He states the pool and ladder were never physically in California. He also states Intex (the entities before the court) did not draft warnings, instructions or designs and that Intex’s “only role” was to facilitate the sale from Intex Trading to Walmart. Foundation is questionable.

He concludes that IRC agrees to bring any witnesses to testify in Texas. Does he have authority to make this promise? How does he know?

Plaintiffs have filed an extensive opposition. Without detailing the 10 supporting exhibits, the court agrees with the essential argument that Intex has not demonstrated “new facts” unavailable to it at its original motion. The issue is jurisdictional. CCP ;1008(e):

“This section specifies the court’s jurisdiction with regard to applications for reconsideration of its orders and renewals of previous motions and applies to all applications to reconsider any order of a judge or court, or for the renewal of a previous motion, whether the order deciding the previous matter or motion is interim or final. No application to reconsider any order or for the renewal of a previous motion may be considered by any judge or court unless made according to this section.”

As indicated above:

1. That Plaintiffs are Texas residents is not a new fact but appears on the face of the pleadings. The court has no doubt that Intext is aware of this.

1. Intex is charged with knowledge of the design and manufacture of the pool. The information was reasonably available to Intex before the first motion.

1. The inability to summon witnesses to trial is not a new fact for purposes of reconsideration. Intex was aware from the complaint that all percipient witnesses were in Texas. (Plaintiff’s exhibit 4, 5 and 6 are declarations of the three percipient witness Linda Clary (Nina’s grandmother) who states she is willing to travel to California. The three percipient witnesses (Plaintiffs Nine and Lisa Burch and grandmother Linda Clary) declare they are willing to travel to California. (The court is not certain this is an enforceable promise, but would consider remedies in limine if they renege on the offer)

With respect to medical providers and other caregivers, it is Plaintiffs’ burden to prove the case, not Intex’s.

Attorney Jon Padilla declares that Plaintiffs will stipulate to video depositions of any Texas witness in Texas or California and to the use of such video testimony at trial. Plaintiffs also stipulate for Nina Burch to be examined by experts in California. The court will hold Plaintiffs to this stipulation should disputes arise.

The court will hear argument focused on whether there are any truly new facts, but its tentative ruling is to deny the motion on jurisdictional grounds.

II. MOTION TO AMEND

Plaintiffs move for leave to amend their complaint to add a prayer for punitive damages supported by facts it contends supports a finding of “despicable conduct.”

As is the custom, the policy of liberal amendment is invoked while ignoring that punitive damages are disfavored. As against a corporate defendant there must be facts satisfying CC ;3294(b):

“An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.”

Plaintiff does offer facts which it believes satisfies this section.

But the court notes that the proposed new Paragraph 52 is on “information and belief” and all other allegations are sub-parts and therefore are also on information and belief. Pleadings based on information and belief must state the source of that information and how it leads to a belief:

“A ‘“[p]laintiff may allege on information and belief any matters that are not within his personal knowledge, if he has information leading him to believe that the allegations are true”’ (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550, italics added), and thus a pleading made on information and belief is insufficient if it “merely assert[s] the facts so alleged without alleging such information that ‘lead[s] [the plaintiff] to believe that the allegations are true’ ” (id. at p. 551, fn. 5). (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1158-1159.)

The court recognizes that Plaintiffs have attempted to satisfy this requirement as well, but the “information” is somewhat vague and nebulous.

Plaintiffs would allege that the height of the ladder handles were too low and Intex “knew” if a person entered the pool in a “head-first” they could suffer severe injuries. But Plaintiffs do not allege this is how the subject injury occurred. Moreover, the fact that a person “could” suffer injury does not mean injury was likely. It is common knowledge that diving head first into limited depth has the potential for injury.

Plaintiffs would allege Intex’s own documents “establish” an unstable ladder can cause injury and death. What documents are these and how do they establish anything? This is not a fact but a contention. The court does not doubt that an unstable ladder can cause injury – it again is common knowledge. A document so stating is hardly an indicia of culpable and despicable conduct.

Plaintiffs would allege Intex received 36 customer complaints of an unstable ladder over a period of three years. Plaintiffs do indicate the source of this information as from Intex call center logs. That is not an overwhelming number over a three-year period particularly when the issue of instability is not identified – there are reasons for instability other than design defect.

Plaintiffs would allege “numerous additional complaints” of instability of A-frame pool ladders from 2005 through 2015 but this time with no indication of where the information was gleaned. The court believes that an unspecified number of complaints is meaningless absent the number of ladders sold.

Plaintiffs would allege an unidentified engineer testified in an unidentified “previous case” that the low handles were a design defect yet Intex continued to sell ladders “without validating their safety.” The result of the testimony is not disclosed. Failing to revise one’s product on the basis of a retained expert’s opinion is not despicable, particularly when Plaintiffs does not allege that the jury found liability.

Plaintiffs would allege that “a letter from a purchaser” in 2006, an unidentified purchaser self-described as a member of the “engineering community” detailed complaints about the stability of his own ladder. This is too vague to constitute culpability for despicable conduct. Who knows what the qualifications of this unidentified individual were or the validity of his complaints?

Sub-section (j) of Paragraph 52 attempts to satisfy CC ;3294(b). It would allege that despite numerous complaints and lawsuits Intex continued to market and sell the ladders. How many of the lawsuits prevailed? The section continues that the Intex President and his staff were aware of these “design defects and complaints” – this suffers from the same weakness of the above proposed allegations.

The court will take argument but is not inclined to grant the motion at this time on this offer. The policy of liberality is counter-balanced by the disfavored remedy. “Despicable” generally means the alleged conduct would cause an ordinary person to despise the actor. It is a very strong word. The court does not see that the allegations meet the definition.

III. UNMASK CUSTOMER LISTS

Plaintiffs have received in discovery redacted customer lists. They seek to have the lists un-redacted, or “unmasked” as Plaintiffs term it. They contend prior notice to consumers is not necessary, but alternatively request, if the court disagrees, to have court-supervised notice given.

Intex indicates this request was denied by a different court in August 2019. The documents sought to be “unmasked” were produced by a compromise after meet-and-confer efforts.

The court rejects Intex’s contention that the court has no authority to make this order because the notice does not state the specific authority – the court can continue the hearing for an amended notice if Intex insists, but the court has broad authority over discovery. This is not a motion for reconsideration requiring new facts or law.

If the merits are reached, the reasons why the court would deny amendment at this time are the same reasons why such discovery would be relevant and necessary.

The court does agree with Intex that consumers are entitled to notice of release of their contact information. If relief is granted, supervision of the notice process will be by a discovery referee.

The court will take argument. It might continue the hearting briefly for amended notice. Assuming valid authority will be offered in the notice, the court’s initial inclination would be to grant relief but require notice to consumers in a process supervised by a referee, costs to be paid by Plaintiffs.

IV. MOTION TO COMPEL FURTHER RESPNOSES TO SPECIAL INTERROGATORIES SET #2

Judge Siegle previously presided over this case. On August 30, 2019 Judge Siegle issued a detailed minute order concerning numerous discovery issues. Among other matters addressed, the order stated in part:

“It is the Court’s understanding that the parties reached agreements about the scope of production for discovery requests about similar incidents, such as the years for production and the products that are substantially similar enough to subject them to discovery. In the rulings below, the Court does not intend to expand or restrict the scope of those agreements.

Redacted Complaints: According to Plaintiffs, Defendants produced complaints with redactions. The complaints may be redacted if they involve products beyond what the parties agreed to produced, and customer information can be redacted to protect individuals’ privacy rights. Such private customer information includes customer names, identifying information addresses, contact information, medical records, and confidential settlement terms. Defendants explained that the redacted portions also could include IRC’s evaluation of claim. Such evaluations very well may contain attorney-client privileged communications and attorney work product, which is beyond the scope of the current motions. IRC is to provide a privilege log of any documents, including these complaints, that it redacted based on attorney-client privilege or work product. Otherwise, the complaints should not be redacted.”

As an initial matter, the court is not necessarily persuaded that this is an improper motion for reconsideration. All discovery orders are subject to change as a case proceeds. This court is not privy to what was discussed at the “numerous” Informal Discovery Conferences leading to the order. The fact that Plaintiff agreed to accept redacted reports (if they did agree) does not mean they could not seek modification later on.

The court will take oral argument on whether or not this is a renewed motion and if it is what new facts justify it.

These interrogatories seek the identities and contact information for all complainants. The court does not intend to reach the merits today. As indicated above a referee will likely be appointed to supervise notice to consumers. As this is closely related, the court intends to refer this motion as well (unless the court is persuaded to grant the motion to dismiss, in which it will be placed off calendar as moot along with the motion to amend and the motion to unmask).