Government Liability Update

Eighth Amendment Limitation on "Excessive Fines" Applies to Civil Forfeitures under State Law

In Timbs v. Indiana, published February 20, 2019, a unanimous U.S. Supreme Court reversed an Indiana Supreme Court ruling on a civil forfeiture related to a criminal conviction.  The petitioner pleaded guilty to heroin dealing and conspiracy to commit theft.  The state limit on the fine for the offenses was $10,000.  The state sought civil forfeiture of the petitioner's $42,000 vehicle--which he purchased with proceeds from his father's life insurance policy--on the ground that it was used to transport heroin.  The petitioner challenged the forfeiture on the ground that it amounted to an excessive fine.  The state supreme court ruled that the Eighth Amendment limit on excessive fines did not apply to state law civil forfeitures.

The Supreme Court unanimously ruled that under the Fourteenth Amendment, the limit on excessive fines applies to civil forfeitures under state law.  The majority ruled that the Eighth Amendment was incorporated into the Fourteenth Amendment's due process clause under both tests for incorporation:  The protection was fundamental to the nation's scheme of ordered liberty; and it was deeply rooted in the nation's history and traditions.  The state argued that the clause does not apply to civil in rem forfeitures.  But Austin v. United States held that the clause applied to in rem forfeitures under federal law.  When a Bill of Rights protection is incorporated into the Fourteenth Amendment, the protection applies identically to both the Federal Government and the states.  The Supreme Court declined to overrule Austin.  The state also argued that whether the protection applied to civil in rem forfeitures was not fundamental or deeply rooted in the nation's history or traditions. In considering whether the Fourteenth Amendment incorporates a protection contained in the Bill of Rights, the court ask whether the right guaranteed—not each and every particular application of that right—is fundamental or deeply rooted.

Two concurring justices opined that the excessive fines protection was incorporated into the Fourteenth Amendment's Privileges or Immunities Clause, rather than its due process clause.

Statutory Bar on Public Employee Indemnification of Public Employer Did Not Bar Employees' Insurer from Contributing to Employer's Insurer's Settlement of Lawsuit

In Westport Insurance v. California Casualty Management, published February 20, 2019, the 9th Circuit affirmed a district court's summary judgment entered on behalf of plaintiff Westport Insurance Corporation against defendant California Casualty Management Company in a diversity insurance contribution case decided under California law.  Three students of a school district sued the district and three of its administrators for failing to prevent a teacher from molesting them over various periods in the 1990s.  Westport, through a predecessor company, issued primary general liability insurance policies to the district  during the 1990s.  It also issued a series of annual excess policies covering the district and its employees during part of the same period.  During the same period, California Casualty issued successive annual liability policies to the Association of California School Administrators, providing excess liability coverage to the administrators who were sued.  Westport settled the three lawsuits for $15.8 million.  California Casualty refused to contribute to the settlement.  On cross-motions for summary judgment, the district court awarded Westport $2.6 million in contribution from California Casualty, along with $755,637.20 in prejudgment interest.

The 9th Circuit rejected California Casualty's argument that Government Code section 825.4 barred Westport's lawsuit.  Section 825.4 provides that (with exceptions that did not apply here) a public entity pays a claim or judgment against itself or a public employee, for an injury arising out of the employee's act or omission, the employee is not liable to indemnify the public entity.  Reviewing California law on the subject, the court concluded that no policy concern prevented California Casualty from indemnifying Westport. Case law holds that contribution from an employee's insurer is not wholly inconsistent with section 825.4. No employee personally contributed to the settlement costs.  The district provided primary insurance to both itself and its employees through Westport.  And California Casualty's coverage was limited to claims arising out of employment.  The 9th Circuit also upheld the district court's decisions concerning policy interpretation, the amount of contribution, and the date prejudgment interest began running.

Anti-SLAPP Special Motion to Strike Not Available Where Communications That Form Basis of Vendor Suit Do Not Involve Matters Pending Before a Legislative Body or in Connection with a Public Issue

In Rand Resources, LLC v. City of Carson, published February 4, 2019, the California Supreme Court affirmed in part and reversed in part a lower appellate court's ruling on anti-SLAPP special motions to strike.  The plaintiff allegedly entered into an exclusive contract with the defendant city to act as the city's exclusive agent in negotiating with the NFL to build a home stadium in the city for an NFL team.  The plaintiff alleged that while it was representing the city, the city stopped complying with the agreement, and worked with another defendant vendor to act as the city's agents in NFL negotiations.  The plaintiff further alleged that before the plaintiff signed the agreement with the city, the city attorney told the plaintiff that the two-year contract would be extended; but when the plaintiff sought an extension, the city council voted to deny the extension.  The plaintiff sued the city for breach of contract and promissory fraud; sued the city, mayor, and the other vendor for fraud; and sued the other vendor for intentional interference with contract and intentional interference with prospective economic advantage.  The defendants made special motions to strike the causes the action, which the trial court granted.  The appellate court reversed, concluding the causes of action did not arise from conduct protected by anti-SLAPP.

The Supreme Court concluded that the causes of action against the city were not protected by anti-SLAPP.  The crux of those claims is that the defendants allegedly concealed and lied about the city's alleged breach of its exclusivity provision.  These were not protected communications under subdivision (e)(2) or (e)(4) of Code of Civil Procedure section 425.16.  To meet (e)(2)'s definition of protected conduct--written or oral statements or writings made in connection with an issue under consideration or review by a legislative body--the defendant's acts that form the basis of the claim must be statements in connection with an issue being considered by the legislative body (here, the city council) at the time the statements are made.  Alleged lies about whether the other vendor was representing the city in NFL negotiations were not connected with any issue which was before the city council at that time.  Subdivision (e)(4)--conduct in furtherance of the exercise of free speech in connection with a public issue or an issue of public interest--also was not satisfied.  Although the building of the stadium was an issue of public interest, the alleged conversations on who should represent the city in NFL negotiations did not.  The same considerations apply to the city attorney's alleged promises.  Since they were not made when the agreement renewal was pending before the city council, they were not made in connection with an issue that was then under review by the city council.  And the issue of whether the agreement with a vendor would be renewed was not in connection with a public issue or issue of public interest.

The court also concluded, however, that the tortious interference causes of action against the other vendor did involve protected conduct.  They were based on the other vendor's communications with the NFL on the stadium issue (an issue of public interest), and were made in connection with the issue of the agreement with plaintiff that was at that time before the city council.

 

Officer Entitled to Qualified Immunity for Failure to Prevent Arrestee's Suicide Attempt in Cell, but Is Not Entitled to Summary Judgment on State Law Claim

In Horton v. City of Santa Maria, published February 1, 2019, a divided 9th Circuit panel affirmed in part and reversed in part a district court order denying summary judgment to a police officer and his city employer in a case brought under 42 U.S.C. section 1983 and California Government Code section 845.6.  The plaintiff was arrested after slashing the tires of a vehicle his girlfriend was riding in.  He admitted to hitting the girlfriend in the past. While in the holding cell at the police station, he told the defendant officer of various troubles in his life, and that he was nervous being in a cell, but twice denied needing medical care.  Another officer referred to the possibility of a psych consult for the plaintiff.  The plaintiff's mother talked to him on the phone.  The officer then spoke to the mother on the phone for about 15 minutes.  The mother told the officer the son had engaged in self-harm and suicidal ideation.  While the officer talked with the mother, the plaintiff undid his belt, looped it through the bars, and hanged himself.  The plaintiff was left alone for a half hour, during which he developed brain damage from the hanging.  The district court denied summary judgment to the officer and the city on the federal and state claims.

The 9th Circuit panel unanimously reversed denial of summary judgment as to the section 1983 claim against the officer.  Because insufficient case law established that the officer's actions amounted to deliberate indifference under the then-prevailing Fourteenth Amendment standard for denial of medical care to pretrial detainees, any Fourteenth Amendment violation was not clearly established.  The officer was therefore entitled to qualified immunity. The court also unanimously ruled that it lacked jurisdiction over the denial of summary judgment to the city on the Monell claim.  While denial of summary judgment based on qualified immunity is immediately appealable, denial of summary judgment to a municipal defendant may be appealed only if reversal on the qualified immunity issue as to the individual will also lead to reversal for the municipality.  That standard was not met here, because the municipality could be held liable even if the officer was entitled to qualified immunity due to lack of clearly-established law.

The majority held that the district court also properly denied summary judgment on the state law claim.  Under the facts, the majority found triable issues of fact on whether the information the defendant officer had showed that the plaintiff required immediate medical care to prevent his suicide attempt.  The dissenting judge argued that there was no evidence that the plaintiff required immediate medical care, or that immediate medical care would have prevented the suicide attempt or injury.  The dissenting judge further criticized the majority for following 9th Circuit case law interpreting Government Code section 845.6 whcih the California appellate courts subsequently criticized.