News Type: Blogs

On the surface, a case just decided by the U.S. Court of Appeal for the 9th Circuit looks to be one primarily of interest to those in the aviation space. In Bernstein v. Virgin America Inc., a Ninth Circuit panel ruled on February 23 that California wage and hour laws pertaining to meal and rest breaks are not preempted by federal law; namely, the Federal Aviation Act.

But beyond that determination, which was a win for the flight attendants who initiated the litigation, is an additional ruling that represents a huge victory for the defense bar and should be of interest to all employers, not just airlines. Specifically, the court in Bernstein decided that heightened penalties for “subsequent violations” under California’s Private Attorney General Act (PAGA) cannot be imposed until the Labor Commissioner or a court notifies the employer in question of the Labor Code violation(s) at issue.

The net effect of the decision in Bernstein: California employers defending PAGA claims now have clarification regarding “subsequent [Labor Code] violations” and whether they will give rise to increased legal exposure.

Why Does All of This Matter?

Pursuant to PAGA, default civil penalties are $100 “for each aggrieved employee per pay period for the initial violation,” and $200 per aggrieved employer, per pay period, per “each subsequent violation.”

The problem was that before Bernstein, courts had not clearly identified when a “subsequent violation” of wage and hour law occurs. Prior case law (Amaral v. Cintas Corp.) simply held that such a violation did not trigger until an employer learned that its conduct violated the Labor Code.

But this left a fair amount of wiggle room for aggrieved employees, who could point to any given PAGA notice, prior employee complaints and lawsuits, internal or third-party payroll audits, employer retention of third-party human resource agencies, or other evidence to demonstrate that their employers acted willfully or had knowledge of ongoing Labor Code violations that justified the $200 “subsequent” penalty rate. But now, after Bernstein, employers cannot be subject to such heightened exposure until they hear from the Labor Commissioner or a court about the occurrence of a wage and hour violation.

What Employers Need to Know in the Aftermath of Bernstein

First and foremost, Bernstein is very favorable to management because it prevents employees from arguing that heightened civil penalties under PAGA should apply after the first California Labor Code violation within the statute of limitations, and after an employer has received a PAGA notice letter or an employee’s civil complaint.

Next, employers should remember that in the event of an unsuccessful appeal of (1) a trial court decision related to a wage and hour claim or (2) a Labor Commissioner citation, they will be subject to heightened penalties that have accrued during the appeal process.

Finally, it must be understood that Bernstein only addressed civil penalties. It remains unclear whether the ruling will also apply to claims for heightened statutory penalties for wage statement violations and the like.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

The California Department of Insurance has invited the public to participate in a pre-notice discussion regarding a contemplated addition to the California Code of Regulations (“CCR”) dealing with mitigation in rating plans and wildfire risk models. The web-based virtual event will be held on March 30, 2021 at 1:00 pm (PST).

The Proposed Regulation

The regulation open to public comment touches upon all of the following:

  1. Incentivizing individual and community mitigation efforts by requiring consideration of property- and community-level mitigation against wildfire risk;
  2. Reducing the risk of loss posed by wildfires;
  3. Improving accuracy in the classification of wildfire risk and the resulting rates and premiums;
  4. Increasing transparency in, and consumer awareness of, insurers’ rating and/or scoring of wildfire risk;
  5. Enhancing consumer protection by establishing a consumer appeals process;
  6. Reducing unfair discrimination by enhancing consistency in insurers’ wildfire rating practices and/or risk scoring practices; and
  7. Potentially improving availability and affordability of property-casualty insurance for communities and properties where wildfire mitigation measures have been implemented.

Participants in the pre-notice discussion will be asked to offer their specific questions about-and potential alternatives to-the proposed regulation.

A Deeper Dive

If adopted, the proposed regulation would require insurers to implement rates based on a compliant rating plan or wildfire risk model, defined as “any computer-based, map-based, or other measurement or simulation tool used by an insurer to segment rates, create a rate differential, or determine the premium discount or surcharge for residential or commercial structures.” Of note, any insurer looking to modify its rates would have to provide its wildlife risk model along with a new rate application to be filed no later than January 1, 2023.

At its core, the proposed regulation seeks to prohibit an insurer from using a rating plan or wildfire risk model that does not consider and take into account certain mandatory factors, including (1) community-level mitigation efforts and (2) property-level mitigation efforts undertaken with respect to an individual property being assessed for risk. Optional wildfire-related factors that insurers can weigh when developing rating plans or risk models are fuel, slope, access, distance to other high-risk areas, aspect, structure characteristics and wind.

Should the proposed regulation ultimately take effect, carriers will have to be mindful of several details and mandates related to their initial rate change applications, including the incorporation of wildfire loss data and the provision of specific wildfire risk model scores. Of course, these are items that the insurance regulatory professionals at Michelman & Robinson, LLP can assist with.

In the meantime, the full text of the proposed regulation can be found here, and M&R reminds anyone interested that the pre-notice discussion (which we will monitor and report on) is not a formal public hearing; as such, public comments will not be included in any rulemaking record.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

When is a 30-minute lunch break a 30-minute lunch break?

Certain employers have made it a practice of rounding time-up or down, typically in five- to 15-minute increments-in lieu of recording the actual time that employees spend working or for meal breaks. Until now, California law has generally permitted rounding time, provided certain criteria are met. For instance, an employer’s rounding policy must be fair and neutral on its face and cannot systematically undercompensate employees over a period of time.

While rounding time is still permitted at the start and end of a shift (though this is not without its own challenges), the California Supreme Court has just ruled that rounding time for meal breaks is unlawful.

In a class action case called Donohue v. AMN Services, the high court determined that state law imposes “precise time requirements” for meal breaks, and shaving off (or even adding) a few minutes here or there is contrary to the “precision” required by statute. Translation: employers must accurately track employee meal breaks to ensure that they are being given the full 30 minutes California law allots to them.

In the aftermath of this decision, employers may need to change their timekeeping practices, as “even minor infringements on meal period requirements” are disallowed and can subject an offending employer to significant damages. Employers must also understand that even where rounding time may be permitted at the start and end of an employee’s shift, this is an area of wage and hour law that remains heavily litigated, by way of class and representative actions.

Should you have any questions about wage and hour issues such as rounding time or other employment-related matters, the employment lawyers at Michelman & Robinson, LLP are here to help.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

With the recent changing of the guard in Washington, D.C., and coinciding with annual reporting and proxy season, comes the need for public companies across industries to reassess their risk disclosures-whether included in their registration statements for selling securities or SEC periodic reporting requirements.

Now that President Biden is in the White House, many policies set in place by the Trump administration are subject to change. This political reality triggers the need for businesses to rethink their risk factors and amend associated disclosures accordingly.

Doing so is critical for a couple of reasons: (1) the SEC mandates that companies appropriately educate their investors, and (2) up-to-date risk disclosures provide cover in the event an entity’s market value dips or shareholders sue alleging they were not warned about potential hazards.

Certain industry sectors-including energy (most notably, fossil fuel), pharmaceuticals, medical devices, technology, banking and finance, real estate, and cannabis, to name a few-are reacting to the new administration by reworking risk disclosures. This is in response to several disparate changes likely to occur under President Biden and a Democratic-controlled Congress that will surely impact business as usual. Some examples of policies and circumstances that may bear upon a company’s risk factors (depending upon the industry) include:

  • Biden’s focus on renewable power and the U.S. rejoining the Paris climate accord
  • Potential changes that may be made to the Affordable Care Act
  • The foreseeability of stricter regulations on drug pricing
  • The possibility of higher corporate taxes (which affects all industry sectors)
  • Fallout from the COVID-19 pandemic
  • Increasingly prevalent cybersecurity risks
  • More aggressive consumer protection enforcement
  • Steps to be taken to address climate change
  • A new approach to marijuana enforcement policy (and possible return to the Cole Memorandum that limits criminal charges related to cannabis)
  • Net neutrality rules and other laws governing Internet companies

Regarding potential changes to required climate change disclosures, Acting SEC Chair Allison Herren Lee announced this past week that the SEC is reviewing how companies have been complying with previous guidelines concerning disclosure of climate change risks. To date, companies have been required to disclose the material effects and costs of complying with federal, state and local environmental laws (which disclosure must be included in a company’s business description, management discussion and analysis section, as well as in its risk factor disclosures). The Acting SEC Chair stated the effects of climate change have become increasingly important to investors and, as such, the SEC intends to move swiftly in updating its climate-related disclosure guidelines and will likely expand the amount of information companies are required to disclose regarding risks that climate change poses to their business.

In addition, the SEC also enacted new risk factor rules last summer, requiring companies to present a summary of no more than two pages previewing their risks if the full risk factor section of their SEC filings exceeds 15 pages.

As a matter of practice, it is best for businesses to be as specific as possible in their risk factor disclosures, focusing on “material” risks as opposed to generalities that could apply to any public company. Of course, the Corporate & Securities attorneys at Michelman & Robinson, LLP stand ready to assist should you have any questions about your SEC filing obligations, risk disclosures included.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Despite veto drama during the waning days of the Trump administration, the William (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (NDAA) was enacted into law, and deep within its 1480 pages is a title-coined the Corporate Transparency Act (CTA)-that establishes new and more stringent reporting requirements. This represents but a small set of robust changes to U.S. anti-money laundering legislation that is part of the NDAA.

At its core, the CTA aims to eliminate anonymity of certain beneficial owners of entities (read: corporations, limited liability companies, financial institutions, and funds) formed in any U.S. state or territory or otherwise registered to do business in this country. It does so by commanding that beneficial ownership information be reported, all in an effort to eliminate (or at least minimize) the use of U.S.-incorporated shell companies for purposes of money laundering or terrorist financing schemes. .

Given this rather precise objective, the list of entities exempt from the CTA is a long one, and not every domestic company will need to comply. More on that below.

Reporting Requirements Under the CTA

The CTA mandates so-called “reporting companies,” defined broadly to encompass corporations, limited liability companies, and other similar entities created or registered to do business in the U.S., to submit a report to the Financial Crimes Enforcement Network of the Department of the Treasury. These reports must include the full legal name, date of birth and address (residential or business) of each entity’s beneficial owner, as well as a unique identifying number or identifier to be provided by FinCEN.

In terms of timing, entities formed before the effective date of the CTA have two years to submit their reports to FinCEN, while new companies must make their submissions at the time of formation or registration. Then, going forward, entities are obliged to report any change in beneficial ownership within one year of occurrence.

Information reported pursuant to the CTA is considered nonpublic and must be kept confidential by FinCEN, unless release is necessary under certain circumstances as enumerated in the statute. For example, the Department of the Treasury will have access to beneficial ownership data “for inspection or disclosure to officers and employees … whose official duties require such inspection or disclosure subject to procedures and safeguards” and for tax administration purposes. Likewise, federal agencies along with state, local, or tribal law enforcement agencies may request such information in furtherance of national security, intelligence, or law enforcement activity and for use in criminal or civil investigations.

There is more. So long as they are compliant with certain limited use requirements, requests for beneficial ownership information can be made on behalf of foreign authorities to assist with ongoing investigations. Financial institutions can make similar requests, but only with consent of the reporting company and subject to customer due diligence requirements. And finally, federal regulatory agencies, including federal functional regulators, are entitled to seek beneficial ownership information stored by FinCEN, subject to scope and use limitations contained in the CTA.

Rest assured, within a year FinCEN is expected to promulgate regulations implementing the CTA that should shed more light on these reporting requirements, among other things.

Beneficial Owners

The reporting requirements of the CTA beg the question: who can be deemed an entity’s beneficial owner? The answer as set forth in the law is not entirely straightforward: “an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity; or (ii) owns or controls not less than 25% of the ownership interests of the entity.” Interestingly, not mentioned are people receiving substantial economic benefits from the assets of the entity, which language was found in an earlier draft of the CTA.

It is anticipated that FinCEN will include further clarifying information expanding on this somewhat vague definition when it implements its regulations. In the meantime, earlier codified FinCEN regulations (31 C.F.R. § 1010.230(d)) provide a bit of insight to the extent they characterize a beneficial owner as “[a] single individual with significant responsibility to control, manage, or direct a legal entity… including” an executive officer or senior manager or other individual performing similar functions. Of note, expressly carved out of this definition are (1) minor children; (2) individuals acting as nominees, custodians, or agents of another individual; (3) those acting solely as employees of the entity in question and whose control is derived solely from that employment status; (4) individuals whose only interest in the entity is through a right of inheritance; and (5) creditors of the entity, unless such creditor meets certain enumerated criteria.

Exempt Entities

On paper, every business formed or operating in the U.S. is subject to the CTA. However, there are two very important exceptions: (1) foreign establishments not registered to do business here, and (2) certain specified exempted entities-spoiler alert: there are a lot of them, 24 to be exact.

Those specifically exempt from the CTA include, but are not limited to:

  • Entities that are already regulated (including public companies; financial services companies, such as public accounting firms; and public utilities)
  • Entities exercising governmental authority on behalf of the U.S. or any Native American tribe, state, or political subdivision
  • Certain banks, bank holding companies, and federal and state credit unions
  • Investment advisers and their operational investment vehicles
  • Insurance companies and producers authorized by a state
  • Tax exempt political organizations
  • Any entity with a physical office within the U.S. that employs more than 20 employees full-time and has filed federal income tax returns demonstrating more than $5 million in gross receipts or sales in the aggregate
  • Any entity that has been in existence for over one year, is not engaged in active business, not owned directly or indirectly by a foreign person, that has not, in the preceding 12-month period, experienced a change in ownership or sent or received funds greater than $1,000, and does not otherwise hold any kind of asset, including ownership interests in any other corporation, limited liability company, or similar entity
  • Brokers or dealers as defined in the Securities Exchange Act
  • Financial market utilities designated by the Financial Stability Oversight Council
  • Any pooled investment vehicles
  • Any entity or class of entities that the Secretary of the Treasury has determined, by regulation, should be exempt from the reporting requirements of the CTA

Bottom line, a wide swath of companies created or registered to do business in the U.S will not be impacted by the CTA’s reporting mandates.

Violations and Penalties

For entities not exempt from the CTA, the consequences of failing to abide by its requirements are significant. Individuals who willfully provide or attempt to provide false or fraudulent beneficial ownership information or who fail to report information to FinCEN at all will be liable for civil penalties up to $500 per day that the violation continues (up to $10,000), and/or imprisonment for not more than two years. Persons who participate in an unauthorized disclosure or use of the beneficial ownership information are subject to even harsher penalties-$250,000 and not more than five years imprisonment.

Impact of the CTA

Prior to the enactment of the NDAA-and with it the CTA-the U.S. had become the anonymous shell company capital of the world. In response, Congress has sought to flip the switch on these shell companies and add an unprecedented level of corporate transparency by overwhelmingly passing the NDAA in a bipartisan manner. Indeed, so strong was the support of the legislation from both sides of the aisle that then-President Trump’s veto was quickly overridden by both the House of Representatives and Senate.

Now that the CTA is the law, the beneficial ownership reporting requirements imposed on non-exempt entities should go a long way toward cracking down on those who rely on shell companies to launder money and fund criminality, including terrorism, nationwide. That being said and given the broad exemptions, the number of companies actually impacted by the new statute may prove to be far and few between.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Early last year, California enacted Senate Bill 824 (codified as section 675.1(b)(1) of the California Insurance Code), which serves to prohibit insurers from canceling or non-renewing policies of residential property insurance placed on homes located in certain ZIP codes for a year after the declaration of a state of emergency related to a California wildfire. The statutory provision also requires the California Insurance Commissioner to issue a bulletin informing insurers of the ZIP codes subject to the moratorium.

This month, Commissioner Ricardo Lara did just that by releasing Bulletin 2020-11 (the “Bulletin”) and a corresponding press release that once again notifies insurers of the one-year moratorium and sets forth the ZIP codes that are off limits in terms of notices of cancellation or non-renewal due to wildfire risk. In this alert, Michelman & Robinson explains how the Bulletin (not to be confused with a similar bulletin the Commissioner sent out last year) affects insurance companies and insureds, alike, and when the moratorium effectively began.

Q. What does the Bulletin provide?

A. Simply put, the Bulletin acts as a notice to insurers explaining that they are precluded from cancelling or non-renewing policies of residential property insurance held by insureds in certain ZIP codes within California for one year. Of note, it is the statutory provision (section 675.1(b)(1) of the California Insurance Code), not the Bulletin, that triggers this prohibition upon the Governor declaring a state of emergency due to wildfire(s).

Q. When does the moratorium begin?

A. It is important to stress that for many insurers, the Bulletin is their first notice of the requirements of the moratorium. Nonetheless, the effective date of the one-year prohibition is the date the Governor declares a wildfire-related state of emergency, not the date of the Bulletin itself. As such, insurers may find themselves in the position of having already issued cancellation or non-renewal notices and now having to retract them.

Q. Who does the Bulletin affect?

A. According to Commissioner Lara, the Bulletin impacts more than 2 million policyholders affected by wildfires. The specific ZIP codes covered by the moratorium, along with the corresponding effective dates (based on the declaration of each state of emergency to date), are listed in the Bulletin.

Q. Under what authority is Commissioner Lara acting?

A. The Bulletin issued by Commissioner Lara comes in the wake of Governor Newsom’s four separate state of emergency declarations made in August and September of 2020, all of which relate to several wildfires that ravaged California. The Commissioner’s action is pursuant to the law (section 675.1 of the California Insurance Code), which requires him to notify insurers of the moratoria that began on the date of each respective state of emergency and end one year later (e.g., in August and September of 2021, depending on the particular wildfire, state of emergency, and ZIP code).

Q. Who should insurers contact for information regarding the Bulletin?

A. The Bulletin directs all insurers with questions to contact Risa Salat-Kolm, an attorney within the enforcement bureau of the California Department of Insurance. She can be reached by email at [email protected]. Of course, carriers can also reach out to the insurance professionals at M&R for advice and counsel.

In the meantime, we will continue monitoring Commissioner Lara’s office for news on this and any future bulletins he may issue down the road.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Michelman & Robinson recently posted a blog about two Californians (a medical doctor among them) and three others (one from New Jersey and two Marylanders), all of whom admitted to their part in a conspiracy-in violation of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA)-that involved multiple layers of kickbacks. EKRA enforcement continues with the indictment last month of the Chief Executive Officer of a Costa Mesa-based substance abuse treatment and counseling center.

The latest EKRA action is particularly interesting because it involves what was likely intended to be a safe harbor marketing services agreement between the facility in Costa Mesa and a marketer-an agreement that the government characterizes as a “sham.”

This is the first known criminal charge to test the “personal services arrangements and management contracts” safe harbor of EKRA. According to the Indictment filed on September 16, the Costa Mesa center paid the marketing company a bi-monthly flat fee to bring detox-eligible patients in the door. The Indictment does not specify the terms of the agreement or other factors relevant to the application of the safe harbor. That being said, the contract between the Costa Mesa facility and marketing firm-as described in the Indictment-looks to be consistent (at least on its face) with some of the EKRA safe harbor requirements, though the actions as alleged against the Costa Mesa CEO may serve to undercut the agreement.

For providers and marketers in this space, especially those that have attempted to restructure their marketing contracts in order to comply with EKRA, this most recent EKRA case should be top of mind. Bottom line: if the indictment against the Costa Mesa CEP serves to reduce the scope of personal services arrangements and management contracts otherwise in line with existing safe harbor requirements, those attempting in good faith to comply with EKRA might suddenly find themselves in jeopardy for actions taken before this new wave of enforcement became public.

M&R will continue to monitor this criminal action going forward.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Congress enacted the Eliminating Kickbacks in Recovery Act (EKRA) back in October 2018-legislation that prohibits the payment of kickbacks in exchange for patient referrals to substance use treatment providers. Nearly two years later, a handful of men who ran a triple kickback scheme are amongst the first to plead guilty for violating the law.

Two Californians (a medical doctor among them) and three others (one from New Jersey and two Marylanders) have admitted to their part in a conspiracy that involved bribing individuals suffering from substance use disorders to enter into drug rehabilitation centers-including a California facility that was owned and operated by the physician-in exchange for cash.

Three participants in the scheme ran a “marketing company” that entered into contracts with rehab clinics nationwide and maintained a network of recruiters that identified and recruited (read: paid) insured individuals to receive treatment at those facilities. The participating patients received kickbacks from the recruiters (sometimes several thousand dollars’ worth), and the recruiters in turn received kickbacks from the marketing company. The kickback chain continued as the marketing company was paid up to $10,000 per patient by the rehabs.

This is a textbook example of the treatment industry ills that EKRA is meant to combat:  here, multiple layers of  kickbacks were paid all the way down the line from treatment facilities, to marketers, to individual recruiters, and then to patients.

The conspiracy, which has cost health insurers millions of dollars and will likely result in prison time for the wrongdoers, is particularly newsworthy given the lack of known enforcement of EKRA since its enactment, as well as the sophistication of the nationwide “body-brokering” enterprise that led to the criminal charges.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

The U.S. Supreme Court has delivered great news to the LGBTQ community nationwide. In this week’s landmark decision captioned Bostock v. Clayton County, the high court ruled that federal law-namely, Title VII of the Civil Rights Act of 1964-prohibits employment discrimination against LGBTQ workers. To that point, Justice Neil Gorsuch, writing for the 6-3 majority, stated, “An employer who fires an individual merely for being gay or transgender violates [the law].”

In his opinion, Justice Gorsuch went to great lengths to establish that the text of Title VII-its words alone-bars employment discrimination on the basis of sexual orientation or gender identity. The following passage cuts to the chase:

“In Title VII, Congress outlawed discrimination in the workplace on the basis of race, color, religion, sex, or national origin. Today, we must decide whether an employer can fire someone simply for being homosexual or transgender. The answer is clear. An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.”

In fact, the majority agreed that, “It is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”

By way of example, Justice Gorsuch considered a hypothetical involving an employer having two employees, both of whom were attracted to men. These workers were identical in all respects, other than the fact that one was male and his colleague was female. With that as his premise, Justice Gorsuch explained that if the employer terminated the man simply because he was attracted to other men, the employer would, by definition, be discriminating against the male employee for traits or actions it otherwise tolerated in the female worker. Stated another way, if the employer were to allow female employees to be attracted to men but deny that same right to male counterparts, it would be engaging in sex discrimination by treating men and women differently.

A Somewhat Surprising Outcome

Given the Supreme Court’s conservative makeup, the decision in Bostock may be surprising to some; indeed, Justices Samuel Alito, Brett Kavanaugh, and Clarence Thomas fervently dissented. Nevertheless, Justice Gorsuch (a Trump appointee), joined by Chief Justice John G. Roberts Jr. and Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan, issued a major victory for LGBTQ rights. Now, the federal law forbidding workplace discrimination on the basis of sexual orientation or gender identity is more aligned with the laws of more liberal states, like California.

That being said, it is important not to overstate the reach and meaning of the opinion in Bostock. Justice Gorsuch confirmed that the decision is to be read narrowly, and in terms of workplace rights, he wrote, “We do not purport to address bathrooms, locker rooms or anything else of the kind . . . Whether other policies and practices might or might not qualify as unlawful discrimination or find justifications under other provisions of Title VII are questions for future cases . . ..”

In addition, it is unclear whether Bostock will entirely ban workplace discrimination on the basis of sexual orientation or gender identity. The reason: the Supreme Court is considering whether employers with religious objections to LGBTQ people should be exempt from anti-discrimination laws.

Be that as it may, gay, bisexual, and transgender individuals have good reason to celebrate, as the Bostock case extends workplace protections to millions of people across the nation. For their part, employers must be mindful of the Supreme Court’s ruling when making personnel decisions.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Most lawsuits must be filed within a prescribed period of time, and the deadline for initiating a civil action is known as the statute of limitations. While the statute of limitations varies depending upon the type of claim contemplated in any given matter, as a rule, if it “runs out” prior to the filing of a complaint, the case is no longer valid.

Sometimes, however, the statute of limitations is suspended, or “tolled,” for a while before it begins to run again. There are several different reasons tolling may occur, one of which was triggered in response to the onset of the coronavirus crisis. In fact, on April 6, 2020, the Judicial Council of California adopted Emergency Rule No. 9, which effectively suspended the statute of limitations on all civil cases in California until 90 days after Governor Gavin Newsom lifts the current state of emergency-this in order to protect parties who have causes of action that accrued before or during the COVID-19 pandemic.

Given that many courts statewide are beginning once again to process civil filings, Rule 9 was recently amended for clarification purposes and to specify new start dates for statutes of limitations. Michelman & Robinson explains how this may affect your civil case.

Q. Does Rule 9 only apply to statutes of limitation?

A. No, the amendment states that the emergency rule also applies to “statutes of repose,” which are similar to statutes of limitations, but establish different filing deadlines for certain civil cases, such as lawsuits arising out of defects in construction projects.

Q. What is the net effect of the amendment to Rule 9?

A. Effective immediately, Rule 9 has been amended to toll the statutes of limitation and repose as follows:

  • For causes of action having statutes of limitation or repose that exceed 180 days, the statutes are tolled until October 1, 2020
  • For causes of action having statutes of limitation or repose that are 180 days or less, the statutes are tolled until August 3, 2020

Q. What causes of action does Rule 9 apply to?

A. The rule is broad and applies to all civil causes of action, including special proceedings that are of a civil nature.

Of course, M&R’s litigators are here to answer any questions you may have about statutes of limitations or repose or, more broadly, civil litigation in the wake of COVID-19.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.