Business Law Journal

On March 21, 2025, the California Supreme Court rendered a decision in Madrigal, et al v. Hyundai Motor America (S280598) regarding the following question: “Does a plaintiff who has rejected a 998 offer or allowed it to be deemed withdrawn for want of timely acceptance, but later agrees to settle before trial, necessarily avoid the postoffer cost-shifting effects of section 998?”  The Supreme Court held that a plaintiff does not necessarily avoid section 998’s cost-shifting effects.

With the growing popularity and prevalence of generative artificial intelligence, courts are increasingly being called upon to decide novel legal issues based on never-before-seen phenomena that are challenging the traditional paradigm applied to human-generated content.  And copyright law is no exception.

Following the Legislature’s 2024 amendments to Section 16600, a new spotlight has been shown down on the so-called Trade Secret Exception and the rift that has emerged over the past few years between California courts about its continued application.  Ultimately, the California Supreme Court will likely be called upon in the near future to address whether—and to what extent—an employer may include restrictive covenants in an employment agreement as necessary to protect the employer’s trade secrets.  Until it does, litigants may credibly argue that the legislature’s recent amendments to Section 16600 abrogated the exception, diminished the exception, or had no effect on it at all.  

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In VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC, the California Court of Appeal recently affirmed the importance of drafting a contract with a clear understanding of every word and clause, and the effect each has on the contract as a whole.

On September 30, 2023, California Governor Gavin Newsom signed into law Senate Bill (SB) No. 235, now codified as California Code of Civil Procedure section 2016.090, introducing a significant shift towards encouraging proactive initial disclosures in state court civil litigation. This legislative change amends California’s Civil Discovery Act to include proactive initial disclosure rules that align with those used in Federal Court. Effective for almost all civil cases filed after January 1, 2024, until January 1, 2027, this amendment heralds a new era of discovery rules in California that aim to foster judicial efficiency, transparency, and fairness in civil litigation.

The recent decision in Epochal Enterprises, Inc. v. LF Encinitas Properties, LLC, 2024 WL 358231 (1/31/24), asks the question: Will common exculpatory lease terms protect the landlord from an adverse jury verdict of gross negligence?  Ultimately, the answer is “No.”

Arbitration is a creature born of contract, and is favored as an expeditious and economical alternative to a civil lawsuit — in part due to the limited discovery available to parties in arbitration. Increasingly, however, arbitrations have increased in complexity, with discovery growing to proportions more typically seen in civil lawsuits (and likewise growing in cost). However, a California Court of Appeal has now explicitly enforced one of the limitations on discovery in arbitration, foreclosing discovery efforts from spilling over to nonparties to an arbitration unless the parties have otherwise agreed.

A federal magistrate judge in the Northern District of California recently rejected a Chinese company’s attempt to invoke China’s recent Personal Information Protection Law (“PIPL”) to limit discovery obligations in the United States.  In Cadence Design Sys., Inc. v. Syntronic AB, No. 21-cv-03610-SI, United States Chief Magistrate Judge Joseph C. Spero refused to limit the PIPL’s legal obligations exception to Chinese laws and China-recognized orders.  On June 24, 2022, the Court denied defendants’ motion for reconsideration of the Court’s earlier order compelling Defendant Syntronic (Beijing) Technology R&D Center Co., Ltd. (“Syntronic Beijing”) to produce computers in the possession and custody of defendants in China, for inspection in the United States.  While on its face China’s PIPL would seemingly prohibit production of these China-stored computers into the United States without the consent of current and former individual employees (who have refused to consent), the Court ruled that its order in the case created a legal obligation sufficient to invoke the legal obligation exception under PIPL Article 13.

Paperwork is an inevitable and often tedious part of doing business.  When that paperwork becomes routine and time consuming, the natural inclination is to skim documents or rely on industry-developed shortcuts.  While this can save you time in the short-term, doing this risks exposing you and your company to massive liability. And while you can directly control your own actions, the risk of liability does not end there.  Many companies choose to outsource that paperwork to third-parties and trust them to do their jobs. But even when you have good practices internally, when the third parties that work for you do not follow best practices, you can still be put at risk.  The recent California Court of Appeals decision in Bergstrom v. Zions Bancorporation is a clear example of how reliance on third-party agents and a third-party’s use of shortcuts can expose your company to massive liabilities. 2022 WL 1419910 (2022).

Consumer privacy continues to be an ever evolving and active area of law and California is still leading the way.  In today’s update, we discuss the latest developments in enforcement and litigation for California consumer privacy law. 

The CPRA and the Privacy Protection Agency Inches Closer

The California Privacy Rights Act (CPRA), approved by voters as a ballot proposition in November 2020, supplements and expands the current California Consumer Privacy Act (CCPA), and established the California Privacy Protection Agency (CPPA or the “Agency”), which is vested with full power and authority to enforce the CCPA (including the additional requirements added by the CPRA).  The Agency had already appointed a Board of Directors and been holding regular meetings, but has recently taken additional important steps in its formation.