California Lawyer
Verdict upheld in recent Taser International case
In a recent case (Rosa v. Taser Intl., Inc.), a court of appeal upheld a verdict for Taser International, holding that under the circumstances of the present litigation, the manufacturer did not have a duty to warn of risk that application of a stun gun to humans could cause fatal levels of metabolic acidosis. The court also held that the manufacturer's failure to test for risks related to acidosis before distribution of the product did not demonstrate a lack of exercise of due care. See the full text of the case here.

This lawsuit is one of many, like the one reported below in our December 2008 issue, brought against Taser International, the manufacturer of the ubiquitous Taser weapon deployed by law enforcement officials.

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CA Court of Appeal cracks down on collectives
The California Court of Appeal has upheld a local Los Angeles ordinance restricting medical marijuana collectives, which were profiled below in our April 2010 cover story.

Check out the details of 420 Collectives v. City of Los Angeles, 207 Cal.App.4th 703 (2012) here.

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California unlikely to to meet prison population reduction requirement
It appears that the state is unlikely to meet its June 2013 deadline for the court-ordered reduction in California's prison population. Though the state made major headway since October when it began sending nonviolent felons to county jails instead of state prisons, that progress has since slowed down. As nonviolent offenders leave the state system, prison officials say, finding ways to decrease the inmate count has become increasingly hard.

Originally, the U.S. Supreme Court mandated that California's prisons not be overcrowded by more than 137.5 percent, but state officials say they will ask for a new cap of 145 percent. According to the Los Angeles Times, the prisons have until August 17 to come up with a schedule for identifying prisoners "'unlikely to reoffend or who might otherwise be candidates for early release' and to detail other ways to hasten the emptying of double-bunked cells."

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Chevron-Ecuador brawl escalates on Canadian soil
The long-running legal brawl between Chevron and a group of indigenous people from the Lago Agrio area of Ecuador is in full swing on Canadian soil since the plaintiffs filed suit against Chevron Canada Ltd. in May. The plaintiffs hope that an Ontario Superior Court judge will rule that Chevron must use its Canadian assets to cover the $18.3 billion judgment handed down by their country's court system last year, according to The Globe and Mail.

The latest court contest, which is scheduled for December, will focus on company structure, as Chevron Canada asserts that it is independent and should not have to pay for a judgment leveled against its U.S. parent. Last week, Chevron's legal team in Ontario filed affidavits claiming that the company's Canadian branch operates without financial help from its U.S. counterpart, though they said they are "overseen" by the San Ramon-based headquarters in California.

Meanwhile, the AP reports that the Manhattan judge who once called the Ecuadorean trial fraudulent issued a ruling in late July stating that it's too soon to say that the judgment can't be enforced in New York.

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Cities May Sue Over Redevelopment Money
The League of California Cities threatened to sue over a new budget provision - trailer bill AB 1484 - that lets the state keep local tax revenues if it believes that city governments are keeping too much money formerly slated for redevelopment, reports the Sacramento Bee.

The new state budget relies on $1.4 billion in revenues from former redevelopment assets and $1.7 billion in property taxes that would have gone to the now shuttered redevelopment agencies.

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US Supreme Court Bars Mandatory Life Terms for Youth
States may not automatically impose mandatory life sentences without parole on juveniles, even those convicted of taking part in a murder, the U.S. Supreme Court ruled, reports the New York Times. The 5 to 4 ruling deemed such sentences cruel and unusual punishment. Nearly 2,500 juvenile offenders in the United States are serving life terms without parole.

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Medical Marijuana Crackdown Was Locally Hatched
The crackdown that shuttered hundreds of storefront shops and large-scale medical marijuana growers in certain regions was a homegrown request from local governments, with a boost from California's U.S. attorneys, not a top-down directive from the White House, reports the Daily Journal.

Responding to complaints from city and county officials and residents who opposed medical marijuana, representatives for the state's four U.S. attorneys last year held a series of joint meetings to develop a response.

After the proposed campaign was drawn up, Eastern District U.S. Attorney Benjamin B. Wagner, whose district spans 15 counties from Bakersfield to the Oregon border and who sits on an advisory committee to U.S. Attorney General Holder, went to Washington, D.C. to personally present the plan to Holder and other top Justice Department officials.

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Jury Awards Plaintiff in Spread of Herpes Case
An Oregon jury awarded $900,000 to a woman who said a retired dentist infected her with genital herpes, in a rare case in which a dispute over a sexually transmitted disease went to a jury trial, reports the Associated Press.

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CalPERS Suit Against Rating Agencies Stands
San Francisco Superior Court Judge Richard Kramer denied S&P and Moody's motion to dismiss on First Amendment grounds CalPERS' negligence claim because the pension fund had established a prima facie likelihood that its lawsuit would succeed, so the state's anti-SLAPP law doesn't apply.

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Gentler Response to UC Protests Urged
The dean of UC Berkeley Law School and the university's general counsel urge UC administrators and police to adopt a gentler response to student protests, including respecting civil disobedience and avoiding blind adherence to rules and regulations, reports the San Francisco Chronicle. Their reccomendation followed a widely denounced police pepper spraying of UC Davis protesters and the beating of their UC Berkeley counterparts.

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Ecuadorans Sue Chevron in Canada

Ecuadoran plaintiffs have sued Chevron in Canada for refusing to pay the $18 billion judgment imposed on the oil giant in their homeland for environmental damage to the rain forest, reports the San Francisco Chronicle.

Chevron contends that the suit is a shakedown and the verdict was the result of judicial corruption in Ecuador. The plaintiffs sued in Canada in an effort to seize Chevron assets there. The company has extensive operations in Canada.

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Conflicts Among Backers Still Hamper Clean Energy Push
Agencies such as the Bureau of Land Management and the California Energy Commission have been trying to head off conflicts between conservationists and renewable energy developers over clean energy projects, reports the Daily Journal. But lawyers working on such projects say these efforts have so far failed to blaze an easier path to renewable energy development.

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District Judge Strikes Down NLRB Rule on Unionizing
Judge James Boasberg of the Washington, D.C. federal district rebuked a National Relations Board panel for approving without a quorum a new rule that shortens the time between filing for a union election and the actual voting, reports the Daily Journal.

Without its lone Republican member, the panel had voted (2 to 0) to implement the rule starting April 30. Management lawyers oppose the new rule, arguing that it does not give businesses enough time to lobby employees against unionizing.

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Regional Church Backs Minister in Same-Sex Weddings
Instead of getting a public rebuke for officiating over several same-sex weddings, the Rev. Jane Adams Spahr of San Francisco received applause and tributes from the regional assembly of the Presbytery of the Redwoods, a symbolic rejection of the national Presbyterian Church USA's censure of Spahr, reports the San Francisco Chronicle.

While the censure will remain in the church's national records, regional Presbyterian officials believe this was the first time a local body rejected a national ruling on lesbian and gay issues.

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White House Threatens to Take Back Bullet Train Funding
The White House is threatening to take back $3.3 billion in federal grants to California to start construction of a bullet train, if the Legislature does not appropriate the state's share of the funding by June, reports the Daily Journal.

Gov. Jerry Brown wants to start building this year a $6 billion track segment running from Bakersfield to Fresno (The complete $68 billion project will link Los Angeles and Anaheim to San Francisco). But key senators want to hold more public hearings on the controversial project and are balking at the Transportation Department's deadline. It is also not clear whether the department can legally rescind the grants.

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Judges Split Over Halting Courthouse Construction
While Gov. Jerry Brown due to budget difficulties wants to save $240 million by delaying new court construction, members of both the establishment California Judges Association and the influential splinter group Alliance of California Judges are divided over whether to halt the construction projects, reports the Daily Journal.

Many judges from the smaller courts around the state are pushing for the continuation of the building projects financed by the courthouse construction fund, which takes in some $321 million annually in court fees and penalties. But judges from larger courts want to use the money to keep existing courts open. All fear that like last year, the state will divert the funds to pay for its general obligations. Already, Brown, in addition to halting court construction, is pushing to cut $544 million from the trial courts and $300 million from their reserves, reports the Sacramento Bee.

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Antibribery Law Bites Top U.S. Firms
The antibribery Foreign Corrupt Practices Act of 1977, which Wal-Mart was recently accused of violating in Mexico, has bitten other top U.S. corporations such as Pfizer, 3M, Alcoa, and Goldman Sachs, which are now facing federal inquiries for possible violations, reports the Washington Post.

Facing increasing FCPA enforcement, the corporate community has launched a well funded lobbying effort in Congress to revise the law. But the outcry over Wal-Mart's alleged bribery of Mexican officials appears to have stalled the campaign.

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Worry Grows Over Municipal Debts

Municipal finance officers are growing concerned that ambiguity in the state law that dissolved California’s 425 redevelopment agencies could force cities and counties to default on bond payments that are coming due this year, reports the Daily Journal.

Under the state law upheld by the California Supreme Court last year, some $5 million in property tax revenue once held by redevelopment agencies now flows to county auditors to disburse. But redevelopment bond debts totaling roughly $30 billion stayed with the cities or counties as “successor agencies.” State legislators are trying to clean up the ambiguity in the law to make sure municipalities can service their debts.

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Green Deals May Dry Up as CA Nears Clean Energy Goals
Power companies are getting so close to the state-mandated goal of purchasing 33 percent of the energy that they distribute from "green" sources that they may not need to buy much more from such sources. This could be bad news for the state's renewable energy industry-and for attorneys who facilitate deals to finance utility-scale renewable energy projects, reports the Daily Journal.

The state's "renewable portfolio standard" requires utilities to meet certain benchmarks to reduce California's carbon footprint. This led to a flurry of green energy purchasing, so that utilities cumulatively already have 75 percent of the clean energy supply they need to meet state requirements by 2020, the California Public Utilities Commission reported.

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ABA Body Nixes Nonlawyer Ownership of Law Firms
To make sure that private investors don't influence legal decisions to the detriment of clients, the American Bar Association's Commission on Ethics 20/20 won't recommend policies allowing nonlawyer ownership of law firms.

Composed of judges, law ethics professors, and liaison members from the ABA governing board, the ethics body earlier already rejected some forms of nonlawyer ownership allowed in other countries, including passive, outside nonlawyer investors, reports the Daily Journal.

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LegalZoom Files for Confidential IPO under JOBS Act Inc., the Glendale-based online service that provides legal documents for users to draft on their own, has tapped Sheppard Mullin Richter & Hampton to file confidential papers for an initial public offering, the Daily Journal reports. Sensitive information guarded by the firm can remain private until closer to a the road show.

Under the JOBS act signed by President Barack Obama, companies with less than $1 billion in revenue can confidentially file a draft registration statement to the Securities and Exchange Commission before publicly releasing the document 21 days before the road show. Lawyers predict technology companies are most likely to take advantage of the provision.

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Feinstein Wants to Stop "Drive-By" Lawsuits Against Businesses
Senator Dianne Feinstein (D-CA) asked state Senate President Pro Tem Darrell Steinberg (D-Sacramento) that the state legislature do something to stop allegedly abusive lawsuits by a small group of plaintiffs lawyers against businesses for noncompliance with ADA regulations guaranteeing ease of access for the disabled, the San Francisco Chronicle reports.

Last year, a bill that would give business owners 120 days to fix violations from the time a demand letter was received was voted down. Senate GOP leader Bob Dutton is pushing for a similar bill, reducing the time allowed to 90 days.

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CA Supreme Court Clarifies Rule on Breaks
Employers must make meal-and-rest breaks available to employees but do not have to make sure they take them, the state supreme court unanimously ruled in Brinker v. Superior Court (S166350).

The opinion provides guidance for California employers but does not end the litigation involving Brinker's International Inc., the restaurant chain hit in 2004 with a class action suit on behalf of 60,000 current and former employees who claim they were not given proper breaks, reports the Daily Journal.

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Patent Cases Going to Pilot Program

More California judges are joining a pilot program designed to train interested judges in the complexities of patent law, reports the Daily Journal. The goal of the pilot program is to reduce the nation's ever-growing backlog of intellectual property cases, which can be notoriously technical and time-consuming.

From September last year to February, 21 patent cases have been reassigned to four judges in the Central District based in Los Angeles who are in the pilot program. In the Southern District based in San Diego, 20 patent cases have been reassigned to six judges.

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Masking Sender of Internet Ad Violates State's Anti-Spam Law
Commercial email that uses a sender domain name that doesn't identify the actual sender on its face or isn't readily traceable to the sender violates California's anti-spam law, the California Court of Appeal ruled last February.

The appellate court in Balsam v. Trancos, Inc. affirmed a trial court judgment in favor of the plaintiff, requiring email marketers, including those that hire affiliates, to make sure that sender information containing sender names, domain names, and email addresses complies with the state's anti-spam law.

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Second Circuit Rebuffs Judge Rakoff
In a sharply worded opinion, a three-judge panel of the Second Circuit U.S. Court of Appeals stayed the Securities and Exchange Commission's case against Citigroup on the grounds that the bank and the agency have a good chance of overturning U.S. Senior District Judge Jed Rakoff's February rejection of their $285-million proposed no-fault settlement. Rebuking Rakoff, the panel affirmed the SEC's argument that the former had no business assessing the public interest in the case.

Judge Rakoff last November rejected the SEC's settlement with Citigroup. Citigroup had allegedly created a misleading fund in which the investors lost more than $700 million while Citigroup earned $160 million. Rakoff stated that the deal

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Judicial Council Scraps Shaky $2B CCMS Project
California?s Judicial Council has scrapped the controversial $2-billion Court Case Management System (CCMS), which would have linked courts in all 58 counties. The reason: There?s no money to deploy the ambitious system, reports the Daily Journal.

The council, headed by the chief justice, spent nearly $500 million on the project over the last ten years. It has been installed in only a few of the 58 trial courts in the state. Although the judiciary will spend $8.6 million just to wind down the project, it?s not clear if any parts of it will be retained.

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Judge Dismisses Lawsuit Against NY Law School
New York Supreme Court Judge Melvin L. Schweitzer dismissed a lawsuit lodged by nine graduates of New York Law School who accused the latter of misleading them about their employment prospects after graduation, reports the New York Times. The judge ruled that the suit had no merit and the case was essentially one of caveat emptor.

The decision is a setback for several similar lawsuits filed across the country. For the second consecutive year the number of law school entrance examinees has sharply declined, reflecting a view that legal market is sluggish. Most graduates of top law schools continue to get jobs, but those from less prestigious law schools are having a tough time finding employment.

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China's Lawyers Must Swear Loyalty to Party
China's Ministry of Justice ordered newly licensed lawyers or those who are renewing their licenses to take an oath declaring their support for the leadership of the ruling Chinese Communist Party, reports Bloomberg. Lawyers are required to take such an oath within three months of receiving their certificates, according to the ministry, and are also ordered to "strive for the cause of socialism," according to the oath.

The move takes place amid a push by the party to maintain its control across all segments of society. The party needs to "resolutely oppose all erroneous political tendencies contrary to the party's basic line," Vice President Xi Jinping said in a March 1 speech. The oath "fully reflects the new requirements from the CPC Central Committee and the State Council," the ministry said in the statement, without elaborating.

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Feds Crack Down on Rigged Foreclosure Bids
A federal crackdown on foreclosure bid-rigging has led to a flurry of indictments in recent months, especially in hard-hit areas such as Stockton and Sacramento, reports the Daily Journal. U.S. Attorney Benjamin B.Wagner of the Eastern District of California has prosecuted several cases, as part of a crackdown by President Barack Obama's Financial Fraud Enforcement Task Force. Foreclosed properties have piled up in California, which has the second highest foreclosure rate in the country, behind Nevada.

Bid-riggers conspire not to bid against a designated bidder among them at a public auction. After the designated bidder buys the property, the group then holds a private auction, at which each conspirator bids the amount above the public auction price each is willing to pay. The highest bidder gets the property. The difference between the price at the public auction and that at the second auction is the group's illicit profit, whichA federal crackdown on foreclosure bid-rigging has led to a flurry of indictments in recent months, is divided among the conspirators in payoffs.

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Panel Merges NFL Concussion Lawsuits
A federal judicial panel merged four lawsuits started by hundreds of former N.F.L. players who have sued the league and helmet makers for allegedly hiding critical information about the dangers of concussions and hits to the head, reports the New York Times.

The United States Judicial Panel on Multidistrict Litigation consolidated three suits filed in the Central District of California and a fourth one filed in the Eastern District of Pennsylvania. More than a dozen suits have been filed since July on behalf of hundreds of retired players, including stars like Jim McMahon and Jamal Lewis, as well as some wives of players. Some of those suits, including those filed in Georgia, Florida and New Jersey, could be added to the combined suit.

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Death Penalty Foes Submit Enough Signatures
Opponents of the death penalty have turned in 800,000 signatures in an effort to qualify a repeal initiative for the November ballot, reports the Daily Journal. The number is well above the 504,000 required by the Secretary of State's office and will now proceed to verification.

Supporters of the SAFE California Act say a repeal of capital punishment would save the state hundreds of millions of dollars, the first $100 million of which should go towards solving murder and rape cases. The death penalty, they argue should be replaced by life in prison without the possibility of parole.

Nearly a quarter or the courts' time is spent reviewing death penalty cases. The review and appeals routinely span decades, and no one has been executed since 2006, when a federal judge set a moratorium to review the constitutionality of the lethal injection process. Recent polls showed a majority of voters still support capital punishment.

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SF Questions DUI Breathalyzer Tests
San Francisco's district attorney and public defender are jointly investigating the police department's use of preliminary alcohol screening devices?breathalyzers?that had not been properly tested for accuracy, the Daily Journal reports.

Both officials noticed that since at least 2006, logs of accuracy tests of the police's field breathalyzers show exact matches between sample readings and the actual tests. "It's mathematically impossible" to consistently have the exact same result, said Public Defender Jeff Adachi. "Until the review is done we don't know the number of cases that could be affected," District Attorney George Gascon said.

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Law Review Circulations Plunge
No major law review had more than 2,000 paying subscribers in 2011, according a George Mason law professor Ross E. Davies, who studied U.S. Postal Service data. Starting last year, the postal system required law reviews to track and report their circulation numbers.

The Harvard Law Review remains the top journal, but its paid circulation has dropped from 10,000 in the '60s and the '70s to just 1,896 last year. While the Stanford Law Review website claims 2,600 subscribers to the print edition, postal records showed only 974 paid subscribers and a total 1,206 copies printed, Davies reported.

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$8.5 Billion BofA Settlement Sent Back to State Court
Last year's Bank of America settlement with investors for $8.5 billion over losses in mortgage-backed bonds has been sent back to state court. The U.S. Court of Appeals for the Second Circuit ruled that the Class Action Fairness Act of 2005 requires the remand to the New York state Supreme Court.

Bank of America, which bought Countrywide Financial Corp. in 2008, settled with large hedge funds, but some investors objected and succeeded in having it removed to federal court. The case then headed to the Second Circuit on interlocutory appeal.

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Del Norte DA Courts Trouble

After freeing himself from the grip of methamphetamine addiction and winning in 2010 on an anti-meth platform, Del Norte County District Attorney Jon Alexander seems to be undermining his effort at self-reinvention with several legal and ethical lapses, reports the Sacramento Bee.

Alexander is now facing an FBI investigation for possible bribery, on top of having been disciplined by the State Bar with multiple suspensions for misdeeds. He is currently under bar probation until May 2013. Alexander last year charged some of his former defense clients, ignoring potential conflicts of interest. He also allegedly tried to "sell or trade" his endorsement for a county public defender position, and dropped all charges against the client of a lawyer who loaned him $6,000 for hair transplants. Alexander said he repaid the loan before he took office and denied showing favoritism.

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Tit for Tat Continues in Chevron-Ecuador Case
The bare-knuckle fight keeps going. An international arbitration panel ordered Ecuador to stop the enforcement of the $18-billion judgment handed down in 2011 by an Ecuadorean court against Chevron for environmental and punitive damages arising from its oil operations in the country's Amazon region.

Convened under the authority of the U.S. Ecuador Bilateral Investment Treaty and administered by the Permanent Court of Arbitration in The Hague, the three-person tribunal ordered El Salvador's judicial, legislative, and executive branches to prevent any enforcement of the multimillion-dollar judgment.

Meanwhile, plaintiffs counsel, the law firm Patton Boggs, sued Chevron in federal court in New Jersey, accusing the company of improperly obtaining a preliminary injunction from U.S. District Judge Lewis Kaplan last year.

Bringing the suit pro se and in its own name, Patton Boggs claimed that during the six months the injunction was in force, before it was vacated by the Second Circuit, it "choked off [plaintiffs'] ability to obtain funding" that would have allowed them to keep pursuing their case.

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9th Circuit Allows DNA Testing of Arrestees
California law enforcers can collect DNA samples from adults arrested for felonies but have not yet been convicted, a sharply divided 9th U.S. Court of Appeals panel held, reports the Daily Journal.

Critics of the practice fear that DNAs of acquitted arrestees might later be falsely matched to a sample found at a crime scene. But upholding a decision by U.S. District Judge Charles R. Breyer of San Francisco, the 2-1 ruling found that the practice does not violate the Fourth Amendment's ban on unreasonable searches and seizures. It also affirms Proposition 69 of 2004, which makes arrestee DNA testing mandatory.

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Presbyterian Pastor Censured for Marrying Same-Sex Couples
The Presbyterian Church's version of the U.S. Supreme Court censured the Rev. Jane Adams Spahr for marrying 16 same-sex couples during the brief time such marriages were legal in California.

A lower court rebuke of the 69-year-old Spahr, a lesbian, was upheld by the General Assembly Permanent Judicial Commission, which ruled that she violated the church's constitution and her ordination vows when she officiated at the same-sex weddings, reports the Los Angeles Times.

The tribunal also warned that ministers who officiate at such weddings could face church sanctions. Spahr, however, said she would continue to marry gay and lesbian couples despite the verdict.

The ruling widens a fissure within the church over the inclusion of gays and lesbians. Last spring, the Presbyterian Church (USA) approved the ordination of gays and lesbians as ministers. This summer, the church's general assembly is expected to debate the definition of marriage and whether its ministers can officiate at same-sex marriages.

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Fraud Claims Against BofA Dismissed
A federal judge threw out an investor's lawsuit that claimed Bank of America's 2008 acquisition of home loan giant Countrywide Financial amounted to a fraud on creditors, the Daily Journal reports.

U.S. District Court Judge Mariana Pfaelzer dismissed with prejudice plaintiffs' claim of successor liability and fraudulent conveyance, ruling that Bank of America is not liable for judgments made against Countrywide.

She described plaintiff's argument that the deal was structured to defraud "maddeningly circular."

The decision saves BofA from having to make payments as investors chase Countrywide for billions of dollars for alleged fraud.

The dismissal could have an impact beyond the plaintiff Allstate Insurance Co. More than a dozen similar cases-a significant percentage of the Countrywide buyout litigation--are in Pfaelzer's court, and other courts could cite her ruling.

Plaintiffs lawyers also may have to review their settlement options.

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L.A. Law Now Requires Condoms in Porn Films
Tommy Gunn and Luscious Lopez, as well as other porn film performers, must now wear condoms if they shoot films in the City of Los Angeles, according to an ordinance passed by the city council and signed into law by Mayor Antonio Villaraigosa in January.

The first of its kind in the nation, the ordinance affects L.A.'s San Fernando Valley, the capital of the multibillion-dollar porn industry. Porn film producers oppose the law, claiming that adult performances that use condoms do not market as well as unprotected sex.

The ordinance doesn't apply to film shoots in certified sound stages that don't require permits. For now, porn film studios, which often use private homes in San Fernando Valley, can choose to film in the county's other 87 cities or in its unincorporated parts.

A pro-condom initiative got on the ballot for a special election in June but the City Council, certain of voter approval for the measure, passed the ordinance to avoid spending $4 million on the special vote.

AIDS prevention groups are gathering signatures to put a countywide measure on the ballot for November, but they also want to put pressure on the L.A. County Board of Supervisors to pass its own law mandating condom use in the adult film industry.

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CPUC to Mull Letting Municipalities Opt Out of Smart Meters
Municipal governments also won a small victory when the California Public Utilities Commission recently decided to allow individual PG&E customers to choose analog power meters instead of Smart Meters, the Daily Journal reports.

The commission also agreed to consider a new process by which local governments and other groups also could be allowed to opt out of the new Smart Meter, an issue it previously sidestepped.

Smart Meters digitally monitor customers' power usage and send the data to utilities via radio antennas.

PG&E started installing the new meters in 2006, but some customers complained that the gadgets could be causing health problems because of the radio antennas.

The CPUC decision allows individuals to opt out but pay additional fees to use analog meters. It's not yet clear how a communal opt-out would be paid for.

It's also not yet clear how to accommodate customers who wish to use Smart Meters in municipalities that opt out of them.

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Patent Reform Could Scare Off Investors from Small Biotech
The America Invents Act's switch from a first-to-invent to a first-to-file patent claim system favor biotech companies with deep pockets but sets back struggling startups because it forces the latter to put their resources behind patent filings earlier in the R&D process, reports the Daily Journal.

This also means biotech startups with limited funds will have to defend the validity of their patents and bear those legal costs sooner than in the previous first-to-invent system. Venture capitalists could, as a result, end up investing less seed capital in biotech startups than they used to.

Already, investment in startups and novel drug prospects is waning as venture capitalist are wary of medicines and medical devices that require hundreds of millions of dollars to develop and bring though clinical testing and a lengthy US Food and Drug Administration approval process.

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Homeowners Win Chinese Drywall Settlement
A proposed class-action settlement reached in a Louisiana court could compensate thousands whose homes were allegedly ruined by contaminated drywall imported from China, the New York Times reports.

Knauf Plasterboard Tianjin, a Chinese affiliate of Germany's Knauf Gips KG, would give cash settlements or pay to replace the drywall in affected homes. Some plaintiffs lawyers said the settlement cost could reach $1 billion.

Thousands of lawsuits were filed against KPT and other Chinese makers of drywall installed during the mid-2000 building boom when domestic drywall supply ran short.

Homeowners, many in Southern states, complained of rotten-egg odors and sulfuric acid that corroded pipes and electrical wiring. Some 5,200 plaintiffs alleged their homes contained the affected drywall, and about half provided evidence.

The settlement does not cover homebuilders, insurance firms, and suppliers that used KPT drywall and spent money to provide remedies on their own. KPT has reached reimbursement agreements with top homebuilders and is still negotiating with other parties.

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Class Action Suit Against American Apparel Dismissed
A Los Angeles federal judge on January 13 dismissed a shareholder class action lawsuit against American Apparel that accused the clothing company of hiding the risks it faced by hiring a largely immigrant work force, the Daily Journal reported.

U.S. District Judge Margaret Morrow said that plaintiffs failed to allege that the company made false statements to investors on the effect of an immigration raid to its productivity, and failed to show that the company made false statements about its accounting practices, which is the subject of a Securities and Exchange Commission investigation. Plaintiffs, however, prevailed on its claim that the company made false statements about its efforts to follow immigration laws.

Morrow gave the plaintiffs 45 days to amend their complaint.

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Judge Blocks Clean Fuel Rule
California's much heralded effort to reduce greenhouse gas emissions to 1990 levels by 2020 suffered a blow when U.S. District Court Judge ruled it unconstitutional and issued a preliminary injunction sought by ethanol producers. The California Air Resources Board issued the rule in 2009 rewarding marketable credits to fuel producers and distributors that emit less greenhouse gases. Those who exceed emission limits must buy the credits in order to be in the state market, raising their costs.

Judge Lawrence J. O'Neill of the district court in Fresno stated in three separate rulings that the rule discriminates against out-of-state fuel producers and tries to regulate actions-including farming methods and use of coal-fired electricity-that lie outside California's boundaries.

Ethanol producers, truckers and refiners sued separately against the regulation, claiming it would make Californians pay the highest fuel prices in the country.

The air resources board said it would appeal O'Neill's decision, arguing that while the Constitution gives Congress the power to control interstate commerce, California's Clean Air Act grants the state special power to regulate pollution and protects it from claims of interference in interstate commerce.

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UC Irvine's Inaugural Class Snaps Up Clerkships
Nearly a quarter of the UC Irvine School of Law's 2012 graduates have obtained clerkships, a higher percentage than Harvard, reports the Daily Journal.

Of UCI's 58 graduates 14, or 24 percent, landed clerkships as of the end of last year, 11 of them with federal district judges or circuit court judges. Two of the remaining three will work for U.S. bankruptcy judges and the third with an Alaska Supreme Court justice.

The number of clerkships could rise as judges were still interviewing more graduates.

According to US News and World Report statistics, the only law schools to beat UCI's 24 percent rate are Yale and Stanford.

UCI administrators attribute the school's early success to the small size of the initial class whose members all received full scholarships, the prestige of dean and founder Erwin Chemerinsky, and the interest stirred by his "experimental" law school.

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Feinstein Eases Central Valley Water Sales

Senator Diane Feinstein inserted two sentences in 1,221-page spending bill signed by President Obama last December, easing the sale of Central Valley water.

Feinstein said her action was a sensible way to move water around the state, but opponents saw it as helping the Kern Water Bank, Westlands Water District, and some well-connected agricultural interests, reported the Miami Herald.

The earmark lifts several environmental restrictions on the transfer of the federal Central Valley Project (CVP) water, which is provided at subsidized rates via a network of dams and canals stretching from Redding to Bakersfield.

The Central Valley Project Act of 1992 limited the sale of subsidized water by irrigation districts in order to prevent speculation.

As a result of Feinstein's action, customers like the Kern Water Bank could now buy federally subsidized CVP water and then sell it at a profit to urban consumers and developers in Southern California, charged the Restore the Delta Newsletter.

Feinstein argued that she wanted "more flexibility" in water distribution, but opponents like the Sierra Club said her measure would seriously worsen conflict over California water use.

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Limits On For-Profit Colleges Watered Down
Intense lobbying by for-profit colleges has diluted the Obama administration's promised regulatory plan to tightly control the flow of federal aid to the $30-billion industry.

According to the New York Times, the colleges spent $16 million on marshalling top Democrats - including Richard A. Gephardt, former House majority leader and John Breaux, the former Louisiana senator - with close ties to the White House in strategizing and pleading the industry's case.

Federal investigations found that for-profit college recruiters often lured students - most of them veterans, low-income people, and minorities - into enrolling and seeking federal student aid, but the colleges often failed to deliver promised training for jobs, leaving students with huge college debts.

The White House vowed to end the abuse by imposing tough rules hitching billions of dollars in student aid to formulas that measure student debt burdens and income after graduation. Colleges would risk losing federal aid altogether if their students weren't earning enough to start paying back their loans.

But the industry's backers reportedly met several times with White House and top Department of Education officials, despite the president's vow to curtail the inordinate influence of lobbyists.

A former education official who helped shape the original regulations to be imposed on the for-profits schools to make sure they adequately train students for jobs, said the lobbying helped water down the plan.

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State SC Strikes Down Redevelopment Agencies
California's Supreme Court upheld the Legislature's dissolution of 400 redevelopment agencies in order to use $1.7 billion from the agencies to help bridge the state budget gap.

The high court also struck down a companion measure that would have allowed the agencies to continue by paying a part of their funds to the state. Chief Justice Tani Cantil-Sakauye dissented in part in the 6-1 ruling, writing that the majority went too far by also nixing the companion measure, the Daily Journal reported.

Redevelopment agencies had sued, claiming that the bills signed into law as part of the state budget, violated Proposition 22, which prohibits the state from dipping into local funds.

Some experts say the Legislature could still preserve the agencies while balancing the budget by reforming how the agencies are funded.

The agencies will dissolve by February 1, but they will be allowed to meet existing obligations, and their assets will be handed to "successor agencies." Details of the process have yet to be clarified.

What will happen to enforceable obligations to investors and localities is not clear. Lawyers expect lawsuits to result from the uncertainty.

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Judge Deals a Blow to FCPA

U.S. District Judge A. Howard Matz last November tossed bribery convictions against a Southern California company and its two top executives, potentially undermining the U.S. justice department's effort to ramp up prosecutions under the Foreign Corrupt Practices Act (FCPA), the Daily Journal reported.

In a case seen as a litmus test for other FCPA, cases Matz found pervasive prosecutorial misconduct, dismissed the indictments, and vacated the convictions against Lindsay Manufacturing Co., its CEO Keith Lindsay and CFO Steve K. Lee. The case marked the first trial of a corporation under the statute and one of a few that reached a judge and a jury.

The court stated that, among other misconduct, the government team allowed a key FBI agent to testify untruthfully before the grand jury, improperly reviewed e-mail communications between one defendant and her lawyer, and inserted material falsehoods into affidavits in support of applications for search warrants and seizure warrants.

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Out-of-State Workers Must Be Paid Overtime
A federal appellate court ruled on December 14 that California overtime pay laws apply to out-of-state residents working here, the Daily Journal reported. The ruling was expected, after the state supreme court unanimously reached the same conclusion last June.

Oracle in 2003 changed its practice of exempting all of its instructors who work in many states from overtime pay when it faced a class-action lawsuit for overtime pay violations under state and federal law. But Oracle continued to face overtime claims from three instructors who live in Colorado and Arizona.

The 9th Circuit initially sided with the plaintiffs in November 2008 (Sullivan v. Oracle 547 F.3d 1177 (9th Cir. 2008)) but withdrew that ruling and asked the California Supreme Court to interpret state law (See 557 F.3d 979 (9th Cir. 2009)).

Once the state supreme court ruled against Oracle (51 Cal. 4th 1191 (2011)), the 9th U.S. Circuit Court of Appeals reversed the trial court?s previous grant of summary judgment to Oracle, holding that the company should have followed California law in paying out-of-state employees to work in the state (2011 WL 6156942).

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Feds Crack Down on Pot Dispensaries
Federal prosecutors are cracking down on medicinal marijuana dispensaries in California and several other states, after the Department of Justice issued a memo in late June clarifying that while individual medicinal pot users and their caregivers should not be the focus of prosecutions, "caregivers" do not include dispensaries. State laws conflict with federal law, which does not recognize any legal use of marijuana. Federal agents from the FBI, DEA, IRS, and the EPA have launched raids on growers and dispensaries in 16 states and Washington, DC. In California, State Sen. Mark Leno and Assm. Tom Ammiano (both D-San Francisco) called on federal authorities to stop the raids and hold consultations with states. Call off the dogs and let's sit down, Leno said.

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