Study Says Number of Farm Workers Increased in California

A recent study published by the U. C. Giannini Foundation of Agricultural Economics reports an increase in the number of agricultural employees in California.  Using data from the Employment Development Department, the authors conclude “since 1990, average employment in [California] agriculture rose 10%.”

To support their conclusion, the authors “extracted all SSNs reported by agricultural employers to EDD in 2007 and 2012, and tabulated their farm and nonfarm jobs in California.”

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The report states:

●    “Hired workers do most of the work in labor-intensive FVH agriculture.  According to the National Agricultural Workers Survey, over 85% of the state’s farm workers were born in Mexico.”

●    “Since 2010, average employment by crop support establishments has been rising by 10,000 a year.”

●    “Over 60% of crop workers employed on the state’s crop farms have been unauthorized for the past decade – 10 percentage points higher than the U.S. average of 50%.”

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Here’s the part that reminds you why we have persistent poverty in communities with an agricultural-based economy, such as Fresno County:

●    “Four counties – Kern, Fresno, Monterey, and Tulare – had over 40% of all primary farm workers”

●    “Average earnings for all workers with at least one farm employer were $18,000 in 2012,

●    “while average earnings for primary farm workers, defined as those who had their maximum earnings in agriculture, were $15,000.”

Brandon Hooker, Philip Martin, and Andy Wong, “California Farm Labor: Jobs and Workers,” in Agricultural and Resource Economics Update, July 2015 (U. C. Giannini Foundation of Agricultural Economics)

Double Bogey, LP v. Enea – Alter Ego Status Under State Law Does Not Equate with Fiduciary Status Under Bankruptcy Law

The federal courts continue to narrow the circumstances in which a person can be denied relief in bankruptcy court based on breach of fiduciary duties.  In Double Bogey, LP v. Enea, ___ F.3d ___ (9th Cir. July 22, 2015), an unpaid creditor sought to invoke nondischargeability on the grounds that the debtor, as the alter ego of his corporation, owed fiduciary obligations to the unpaid creditor.

The Ninth Circuit disagreed, holding that “the mere fact that state law places two parties in a relationship that may have some of the characteristics of a fiduciary relationship does not necessarily mean that the relationship is a fiduciary relationship under 11 U.S.C. § 523(a)(4).”

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Explained the court, “partnership law clearly and expressly imposes trust-like obligations on partners, explicitly outlining partner’s fiduciaries duties and identifying the assets of the partnership as the trust res over which partners are fiduciaries.”

There is a different result with respect to corporations.  “California’s alter ego doctrine does not explicitly create a trust relationship, either by raising existing legal duties or otherwise … Instead of creating, enforcing, or expounding on substantive duties, California’s alter ego doctrine merely acts as a procedural mechanism by which an individual can be held jointly liable for the wrongdoing of his or her corporate alter ego.”

Thus, “A doctrine which merely supplies an additional judgment defendant after liability exists does not clearly and expressly impose trust-like obligations prior to the creation of that same liability.  Therefore, we cannot conclude, as a matter of federal law, that California’s alter ego doctrine establishes that a corporate debtor’s alter ego is a trustee in that strict and narrow sense required by the Code.”

As a result, the individual, despite a finding of alter ego liability under state law, was not denied his discharge in bankruptcy. “Common-law doctrines – like California’s alter ego doctrine – rarely impose the trust-like obligations sufficient to create a fiduciary relationship under Section 523(a)(4).  Indeed the kinds of trusts typically created by operation of law – constructive, resulting, or implied trusts – never satisfy Section 523(a)(4)’s rigorous requirements.”

Double Bogey, LP v. Enea, ___ F.3d ___ (9th Cir. July 22, 2015)

Bos v. Board of Trustees – 9th Circuit Narrows Fiduciary Non-Dischargeability in Bankruptcy

Several categories of debt are excluded from relief under the Bankruptcy Code, meaning that a debtor cannot obtain a discharge for these debts.

In Bos v. Board of Trustees, ___ F.3d ___ (9th Cir. 2015), the Ninth Circuit considered whether an employer’s contractual requirement to contribute to an employee benefits fund made the employer a fiduciary of unpaid contributions.  The court held that there was no such relationship for purposes of bankruptcy law.

The case involved claims by the Carpenters’ Union against Gregory Bos and his corporation.  Mr. Bos agreed that his corporation would be bound by the Carpenters’ Master Agreement.  The employer was required to make monthly payments to the union’s trust fund based on hours of work.

Fresno attorneyThe essential facts were undisputed.  Mr. Bos had full control over the finances of his corporation.  Mr. Bos had the authority to determine whether payments were made to the union or to other creditors.  Even more, Mr. Bos signed a promissory note for the amount owed to the union.

Section 523(a)(4) of the Bankruptcy Code provides a debtor may not discharge debts due to “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”  Held the Ninth Circuit, “we have consistently held unpaid contributions by employers to employee benefit funds are not plan assets.”

Continuing with its “limited approach … in recognizing fiduciary status,” the Ninth Circuit held that unpaid contributions owed to the union were contractual obligations, not obligations arising from a fiduciary relationship involving control over property belonging to a third person.

The obligation to make payments “is in fact more appropriately classified as a contractual right to bring a claim against the employer for delinquent payments… Even if the language in the trust agreements in the promissory note sufficed to turn unpaid contributions into some form of plan assets, neither [the the corporation] nor [the individual debtor] had control over such asset prior to nonpayment.”

Therefore, the court held that the debtor did not act as a fiduciary under 11 U.S.C. section 523(a)(4).

Bos v. Board of Trustees, ___ F.3d ___ (9th Cir. 2015)

Knowledge of the law is like a deep well

Sir Edward Coke was born in 1552.  He was regarded as a great lawyer.  He was twice married, his domestic life being full of quarrels.  Coke was one of the most truculent of English lawyers, and an arch-rival of Francis Bacon.  “He was a potent element in Francis Bacon’s ruin,” says Dean Church.

Fresno lawyerOn the study of law, Coke said the following, true now for many centuries:

“Our student shall observe, that the knowledge of the law is like a deepe well, out of which each man draweth according to the strength of his understanding.  He that reacheth deepest, he seeth the amiable and admirable secrets of the law, wherein I assure you the sages of the law in former times (whereof sir William Herle was a principal one) have had the deepest reach.

“And as the bucket in the depth is easily drawn to the uppermost part of the water, (for nullum elementum in suo propio loco est grave) but take it from the water, it cannot be drawne up but with great difficultie; so albeit beginnings of this study seem difficult, yet when the professor of the law can dive into the depth, it is delightfull easie and without any heavy burthen so long as he keepe himselfe in his own proper element.”

Concealed Weapons in the Central Valley

It seems that we’re not afraid to be packin’ down on the ranch.

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Wong v. Stoler – Delay Does Not Benefit Defendants

Here’s a thorny problem.  The trial court found that the seller of a house lied to the buyer.  The buyer sought the remedy of rescission.  The trial court denied relief, in part because of events that occurred with the passage of time.

The court of appeal disagreed in Wong v. Stoler (June 23, 2015) __ Cal.App.4th ___, saying that equity favored the buyers.  The case will embolden aggressive plaintiffs’ attorneys.  Read on.

Let’s start with the facts.  The buyers purchased a 4,400 square foot house in May 2008 for $2.35 million.  The house was located at 2 Sudan Lane, San Carlos.  The sellers misrepresented the sewer hookup, and did not disclose that it was not a city connection.  The buyers first learned of the private sewer system in November 2008.

Here’s an important fact.  “By this time, much of the home was down to the studs as a result of the demolition work.”  By the time of trial, “the court reasoned that the [sellers] had purchased a new home over four years ago and had spent $100,000 in improving it, and the [buyers] had spent $300,000 improving the property and had removed a significant amount of the original landscaping.”

Fresno lawyerThe court found that the sellers acted with reckless disregard in negligently misrepresenting the material facts about the true nature of the sewer system. “The court further found that the misrepresentations affected the property’s value and that the [buyers] would not have bought the property if they had known about the private sewer system.”

Nonetheless, the trial court determined that, given the “burden that rescission would place on the [sellers],” rescission was neither a fair nor appropriate remedy.

The court of appeal saw no reason not to handle the sellers with rough hands.  Explained the court,”Under California law, negligent misrepresentation is a species of actual fraud and a form of deceit … Thus, a single misstatement as to a material fact, knowingly made with intent to induce another into entering the contract, will, if believed and relied on by that other, afford a complete ground for rescission.”

Now comes the hammer. “Where defendant has been guilty of fraudulent acts or conduct which have induced the agreement between him and the plaintiff, courts of equity are not so much concerned with decreeing that defendant receive back [ ] identical property [ ] as they are in declaring that his nefarious practices shall result in no damage to the plaintiff.”

“Persons who attempt to secure profits by deceitful means may not confidently expect to receive special consideration from courts of equity … If his fraudulent acts have resulted in disastrous financial consequences to himself, it is no one’s fault but his own, and he must sustain the necessary inconveniences thereby entailed.”

Ouch.  “We recognize that changes have been made to the property and years have transpired.  But the changes in the property were commenced before the [buyers] learned of the [sellers’] misrepresentations, and much of the time that has elapsed has been due to the [sellers] contesting the rescission … While untangling the deal may not be easy, we are unaware of any insurmountable obstacles.”

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“Thus, we remand the case to the trial court to effectuate the Wongs’ rescission … The trial court’s goal [ ] in fashioning this remedy must be, to the extent possible, to restore the Wongs to their status quo ante.”

Is this practical?  The transaction occurred in May 2008.  The trial court judgment was entered in early 2013, and the decision of the court of appeal was entered in June 2015.  How is the trial court going to be able to unwind seven years?  How are the parties going to unwind seven years?  Should we simply refer to the property as “Bleak House”?

A Deal is Deal, Except When You Pump Your Arms

When you read the cases, it’s hard not to reach the conclusion that the courts view a liability release agreement with distrust. A new high water mark in this analysis was reached in the recent decision in Etelvina Jimenez v. 24 Hour Fitness USA, Inc. (June 9, 2015) __ Cal.App.4th ___. In Jimenez, the court relied on a manager’s non-verbal gestures to defeat a release from liability.

Etelvina Jimenez joined a 24 Hour Fitness health club in Sacramento in 2009. In 2011, she suffered severe head injuries when she fell backwards off a moving treadmill and hit her head on a nearby exercise machine.

When plaintiff joined the gym, she was required to sign a membership agreement. However, Ms. Jimenez could not read or speak English. The manager “pointed to his computer screen to a figure, $24.99, indicating the membership fee, and made pumping motions with his arms like he was exercising.”

Gym-MembershipAccording to the court, plaintiff understood the “physical gestures to mean that if she paid that amount, she could use the facility.” Added the court, the manager “did not point out the release to Etelvina or make any other indications about the scope of the agreement aside from his gestures mimicking exercise and the fee.”

Etelvina believed she signed an agreement only to pay the monthly fee of $24.99.

The court held that the act of pointing at the computer screen and making a pumping motion could constitute a nonverbal gesture giving rise to a claim for affirmative misrepresentation.

Let’s say that one more time: the contract was written in English. It contained a release from liability clause. Plaintiff did not speak or read English. Nobody compelled plaintiff to sign up at 24 Hour Fitness – she could have chosen other gyms. The manager pointed at the dollar figure on his screen and “made pumping motions with his arms.” Based on this non-verbal communication, the court held that a reasonable jury could infer a misrepresentation by the manager, thereby negating the release agreement.

Explained the court, “under the circumstances, already ripe for misrepresentation overreaching, [the manager’s] gestures and pointing may well have misrepresented the nature of the document [plaintiff] signed. This is an inherently factual question for a jury to decide.”

For the life of me, I cannot understand how pointing at a dollar figure on a computer screen and pumping one’s arms could be construed as misrepresenting the terms of a contract that plaintiff was unable to read. Perhaps the legislature should revisit this issue. Perhaps gym membership contracts, like auto sale contracts, should have mandatory Spanish versions for Spanish-speaking customers.

But that’s a question for the legislature, not for the courts. Here, we have a court making a policy decision because it simply did not want to enforce the release clause.

Estate of Britel – When is a Child Not a Child?

The law is filled with rules.  Rules give guidance to judges.

Sometimes the legal result does not square with the facts.  In Estate of Britel (2015) 236 Cal.App.4th 127, “the court admitted into evidence a DNA test showing a 99.9996 percent probability that the decedent (Amine Britel) was A.S.’s (the child’s) father.”  Yet the court held that the child was not entitled receive any property under the law of intestate succession.  How did this happen?

When a person dies without a will, the judge will look to the law of intestate succession to determine who will receive the decedent’s property.  Explained the court of appeal, “Intestate succession is governed entirely by statute.  The heirs of a person are those whom the law appoints to succeed at the decedent’s death.”

“As relevant here, if there is no surviving spouse or domestic partner of an intestate decedent, the intestate estate passes to the decedent’s ‘issue’ … For the purpose of determining intestate succession, the relationship of parent and child exists between a person and the person’s natural parents, regardless of the marital status of the natural parents.”

Sounds promising for the child.  But here is where the argument ran ashore.  The mother, Jackie Stennett, “contends biological parents are, by definition, natural parents within the meaning of [Probate Code] section 6450.  Not so.”

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Instead, when child born out of wedlock wants to show he is the natural child of a man who died without leaving a will, the statute requires “clear and convincing evidence that the father has openly held out the child as his own.”  A paternity test administered after death is not sufficient by itself.

Explained the court, “We conclude [the statute] requires an affirmative representation of paternity that is unconcealed and made in open view.  But although the representation must be a public one, in the sense of being made in open view, the statute does not require an announcement to the world, an official action, or an affectionate fatherly intent.  Each case depends upon its own circumstances.”

The court held that Jackie Stennett [the mother] failed to prove “that Amine openly held out A.S. as his own child.”  Hence, the legal result, which does not square with the facts.

Roscoe Pound on the Development of English Law

Roscoe Pound, Dean of Harvard Law from 1916 to 1936, was a prolific writer in 1920s and 1930s regarding jurisprudence.  Here is Dean Pound’s description – both succinct and accurate – regarding the path of the law.

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“The historical school thought of each in terms of the growth of an organism, in terms of a development by the force of something working from within, wholly apart from human activity.  Blackstone’s analogy of an English castle made into a modern house, of something made over by men for their needs, by constant adaptations of and addings to the old materials, is quite as well taken.

“Indeed we might well compare these systems of law to one of the old churches in Rome.  Perhaps the Servian wall is in its foundations and an old pre-Christian basilica was the first edifice.  It was made over into a church in the fourth century.

“Perhaps in the ninth century a new church was built on the foundations and with part of the walls.

“It was rebuilt in the twelfth century and many stones and ornaments and some of the old mosaics and paintings were incorporated.

“It was restored frequently in later centuries and overhauled thoroughly in an eighteenth-century restoration in the baroque style of the time.

“The nineteenth century has added new chapels and monuments and has sought sometimes to bring to light some fragments of antiquity.

“How much of what men use today is the Servian wall or the Roman basilica, or the church in which the fifth-century council sat, or the church of the twelfth century or even the church of the Renaissance?  Such a picture is much nearer the truth than the picture of organic evolution and continuous identity with which the historical school made us familiar.”

Roscoe Pound, Interpretations of Legal History (Macmillan Company 1923)

Huge Decline in California Bankruptcy Filings

The federal bankruptcy courts publish detailed statistics on bankruptcy filings.  California has four federal judicial districts, with Fresno located in the Eastern District.

The 2011-2014 bankruptcy filings for the Eastern District of California show a substantial decline, as shown in this table:

  E.D. Cal. total filings Chapter 7 cases
Chapter 11 cases
Chapter 12 cases
Chapter 13 cases
2014 24,030   19,634   109   18   4,269  
2013 32,635   25,930   187   30   6,487  
2012 42,850   33,761   201   37   8,846  
2011 53,888   42,957   234   38   10,659  
 Decrease 55%   54%   53%   53%   60%  

 

What does this mean for the future?  Hard to tell, as the Central Valley remains in the grip of a years-long drought.  Agricultural revenues will remain depressed, which will not help the local economy.