Five Must-Know Legislative Changes to California Litigation Starting January 1, 2016

Beginning January 1, 2016, four bills sponsored by the California Defense Counsel will alter the landscape of civil litigation in California. These new laws bring about several changes to demurrers, offers to compromise, deposition notices, jury trials, and motions for summary judgment. A thorough understanding of how these bills change litigation strategy for civil suits in California is not only necessary, but critical to engage in successful litigation practice.

Three significant changes have been made to the "initial pleading phase" of a lawsuit. The first substantive change is in relation to demurrers. A demurrer is a pleading that is used to challenge the legal sufficiency of allegations in a complaint or the defenses raised in an answer. However, in everyday practice, a demurrer is almost exclusively used by defendants to attack complaints. Prior to the newly-enacted bills, a defendant could file a demurrer to a complaint without advising a plaintiff of their intent to do so. However, Senate Bill 383 has dramatically changed this practice and requires the demurring party to meet and confer with opposing counsel prior to the filing. The goal of requiring this substantive exchange is to allow the parties to agree on an amended complaint (or amended answer) without the need for court intervention. In light of the fact that every demurrer requires a court hearing, and based on the fact that the current backlog of the courts can result in a demurrer being heard three (3) to six (6) months from the date of filing, it is clear that the requirement for a meet and confer will not only help reduce the burden on the court system, but also allow for cases to progress in a more expedient manner.

The second substantive change to the "initial pleading phase" is related to plaintiffs filing an amended complaint on the eve before a demurrer hearing thereby rendering the hearing moot. This practice exploited the resources of a defendant and unnecessarily increased the cost of litigation as the last minute amended complaint would be filed only after a defendant had drafted a demurrer, drafted a reply to an opposition, and prepared for the hearing. However, beginning January 1, 2016, if a plaintiff wishes to file an amended complaint before the hearing on the demurrer, the plaintiff must file it at the time their opposition is due. This prevents the defendant from having to prepare a reply and appear at the hearing, as well as freeing up the court. Also related to amended complaints is the new limit on the number of amended complaints that may be filed. Previously, the parties could engage in a seemingly endless cycle of complaints and demurrers. Under the new law, a plaintiff will only have three opportunities to cure any defects in their complaints. Once a plaintiff has exhausted their three chances, a court will not have the authority to sustain a demurrer and preclude a plaintiff from filing any additional amended complaints.

The new bills have even brought about changes to statutory offers to compromise. Under Section 998 of the California Code of Civil Procedure, the parties may make a settlement offer at any time up to ten (10) days prior to trial or arbitration. However, should a party fail to obtain a judgment or award that exceeds the "998 offer" made by an opposing party, the opposing party will be entitled to recoup certain costs and penalties based on Party A's failure to "beat the offer." The costs could include expert witness fees that were incurred prior to the offer being made and even attorney's fees if an attorney's fee provision or statute is applicable. The primary effect of this statute is to promote reasonable settlement offers, and acceptance of such offers, by threatening penalties and costs for failing to do so. However, the recent change to Section 998 of the California Code of Civil Procedure now limits the recoupable penalties and costs to only those incurred after a statutory offer to compromise. This is a dramatic change that incentivizes reasonable settlement offers to be made early in the litigation with the hopes that the parties will seriously consider resolving the matter as soon as possible or face the possibility of maximum costs and penalties at the time of judgment or award.

An additional change taking place on January 1, 2016 is a requirement that if a party noticing the deposition, or the law firm, has a contract or financial relationship with the court reporter to be used, it must be disclosed in advance of the date of deposition. This disclosure/conflict of interest requirement is now included to curb a possibility of abuse or the impression of impropriety resulting from the growing financial relationships between law firms, clients, and certain court reporting services.

Based on the statutory changes mentioned above, it is clear that one of the main concerns for the legislature is streamlining the litigation process and reducing unnecessary burdens on the court. Unfortunately, it will likely take some time before these changes begin alleviating the clogged courts. Additionally, as with anything new, there are bound to be "growing pains" with necessary changes to litigation strategies and addressing possible loopholes that may be exploited. Fortunately, Poole & Shaffery has been preparing its litigation team for the new changes and is looking forward to another successful year.