Brown v. Mortensen ( 2019 )

Filed 1/3/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
ROBERT A. BROWN et al., B281704
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC289546)
v.
STEWART MORTENSEN,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of
Los Angeles County, John Shepard Wiley, Jr., Judge. Reversed.
Law Offices of Lyle F. Middleton, Lyle F. Middleton; Law
Office of Robert A. Brown, and Robert A. Brown for Plaintiffs and
Appellants.
Carlson & Messer, Charles R. Messer, David J. Kaminski
and Stephen A. Watkins for Defendant and Respondent.
_________________________
This case resolves two obscure and previously unaddressed
state constitutional issues: Does article I, section 16 of the
California Constitution guarantee the right to a jury trial for (1)
nominal statutory damages claims, and/or (2) claims for
attorneys’ fees, under the Confidentiality of Medical Information
Act (CMIA) (Civ. Code, §§ 56 et seq.1)?
With little useful guidance from the parties, no controlling
precedent, and the three-year postremittitur deadline for
bringing the case to trial about to expire,2 the experienced and
highly regarded trial judge concluded it does neither. With more
time to reflect, further development of case law, and some modest
additional input from the parties, however, we reach a different
conclusion. We hold that jury trial is guaranteed for CMIA’s
nominal statutory damages claims brought before 2013 under
section 56.36, subdivision (b)(1), but not for attorneys’ fees claims
under section 56.35. We therefore reverse the trial court’s
judgment (which was entered after a bench trial) and remand for
jury trial on both the nominal statutory damages claims and a
remaining compensatory damages claim. The attorneys’ fee
claim should be addressed, if at all, by the court via posttrial
motion.
BACKGROUND
Plaintiffs and appellants, Robert A. Brown (“Brown”), and
his two then-minor daughters, Kirsten Brown and Kayla Brown
1
All further statutory references are to the Civil Code
unless otherwise indicated.
2 Code of Civil Procedure section 583.320, subdivision
(a)(3).
2
(collectively, “the Browns”), were patients of a dentist named Dr.
Rolf Reinholds. In July 2000, Dr. Reinholds billed Brown $600 in
connection with a dental crown. After Brown paid only a portion
of the bill, Reinholds referred the debt to a collection agency
called Credit Bureau Services, owned by defendant and
respondent Stewart Mortensen.
The Browns brought suit in 2003, contending an employee
of Mortensen transmitted confidential medical (i.e., dental)
information received from Dr. Reinholds to the three major
national consumer credit reporting agencies, Experian, Equifax,
and Trans Union, in violation of the CMIA.3
After significant delays, including delays resulting from
interlocutory appellate review,4 the Browns finally brought their
3 The Browns originally sued both Dr. Reinholds and
Mortensen, but dismissed the dentist after he became terminally
ill and closed his practice.
4 The first appeal arose after the trial court sustained a
demurrer to the Browns’ fourth amended complaint on the
grounds that it was impermissibly vague and that the Browns’
CMIA claims were preempted by Fair Credit Reporting Act.
When the Browns elected not to amend, the trial court dismissed
the case. On appeal, a different panel of this division rejected the
vagueness conclusion, but agreed with respect to preemption.
The Supreme Court reversed, holding the claims were not
preempted. (See Brown v. Mortensen (2011) 51 Cal.4th 1052.)
On remand from the Supreme Court, in an unpublished opinion,
a different panel of this division reasserted its conclusion on
vagueness, acknowledged the Supreme Court’s decision, and
remanded. In a second appeal resulting in a 2014 unpublished
opinion, a different panel of this division affirmed the trial court’s
later order that the Browns were unsuitable class
3
case to trial in late 2016.5 The Browns had requested a jury and
the parties prepared jury instructions. At some point, however, a
question arose concerning whether the Browns had a right to a
jury trial on all of their claims. At a pretrial conference, the trial
judge expressed a preliminary view that the Browns’ nominal
statutory damages claims are equitable and that at least part of
the case should be tried to the court rather than the jury. He
proposed that he reserve decision on the jury trial issue, and the
parties try the case (which was expected to take only about a day)
to the court without waiver of the Browns’ position that all the
issues should be tried to a jury. Brown, who is an attorney, and
who was representing himself and his daughters, agreed, as did
Mortenson’s counsel. The parties then tried their case to the
court.
The CMIA “ ‘is intended to protect the confidentiality of
individually identifiable medical information obtained from a
patient by a health care provider, while at the same time setting
forth limited circumstances in which the release of such
information to specified entities or individuals is permissible.’
[Citations.] [¶] . . . ‘The basic scheme of the [CMIA] . . . is that a
provider of health care must not disclose medical information
without a written authorization from a patient.’ [Citation.]”
(Brown v. Mortensen (2011) 51 Cal. 4th 1052, 1070.)
representatives, but reversed the order to the extent it
disqualified class counsel, precluded discovery and prevented
amendment to name new class representatives.
5 The scant record provided to us does not reveal what
became of the class allegations, but the case did not go to trial as
a class action.
4
Section 56.10, subdivision (a) states that “a provider of
health care . . . shall not disclose medical information regarding a
patient . . . without first obtaining” a written authorization
required by the statute. And a “recipient of medical information
pursuant to an authorization . . . may not further disclose that
medical information except in accordance with a new
authorization” that meets the statutory requirements, or as
otherwise specifically required or permitted by law. (§56.13.)
At trial, the Browns’ theory was that Dr. Reinholds
disclosed their confidential medical information to Mortensen
without the written authorization required by statute, in
violation of section 56.10, subdivision (a), and that Mortensen
disclosed this information to the credit bureaus, also without
their authorization, in violation of section 56.13.6
After a brief bench trial, the trial judge issued final rulings,
and entered judgment in favor of Mortensen. The trial court
ruled “there is no right to a jury trial on the equitable issues in
the case,” and identified the equitable issues as the Browns’ claim
for nominal statutory damages of $1,000 per person (i.e., $1,000
each for Robert, Kayla, and Kristen Brown) under section 56.36,
subdivision (b)(2), and their claim for statutory attorneys’ fees of
6 As noted in the text, section 56.13 prohibits a “recipient of
medical information pursuant to an authorization” from re-
disclosing that information without an appropriate authorization.
(Italics added.) At trial, the Browns contended, however, that
Mortensen did not receive the information “pursuant to an
authorization.” If so, section 56.13 does not, by its terms, seem
to apply. The parties did not raise the issue at trial, however,
and do not address it in their briefing. It may be addressed on
remand via an appropriate dispositive motion.
5
up to $1,000 per person under section 56.35. The trial court ruled
that the remaining claim, i.e., Brown’s claim for compensatory
damages for emotional distress under section 56.36, subdivision
(b)(2), was not equitable.
The trial court further ruled it had held a bench trial on the
equitable issues. It characterized the “central factual dispute at
trial” as whether Mortensen’s company had sent an “itemized
statement” to Equifax, Experian, and Trans Union containing the
Browns’ confidential medical information. Resolution of that
issue, the trial court noted, boiled down to a credibility
determination. Mortensen’s employee testified the itemized
statement had never been sent. Brown testified it had. The trial
court found the employee’s denial credible, and Brown’s
testimony not credible, for a number of reasons detailed in the
ruling. Ultimately, the trial court rejected all of Brown’s
testimony as unreliable. It concluded, therefore, that the Browns’
claim that Mortensen transmitted their confidential medical
information to the credit bureaus “fails for want of proof.” The
trial court concluded: “the sole wrongdoer is Brown, who owed
but did not pay a $600 debt. The sole victims were Reinholds,
who died an unpaid creditor, and Mortensen, whose legitimate
collection effort Brown foiled entirely.”
Finally, the trial court noted Brown would have had a right
to a jury trial on his claim for emotional distress damages. It
ruled, however, that its finding that Mortensen had not
transmitted confidential medical information to the credit
bureaus disposed of Brown’s remaining claim, rendering a jury
trial unnecessary. Among other cases, the trial court cited in
support of this proposition DiPirro v. Bondo Corp. (2007) 153
Cal.App.4th 150,185 (DiPirro) (“Where a ‘mixed bag’ of legal and
6
equitable claims is presented in a case, a court trial of the
equitable claims first may obviate the necessity of a jury trial on
the legal claims, but otherwise the plaintiff cannot be denied the
right to a jury trial on the legal causes of action. [Citations.] If
‘there are equitable and legal remedies sought in the same action,
the parties are entitled to have a jury determine the legal issues
unless the trial court’s initial determination of the equitable
issues is also dispositive of the legal issues, leaving nothing to be
tried by a jury.’ ”)7
7 The Browns contend that our Supreme Court, in Shaw v.
Superior Court (2017) 2 Cal.5th 983 (Shaw), overturned the well-
established rule that “when both legal and equitable claims are
at issue, a trial court has discretion to rule first on the equitable
claim; this may obviate a jury trial of the legal claim if the trial
court’s ruling is dispositive of an issue crucial to the legal claim.”
(Id., p. 1006.) We reject this contention as a gross misreading of
Shaw. Shaw held there is no statutory right to a jury trial on a
cause of action for retaliatory termination under the statutorily
created civil action authorized under Health and Safety Code
section 1278.5, subdivision (g). But, Shaw also held that statute
does not deprive a terminated employee of a right to a jury trial
because Health and Safety Code section 1278.5, subdivision (m)
“fully preserves a plaintiff’s right to obtain a jury trial in the
related tort cause of action for wrongful termination in violation
of public policy authorized under Tameny v. Atlantic Richfield Co.
(1980) 27 Cal.3d 167 [164 Cal.Rptr. 839, 610 P.2d 1330].” (Shaw,
supra, 2 Cal.5th at p. 987.) We decline to address the argument
further because it was raised for the first time in the Browns’
reply brief, and for reasons of fairness we generally do not
consider such arguments. (Marriage of Khera & Sameer (2012)
206 Cal.App.4th 1464, 1477.)
7
STANDARD OF REVIEW
“[W]hether [a party is] constitutionally entitled to a jury
trial . . . is a pure question of law that we review de novo.” (Caira
v. Offner (2005) 126 Cal.App.4th 12, 23; DiPirro, supra, 153
Cal.App.4th at p. 179). Unwarranted denial of the right to a jury
trial is in excess of the trial court’s jurisdiction and constitutes
reversible error per se. (Valley Crest Landscape Development,
Inc. v. Mission Pools of Escondido, Inc. (2015) 238 Cal.App.4th
468, 493.)
DISCUSSION
1. The jury trial right under California law.
In Shaw, our Supreme Court recently summarized state
law governing the jury trial right as follows: “Under California
law, the right to a jury trial in a civil action may be afforded
either by statute or by the California Constitution. . . . [¶] As a
general matter, the California Legislature has authority to grant
the parties in a civil action the right to a jury trial by statute,
either when the Legislature establishes a new cause of action or
with respect to a cause of action that rests on the common law or
a constitutional provision. [Citations.] Given the Legislature’s
broad general legislative authority under the California
Constitution and in the absence of any constitutional prohibition
[citations], the Legislature may extend the right to a jury trial to
instances in which the state constitutional jury trial provision
does not itself mandate a right to a jury trial.
“In instances in which the language and legislative history
of a statute creating a civil cause of action do not indicate
whether the Legislature intended that the action is to be tried by
a jury or by the court, the question whether there is a right to a
8
jury trial is generally determined by application of the state
constitutional jury trial provision, now embodied in article I,
section 16 of the California Constitution. [Citation.] But even
when the language and legislative history of a statute indicate
that the Legislature intended that a cause of action established
by the statute is to be tried by the court rather than by a jury, if
the California constitutional jury trial provision itself guarantees
a right to a jury trial in such a cause of action, the Constitution
prevails and a jury trial cannot be denied. [Citations.]
“Article I, section 16 of the California Constitution declares
broadly that ‘[t]rial by jury is an inviolate right and shall be
secured to all . . . .’ Notwithstanding the breadth of this
declaration, past California cases make clear ‘that the state
constitutional right to a jury trial “is the right as it existed at
common law in 1850, when the [California] Constitution was first
adopted.” ’ [Citations.]
“In C & K Engineering [(1978)] 23 Cal.3d at pages] 8−9, we
noted: ‘As a general proposition, “[T]he jury trial is a matter of
right in a civil action at law, but not in equity.’ [Citations.] [¶] As
we stated in People v. One 1941 Chevrolet Coupe, [(1951) 37
Cal.2d 283, 2 (One 1941 Chevrolet)], “ ‘ If the action has to deal
with ordinary common-law rights cognizable in courts of law, it is
to that extent an action at law. In determining whether the
action was one triable by a jury at common law, the court is not
bound by the form of the action but rather by the nature of the
rights involved and the facts of the particular case−the gist of the
action. A jury trial must be granted where the gist of the action
is legal, where the action is in reality cognizable at law.’ ”
[Citation.] On the other hand, if the action is essentially one in
equity and the relief sought “depends upon the application of
9
equitable doctrines,” the parties are not entitled to a jury trial.
[Citations.] Although we have said that “the legal or equitable
nature of a cause of action ordinarily is determined by the mode
of relief to be afforded” [citation], the prayer for relief in a
particular case is not conclusive [citations]. Thus, “The fact that
damages is one of a full range of possible remedies does not
guarantee . . . the right to a jury . . . .” [Citation.]’ ” (Shaw,
supra, 2 Cal.5th 983, 993−995, fns. omitted.)
As the trial judge pointed out, the CMIA was enacted to
protect patient privacy. The right to privacy did not exist in the
common law of 1850. Rather, the right to privacy can be traced
back to the well-known Warren and Brandeis article of 1890.
(Warren & Brandeis, The Right to Privacy (1890) 4 Harvard L.
Rev. 193.)
That the Legislature enacted the CMIA well after the
adoption of the Constitution, and that it creates rights unknown
at that time, does not control the right to a jury trial, however.
“The constitutional right of trial by jury is not to be narrowly
construed. It is not limited strictly to those cases in which it
existed before adoption of the Constitution but is extended to
cases of like nature as may afterwards arise.” (One 1941
Chevrolet, supra, 37 Cal.2d at p. 300.) In other words, we must
look for analogies, to determine whether similar actions were
cognizable at common law in 1850.
The Browns do not contend the language or legislative
history of the CMIA grant them a jury trial right.8 Instead, they
8 Although the parties do not mention it in their briefing,
the current version of the statute indicates that in some cases
actions for actual damages under section 56.36, subdivision (b)
10
assert the state constitution guarantees them a right to a jury
trial on all of their claims. The parties agree that (absent the
trial court’s factual findings) Robert Brown would be entitled to a
jury trial on his compensatory damages claim for emotional
distress. We therefore must decide whether it was error for the
trial court to try first, without a jury, the Browns’ claims for
nominal statutory damages and/or their section 56.35 claims for
attorneys’ fees. We turn next to that inquiry.
2. The Browns were entitled to a jury trial of their section
56.36, subdivision (b)(1) claims for nominal statutory
damages.
Section 56.36 currently provides, in relevant part:
“(b) In addition to any other remedies available at law, an
individual may bring an action against a person or entity who
has negligently released confidential information or records
concerning him or her in violation of this part, for either or both
of the following:
brought on or after January 1, 2013 will be tried to the court,
rather than a jury. (See § 56.36, subdivision (e)(1) [“In an action
brought by an individual pursuant to subdivision (b) on or after
January 1, 2013, in which the defendant establishes the
affirmative defense in paragraph (2), the court shall award any
actual damages and reasonable attorney’s fees and costs, but
shall not award nominal damages for violation of this part.”].)
The affirmative defense referred to in the statute requires
consideration of a number of equitable factors. These provisions
are inapplicable to this case, however, because the Browns
brought their suit well before 2013. Moreover, all of the statutory
language referred to in this footnote was added to the statute
well after the Browns brought their lawsuit.
11
“(1) Except as provided in subdivision (e), nominal damages
of one thousand dollars ($1,000). In order to recover under this
paragraph, it is not necessary that the plaintiff suffered or was
threatened with actual damages.
“(2) The amount of actual damages, if any, sustained by the
patient.”
The statute is silent about why the Legislature chose to
allow statutory damages of $1,000 without proof of injury, and
the parties have not directed us to anything in the legislative
history to illuminate the issue. Provisions such as this, however,
generally serve as penalties to discourage noncompliance, and as
liquidated damages that facilitate and encourage private
enforcement of the statute by eliminating the difficult and
sometimes expensive task of proving actual damages (such as
emotional distress) caused by violation of the act’s privacy
provisions.
“Determining whether the gist of a claim is in law or equity
‘depends in large measure upon the mode of relief to be afforded.’
[Citation.] Generally, an action for damages is legal in nature.”
(Mendoza v. Ruesga (2008) 169 Cal.App.4th 270, 283.) Here, we
are confronted with the question of whether noncompensatory
nominal statutory damages are legal in nature. Unfortunately,
no party addressed this dispositive question directly, either in the
trial court or on appeal.
The Browns, seizing on the statute’s reference in paragraph
(b) to “negligently” releasing confidential information, argue that
the gist of their action is legal because it is like an ordinary
action for negligence, or negligence per se. Actions of that type
were tried in courts of law before the adoption of our state
12
Constitution in 1850. The analogy is not apt, however, because
actual damages are an element of negligence and negligence per
se claims. Here, the nominal statutory damages are awarded
without proof of actual damages or threat of injury. And in any
event, the Browns did not allege negligence or negligence per se
in their operative complaint.
As noted above, nominal statutory damages serve as a
penalty, and actions to recover a penalty were available at
common law before 1850. In Grossblatt v. Wright (1951) 108
Cal.App.2d 475, a different division of this court considered
whether a jury trial right existed under rent control provisions of
the Housing and Rent Act of 1947, which permitted tenants or
prospective tenants to recover “liquidated damages” of either $50
or three times the amount by which the rent charged by a
landlord, or proposed to be charged by a prospective landlord,
exceeded the maximum allowable rent. The court characterized
these damages provisions–particularly the treble damages
provision–as penalties, and concluded the gist of an action to
recover these penalties was legal rather than equitable. “The
action (writ) of debt was the general remedy at common law for
the recovery of all sums certain, or sums readily reducible to a
certainty, whether the legal liability arose from contract or was
created by statute. Statutory penalties existed at common law,
and debt was the appropriate action for the recovery thereof
where no other remedy was specified, because the money due
under such statute gave rise to a debt, the underlying theory
being an implied promise which the law annexed to the liability.”
(Grossblatt at pp. 484−485; see also id. at fn. 18, collecting
additional authorities.) “A jury trial was a matter of right in the
common-law action of debt, and consequently it exists in all civil
13
actions under modern practice which formerly would have fallen
within this form of action.” (Id. at p. 486.)9
Thus, because the gist of their action was legal, the Browns
had a constitutional right to have their claims for nominal
statutory damages tried to a jury. They therefore are entitled to
reversal and remand for a jury trial.10
3. The Browns were not entitled to a jury trial for their
section 56.35 claims for attorneys’ fees; if the plaintiff
prevails, any such fee awards should be decided by the
court on posttrial motion.
Section 56.35 provides: “In addition to any other remedies
available at law, a patient whose medical information has been
used or disclosed in violation of Section 56.10 or 56.104 or 56.20
9 (Cf. One 1941 Chevrolet, supra, 37 Cal.2d at p. 295 &
fn. 15 [noting cases involving penalties to the Crown were tried to
a jury in the Court of Exchequer]; see also Tull v. United States
(1987) 481 U.S. 412, 422 [explaining as a matter of historical fact
that a government suit to collect a “civil penalty was a type of
remedy at common law that could only be enforced in courts of
law. Remedies intended to punish culpable individuals, as
opposed to those intended simply to extract compensation or
restore the status quo, were issued by courts of law, not courts of
equity.”].) We recognize, of course, that collection of penalties by
the government differs from collection of penalties by private
parties.
10 The parties have not briefed the relationship between
compensatory damages claims under section 56.36, subdivision
(b), which are available “against a person or entity who has
negligently released confidential information,” and section 56.35,
which does not mention negligence. We do not need to explore
that subject to resolve the issues before us.
14
or subdivision (a) of Section 56.26 and who has sustained
economic loss or personal injury therefrom may recover
compensatory damages, punitive damages not to exceed three
thousand dollars ($3,000), attorneys’ fees not to exceed one
thousand dollars ($1,000), and the costs of litigation.”
“Our courts have consistently ‘distinguish[ed] between’
attorney’s fees that are sought as ‘[an] allowance . . . to the
prevailing party as an incident to the principal cause of action,’
and those that are sought as ‘part of the cause of action.’
[Citation.] When sought by the ‘prevailing party . . . as an
incident to [the] judgment’ [citation], attorney’s fees may be
‘properly awarded [as a form of cost] after entry of a . . .
judgment.’ [Citation.] However, when ‘fees are part of the relief
sought[, they] must be pleaded and proved at trial.’ [Citation.]
As explained by our Supreme Court: ‘ “[W]here attorney fees are
. . . sought in a proceeding as damages . . . , then the claim for
attorney fees is part of the damage sought in the principal
action. . . . [I]n such circumstances . . . the attorney fee [would]
be required to be pleaded and proven–as any other item of
damages–at trial. No similar procedural and evidentiary base is
required where ‘the attorney fee was not the cause of action but
an incident to it.’ ” [Citation.]’ ” (Monster LLC v. Superior Court
(2017) 12 Cal.App.5th 1214, 1228 (Monster LLC).)
Attorneys’ fees claims forming part of a damages claim
must be decided by a jury if the right to a jury exists, because
that right encompasses the right to have the jury try and
determine issues of fact, including “ ‘the assessment of
damages.’ ” (Monster LLC, supra, 12 Cal.App.5th at p. 1225.)
Otherwise, they generally are decided on posttrial motion, along
15
with costs (which also are available under § 56.35). (See Monster
LLC at p. 1229.)
We do not read the CMIA to incorporate attorneys’ fees as
an element of damages. Rather, it allows attorneys’ fees up to
$1,000 and costs to a prevailing plaintiff, as incidental relief. As
is the usual practice, attorneys’ fees are to be adjudicated in a
posttrial motion. Thus, the attorneys’ fee provision does not
carry with it a right to a jury trial, and it also does not afford an
opportunity to a trial court to make factual determinations that
would bind a jury.
We note, however, that attorneys’ fees under section 56.35
are available only upon proof of economic loss or personal injury,
and thus would be unavailable to plaintiffs such as Kirsten
Brown and Kayla Brown, who seek recovery only of nominal
statutory damages without proof of injury.
16
DISPOSITION
The judgment is reversed. The case is remanded for jury
trial on the Browns’ nominal statutory damages claim and
Brown’s compensatory damages claim and other proceedings
consistent with this opinion. If Brown prevails on his
compensatory damages claim, his claim for attorneys’ fees should
be resolved in a posttrial motion. The parties will bear their own
costs on appeal.
CERTIFIED FOR PUBLICATION.
CURREY, J.*
We concur:
ROTHSCHILD, P. J. CHANEY, J.
* Associate Justice of the Court of Appeal, Second
Appellate District, Division Four, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
17