Wednesday, February 9, 2005
C.A. Limits Power to Hear Renewed Summary Judgment Motion
By KENNETH OFGANG, Staff Writer/Appellate Courts
A trial court’s inherent power to revisit its own rulings does not permit it to entertain a renewed summary judgment motion in the absence of new facts or a change in the law, the Court of Appeal for this district ruled yesterday.
Reversing a summary judgment favoring a stock brokerage in a dispute with a former employee over the structure of the company’s stock purchase plan, Div. Seven concluded the trial judge violated Code of Civil Procedure Sec. 437c(f)(2). The statute requires a party moving for summary judgment a second time to establish “newly discovered facts or circumstances or a change of law supporting the issues reasserted.”
The suit was brought as a putative class action by David B. Schachter against Salomon Smith Barney, Inc. and its parent company, now known as Citigroup, Inc.
Schachter, a former financial consultant at Smith Barney, challenged a feature of the Capital Accumulation Plan, which allowed employees to apply a portion of their deferred compensation to the purchase of discounted company stock. The shares were restricted and did not vest before the employee had been with the company two years.
If the employee quit or was fired for cause before the two years was up, however, he would lose both the stock and the deferred compensation used to purchase the shares. Schachter claimed that this aspect constituted a deprivation of earned wages, in violation of the Labor Code, as well as common-law conversion and a violation of the Unfair Business Practices Act.
The defendants’ first motion for summary judgment was denied by Los Angeles Superior Court Judge Aurelio Munoz in 2000. Munoz reasoned that unlike a bonus plan, in which the bonus is not earned until the employee has worked for the company the requisite period of time, the CAP required an employee to give back money that the employee had already been paid.
“This amounts to a rebate to the employer in violation of Labor Code [Sec.] 224 since the employee is getting nothing back in return,” Munoz wrote.
Two years later, however, the defendants renewed the motion, citing a ruling by Los Angeles Superior Court Judge Carolyn Kuhl upholding the legality of a similar plan offered by another stock brokerage.
Judge Victoria Chaney, to whom the Schachter case had been reassigned, questioned whether she could overturn Munoz’s ruling.
“Judge Kuhl’s opinion, although interesting, is not precedent, it’s not binding on me, and it has no effect in this case,” Chaney wrote. “And it doesn’t really matter whether I agree or disagree with Judge Munoz, the reality is, he made a ruling and we’re all going to be living with it.”
A month later, however, following a case management conference, Chaney granted summary judgment for the defendants under the court’s inherent power to reconsider its own rulings sua sponte.
But Justice Laurie Zelon, writing for the Court of Appeal, said Sec. 437c(f)(2) limits the court’s discretion to reconsider its denial of a summary judgment.
Zelon distinguished cases involving Sec. 1008, the general reconsideration statute. Those cases have held that Sec. 1008 either does not apply to the court’s reconsideration of an interim ruling on its own motion, or is unconstitutional to the extent it purports to preclude a court from granting reconsideration.
Zelon concluded that “as a general matter,” a trial court has inherent constitutional authority to correct its own rulings, either sua sponte or on a party’s motion, and that this authority extends to a sua sponte reconsideration of a denial of summary judgment.
“However, the Legislature enacted a specific limitation on the parties out of a concern for abuse of the summary adjudication process, and the burden such motions can impose on a party’s resources,” the justice wrote. Absent a request by the court, Zelon wrote, the renewal of the motion, absent compliance with Sec. 437c(f)(2), violates the legislative intent, even if the moving parties “used their motion to request the court to act ‘sua sponte.’”
Attorneys on appeal were Ashley D. Posner and Barbara Brudno of the Law Offices of Ashley D. Posner for the plaintiff and Raoul D. Kennedy, David Pattiz, Douglas B. Adler and Seth M. Schwartz of Skadden, Arps, Slate, Meagher & Flom for the defendants.
The case is Schachter v. Citigroup, Inc., 05 S.O.S. 732.
Copyright 2005, Metropolitan News Company