Winning a lawsuit is only half the job. If the company or person that owes you money has no assets, the judgment can be close to worthless on its own. A recent California Court of Appeal decision, 8451 Melrose Property, LLC v. Akhtarzad, gives businesses another way to collect, letting a court add new parties to a judgment after the case is over when the evidence shows they were the real players behind it.

A Judgment Is Only as Good as Your Ability to Collect It

Your business wins a lawsuit. After years of fighting, you finally have a judgment worth millions of dollars.

Then reality sets in.

The party you sued has no real assets. That courtroom win suddenly doesn’t feel like much of a win at all. Most business owners assume that’s where the story ends. But in some cases, it doesn’t.

In 8451 Melrose Property, LLC v. Akhtarzad, the California Court of Appeal held that the people truly running a business can be put on the hook for its judgment, even when their names never appeared on the case, if they controlled the litigation and shared in the rewards.

The Tenant Wasn’t the Only One Behind the Lease

The dispute started with a commercial lease. The tenant stopped paying rent soon after moving in and left the building gutted, and the landlord was out millions. After two trials and two appeals, the landlord won a judgment of more than $10.5 million for unpaid rent and the cost of restoring the property.

Winning didn’t solve the real problem. The landlord still had to collect.

That’s when the picture changed. As the landlord dug in, evidence surfaced that the named tenant, Sina Akhtarzad, had never been acting alone. He was one member of an undisclosed “one-for-all” family partnership, a group of relatives who for decades pooled their real estate investments, income, and expenses and ran the whole thing as a single pot of money. The partnership, not Sina by himself, was the real tenant. A family corporation called Amey Enterprise handled the leasing.

So the landlord asked the court to amend the judgment under Code of Civil Procedure section 187, a state law that lets a court fix who is really named on a judgment, and add the individual partners and Amey as judgment debtors, the parties legally required to pay. The trial court did, and the Court of Appeal affirmed.

Knowing About the Lawsuit Wasn’t Enough. Controlling It Was.

Here’s the part that should get every business owner’s attention. The partners didn’t get added just because they knew about the case. Under California law, simply knowing your business partner is being sued does not make you personally responsible for the result. If that were the rule, anyone loosely tied to a lawsuit could be dragged onto the judgment.

What pushed these partners over the line was control. The partnership paid for the defense. It let Sina fight the case on everyone’s behalf through both trials and both appeals. The partners sat behind the litigation the entire time, funding it and benefiting from it, while keeping their names off the caption.

On those facts, the court applied a three-part test: whether the added parties controlled the underlying lawsuit, whether they shared such a unity of interest with the original debtor that their separate identities didn’t really exist (in plain terms, whether they were all effectively one operation), and whether it would be unfair to treat the debt as the named tenant’s alone. The court also made clear that alter ego, the usual doctrine for holding the people behind a company liable for its debts, is not the only path. Here, equity was enough.

What This Means for Business Owners

There are two lessons here, and which one applies depends on which side of the “v.” you’re on.

If your business wins a judgment, don’t assume your options stop at the party named in it. When the evidence supports it, you may be able to reach the people who were actually running the business or the litigation from behind the scenes, even years after the fact. Section 187 carries no statute of limitations, so a defendant who thought the case was long over can still be added.

If you operate through several entities, a partnership, or a handshake arrangement, the warning runs the other way. Courts will look past the names on the paperwork. If you’re directing the litigation, paying for the defense, and sharing in the upside, you can end up personally liable even though you were never named as a defendant. Structure matters, but so does conduct. If your real role in a business doesn’t match what’s on paper, you may be carrying risk you can’t see.

Bottom Line

Winning in court is a milestone, but it only counts if you can collect. 8451 Melrose Property, LLC v. Akhtarzad shows that California courts will look past formal business structures when the evidence proves someone else was really running the dispute.

If you’re holding a judgment that looks impossible to collect, or you’re worried about how your own business setup could expose you in a future fight, Horst Legal Counsel can help you weigh your options and build a strategy that protects you before a small problem becomes an expensive one. Contact us here.

Source link: https://www.courts.ca.gov/opinions/documents/B340673.PDF

The post You Won the Lawsuit. That Doesn’t Mean You’ve Collected a Dime. appeared first on Horst Legal Counsel.

When your business files a lawsuit, an early ruling from the judge can change the entire course of the case. If that ruling goes against you, it may be tempting to look for the fastest way to get in front of the Court of Appeal. A recent California Supreme Court decision shows why one shortcut, voluntarily dismissing your case too soon, can cost you the very appeal you’re trying to pursue.

A Shortcut That Can Cost You More Than Time

You’ve spent months preparing your lawsuit. The complaint is filed, the case is moving forward, and then the judge dismisses several of your claims. The judge gives you permission to amend them, but you believe the ruling is legally wrong.

Now you’re faced with a decision. Do you spend more time and money continuing the case, or do you end it now and appeal?

At first glance, dismissing the lawsuit might seem like the quickest route. If the case is over, you should be able to appeal, right?

Not necessarily.

In Maniago v. Desert Cardiology Consultants’ Medical Group, the California Supreme Court made clear that voluntarily dismissing your case before the trial court has finally resolved your claims does not automatically create a right to appeal. In the wrong circumstances, it can do the opposite.

The Shortcut That Didn’t Work

The plaintiffs in Maniago sued a cardiologist and his medical group, alleging multiple causes of action. The trial court sustained demurrers to several claims with leave to amend, meaning the plaintiffs had the opportunity to revise those claims and continue litigating. One negligence claim was still pending, and another claim had not been challenged at all.

Rather than amend the complaint or continue with the remaining claims, the plaintiffs voluntarily dismissed the entire lawsuit before the trial court had entered a final judgment on any claim. They then attempted to appeal the rulings that had gone against them.

The Supreme Court held that this approach did not create an appealable judgment under these circumstances. Because the plaintiffs dismissed the action before the trial court had finally resolved any of their claims, the Court of Appeal did not have jurisdiction to hear the case.

Why the Supreme Court Reached That Result

California generally follows what’s known as the final judgment rule. In most civil cases, an appeal is available only after the trial court has entered a final judgment resolving the case.

The Supreme Court explained that allowing parties to voluntarily dismiss a lawsuit before any claim has been finally decided, simply to obtain immediate appellate review, would undermine that rule and encourage piecemeal appeals. At the same time, the Court emphasized that its decision was limited to the facts before it. It did not decide every situation involving a voluntary dismissal, only the one presented in Maniago.

There Was a Better Option

One of the most useful parts of the decision is what the Court suggested the plaintiffs could have done instead.

Depending on the circumstances, a party may ask an appellate court to review an important issue early by filing a writ petition. Writ review is discretionary, so it is not available in every case, but it is one recognized path to early appellate review.

Another option is to allow the trial court’s rulings to become a final judgment before dismissing any remaining claims. That approach follows California’s normal appellate process and helps preserve the right to appeal.

The lesson is simple: before making a procedural decision that ends your case, make sure you understand how it could affect your appellate rights.

What This Means If You’re Suing to Protect Your Business

Business litigation is full of strategic decisions. Some involve settlement, others involve trial, and some involve deciding when, and how, to appeal.

After Maniago, businesses that bring lawsuits should think carefully before voluntarily dismissing a case after an unfavorable ruling. What looks like a faster path to appellate review could end up closing that door altogether.

If you’re considering an appeal, talk with your attorney before taking any step that could affect the timing of your case. A few extra months in the trial court may be far less costly than losing the opportunity to appeal altogether.

Bottom Line

The Maniago decision shows that litigation strategy is about more than winning or losing individual motions. The procedural choices you make along the way can determine whether an appellate court ever gets the chance to review your case.

If your business is involved in litigation and you’re considering an appeal, it’s important to understand your options before making a move that’s difficult to undo. The right strategy at the trial court level can protect your ability to challenge an unfavorable decision later. An experienced litigation attorney can help you evaluate those options and preserve your rights every step of the way.

The post This Litigation Shortcut Could Cost You Your Right to Appeal appeared first on Horst Legal Counsel.

If your business uses generative AI to draft anything that goes out under your name, a California appellate court just showed you how the failure actually happens, and it is not the failure most people brace for. The problem here wasn’t a company that banned AI or ignored the risk. It was a professional who had an AI policy requiring human verification, and who still filed a document full of fabrications. A policy on paper did not save him.

The case is Del Biaggio v. Bansen (Cal. Ct. App., 1st Dist., Div. 4, July 10, 2026), and although it grew out of a dairy contract dispute in Humboldt County, the lesson has nothing to do with cows.

A Dairy Contract That Turned Into an AI Cautionary Tale

Daniel Del Biaggio worked at the Bansens’ dairy under an agreement that promised him salary, livestock transferred over time, and an eventual chance to lease the operation. When the Bansens allegedly failed to hand over the livestock he was owed, he sued and won a $52,850 jury verdict. As the prevailing party, the side that wins, he asked for his attorney fees under the contract, including hours his lawyer’s paralegal had billed. That fee fight is what carried the case up on appeal.

It might have stayed an ordinary fee dispute. Then the court read the opening brief.

What the Court Actually Held

On the money questions, the result was mixed. The court upheld the trial judge’s decision to cut the attorney’s hours, since block billing, lumping many tasks into a single time entry, and several thin causes of action gave the judge room to trim. It reversed the exclusion of paralegal fees, holding that a contract promising the prevailing party its “attorneys’ fees,” a term the contract left undefined, reasonably includes the reasonable cost of paralegal work. It also erased a sanction the trial court had imposed on Del Biaggio’s lawyer, finding that his reconsideration motion, a request that the trial judge revisit its own ruling, was proper.

Then the court turned to something it raised on its own. Del Biaggio’s opening brief attributed quotations to the California Supreme Court’s decision in PLCM Group v. Drexler that appear in no case at all, and it misdescribed other authority. Those invented quotations stated the exact proposition counsel wanted to prove. The lawyer’s own declaration acknowledged the passages came from generative AI and were never properly verified before filing.

Why “We Have an AI Policy” Wasn’t Enough

Here is the part every business should sit with. The lawyer told the court his office uses AI “consistent with State Bar guidance,” with “protocols requiring human verification of all outputs.” The court was unmoved, and its reasoning is the real takeaway.

First, the protocol did not actually deliver the review it promised. The lawyer planned to have a paralegal confirm that the citations existed while he was tied up in another trial. The court said that plan was inappropriate even if it had worked, because he never intended to read the cited law himself. Checking that a source exists is not the same as reading what it says.

Second, the court flagged a detail worth remembering. The fabricated quotations said precisely what the lawyer was hoping to prove. That should have been the warning sign. AI output is most dangerous at the exact moment it tells you what you want to hear.

The sanction was $1,500, paid to the court, with the opinion forwarded to the State Bar. The dollar figure is small. The professional and reputational consequence is not.

What This Means for Businesses Using AI

Read the holding as a governance standard, because that is how it will be used. A written AI policy is not a defense unless the review it promises actually happens, on the real output, performed by someone competent to catch the error. Delegating verification to a proxy step, like confirming a citation exists rather than reading it, is precisely the gap that produced this result. And when AI hands you something that confirms your position perfectly, that is the moment to slow down, not speed up.

For regulated professionals, the exposure is discipline and sanctions. For everyone else, it is contracts built on invented terms, reports with fabricated support, and decisions made on facts that were never real.

Bottom Line

If your organization uses generative AI, the question is not whether you have a policy. It is whether a qualified human reviews the substance of what the tool produces before it leaves the building. This decision turns that from a nice-to-have into a benchmark a court is now willing to enforce. Horst Legal Counsel advises businesses on AI governance, professional risk, and the disputes that follow when controls fail. If you want a candid look at where your current process would leave you, we are glad to talk it through.

The post Your AI Policy Won’t Save You If Nobody Reads the Output appeared first on Horst Legal Counsel.

In Doe v. Marysville Joint Unified School District (Cal. Supreme Ct., July 2, 2026), the Court held that a plaintiff who voluntarily dismisses the same claims twice, the second time in federal court, isn’t barred from bringing those state law claims all over again in California state court. For anyone who tracks litigation exposure, that’s a meaningful gap between what a federal dismissal feels like and what it actually does.

Two dismissals, then a third filing

The plaintiffs are former students who allege a school counselor abused them years ago. Those underlying facts, disturbing as they are, aren’t what the case turned on. The Court set them aside as irrelevant to the legal question. What matters here is the sequence of filings.

The plaintiffs first sued the school district in state court, then voluntarily dismissed, which simply means a plaintiff chooses to drop their own case. The same day, they refiled in federal court, adding federal claims alongside their state law claims. When the district moved to dismiss, the plaintiffs dismissed again, this time under Federal Rule of Civil Procedure 41(a)(1)(A)(i), which lets a plaintiff drop a case early without a judge’s sign-off. Each dismissal was “without prejudice,” meaning the plaintiffs reserved the right to come back. Then they filed a third time, in California state court, raising only their state law claims.

The district saw an opening. Federal Rule 41(a)(1)(B) contains what’s known as the two-dismissal rule: if a plaintiff dismisses the same claim a second time, that dismissal “operates as an adjudication on the merits,” which is legal shorthand for a ruling that treats the claim as decided. The district argued this converted the second dismissal into a final loss, one that should block the state court case under claim preclusion, the doctrine that stops a party from relitigating a claim already resolved. The trial court agreed and threw the case out. A divided Court of Appeal affirmed.

What the Supreme Court actually held

The Supreme Court reversed, and its reasoning is worth understanding because it corrects a common misreading. Leaning on the U.S. Supreme Court’s decision in Semtek Int’l Inc. v. Lockheed Martin Corp., the Court explained that the two-dismissal rule is a rule of federal procedure, not a rule of claim preclusion. “Adjudication on the merits,” as Rule 41 uses the phrase, means only that the plaintiff can’t refile the same claim in the same federal court. That’s a necessary condition for claim preclusion. It is not a sufficient one.

In plain terms, the rule polices the door of the federal courthouse where the dismissals happened. It doesn’t lock every other courthouse in the country. A dismissal that bars a refiling in federal court still doesn’t touch a plaintiff’s ability to press state law claims in state court, where the federal rule has no force at all. California, the Court noted, has no equivalent two-dismissal rule of its own.

Reading the rule any other way would raise real problems. It would push past the limits of the federal Rules Enabling Act, which bars procedural rules from enlarging or shrinking substantive rights, and it would create the very state-federal outcome gap that federalism principles exist to prevent. Because the plaintiffs’ voluntary dismissals weren’t judgments on the merits under either federal or California law, the result came out the same under both the federal and the California rules of claim preclusion.

Why this matters for your litigation strategy

For defendants, the practical lesson is direct. Don’t assume a plaintiff’s repeated dismissals mean the threat is gone. If the claims can stand on state law, they can reappear in California state court, and a federal procedural rule won’t stop them. That possibility belongs in how you evaluate settlement posture, reserves, and overall risk.

For plaintiffs and their counsel, the decision preserves flexibility. A stumble in federal court, or a deliberate retreat from it, doesn’t automatically forfeit state law claims that belonged in state court in the first place.

And for anyone choosing between forums, the case is a reminder that where you file, and where you dismiss, carries consequences that don’t always travel with you. Federal and state litigation run on different rules, and the seams between them are exactly where disputes like this one live.

The Bottom Line

A dismissed case isn’t always a closed case. Doe v. Marysville draws a clean line: the federal two-dismissal rule bars refiling in the same federal court, and nothing more. If you’re weighing whether a matter is truly behind you, or planning your next move across state and federal forums, that line is worth knowing before you lean on it.

Business litigation, appellate strategy, and the procedural questions that decide where a case can be fought are central to Horst Legal Counsel’s practice. If you’re assessing whether a dismissed matter can return, or mapping strategy across state and federal court, we’re glad to talk it through. Contact us here.

The post Dismissed Twice, Still Not Over: California Limits the Two-Dismissal Rule appeared first on Horst Legal Counsel.

The case is Sunflower Alliance v. Department of Conservation (Cal. Supreme Ct., June 25, 2026). A company called Reabold wanted to reopen a dormant oil well in Contra Costa County, plugged and idle since the 1980s, and convert it into a well for injecting treated wastewater deep underground, about 12,600 gallons a day for twenty years. CalGEM, the state division that regulates these wells, approved the project and declared it exempt from the California Environmental Quality Act, the law that forces environmental review of projects that may carry impacts. It leaned on the “class 1” categorical exemption, which covers minor alterations to existing facilities involving “negligible or no expansion” of an existing or former use. A community group, Sunflower Alliance, sued. Turning an oil-extraction well into a wastewater-injection well, it argued, is no negligible change.

What the Class 1 Exemption Actually Asks

The Court of Appeal sided with the company, but its reasoning is what should get your attention. It read “negligible” to mean environmental risk. Because the agencies had found the injection posed little danger to nearby water, the court called the change in use negligible and the exemption satisfied. Strip the case to its core and one question remains. Does “negligible” measure the change in use, or the risk of environmental harm?

The Supreme Court’s Answer

The change in use, and only the change in use. Writing for a unanimous court, Chief Justice Guerrero held that the exemption’s text speaks to expansion of use and says nothing about environmental risk, and a court doesn’t get to write in words the regulation left out. The risk question has its own home in CEQA’s structure. When the state built its catalog of categorical exemptions, it decided once, at the rulemaking stage, that those categories of projects don’t typically cause significant environmental effects. Let an agency or a court relitigate that risk project by project, at the exemption stage, and you collapse two separate steps of the law and skip the public environmental review reserved for projects that don’t qualify.

So the court reversed and handed the case back to answer the right question, whether converting a shuttered oil well into a high-volume injection well is a negligible change in use. Justice Kruger, concurring, put her finger on the part left unresolved. Deciding what counts as “negligible” still needs a yardstick, and she pointed to the Guidelines’ own examples, adding a bike lane to a street, turning a home into an office, as the measure of how much change the exemption can absorb.

What This Means for Developers, Property Owners, and Operators

If your project reaches approval through a CEQA categorical exemption, the takeaway is blunt. Anchor your case to the scope of the change in use, not to how safe the project is. A file thick with evidence of low environmental impact, however convincing, answers a question the exemption never asked. For anyone who learned to win exemptions by pointing at minimal harm, that’s a genuine reset.

It cuts both ways. A genuinely low-risk project can still be too large a change in use to qualify, so some projects that used to slip through will now draw full review. But the same rule protects a truly minor change from being second-guessed on risk grounds. For oil and gas operators, water agencies, and industrial users eyeing conversions of existing facilities, the scope-of-use framing now governs. For developers and property owners, the play is to show, on the record, how the project fits the nature and degree of an existing use, and to treat the categorical exemption as the narrow tool the Supreme Court says it is.

Bottom Line

Categorical exemptions exist to spare routine projects from full environmental review, not to let agencies make the case-by-case risk calls the Legislature assigned to the rulemaking process. After Sunflower, the question at the exemption stage is clean, and it isn’t whether your project is safe. It’s whether your project is a negligible change in use. If the honest answer is no, a mountain of risk evidence won’t rescue the exemption, and an approval built on that evidence is a challenge waiting to happen. The time to get the framing right is at the application, before the exemption is granted and then fought over in court. Horst Legal Counsel advises developers, property owners, and businesses on land use, CEQA compliance, and the disputes that follow. If a categorical exemption sits on your project’s critical path, let’s pressure-test it before someone else does.

The post Your Project’s Low Environmental Risk Won’t Win You a CEQA Exemption appeared first on Horst Legal Counsel.

The case is Division of Occupational Safety and Health v. Uber Technologies, Inc. (Cal. Ct. App., 2d Dist., June 18, 2026). Dino Park made deliveries through Uber Eats. In May 2023, after dropping off an order, he fell down a flight of stairs and died of his injuries days later. Cal/OSHA, the state agency responsible for workplace safety, carries a mandatory duty to investigate on-the-job deaths. It asked Uber for a meeting. Uber said no. So the agency issued an administrative subpoena, a regulator’s formal demand for records that doesn’t require filing a lawsuit first, seeking twenty categories of documents about Park’s work and how he died. Uber produced nothing and stood on a single theory: Park was an independent contractor under Proposition 22, the 2020 ballot measure that lets app-based drivers be treated as contractors when certain conditions hold, so the agency had no jurisdiction over it. The trial court ordered Uber to produce everything. Uber appealed.

Why the Subpoena Survived

Uber’s core argument had a surface logic. If Cal/OSHA only regulates employees, and Park was no employee, then the agency should have to establish employment before demanding a single page, perhaps in a separate lawsuit filed for that purpose. The court took that logic apart. An agency can issue a subpoena precisely to find out whether the target falls within its reach in the first place. As the court put it, drawing on decades of authority, a regulator may investigate on nothing more than a suspicion the law is being broken, or even just to satisfy itself that it isn’t. Forcing Cal/OSHA to win the contractor fight before it could investigate would invert the whole purpose of the subpoena, which was to gather the very facts that answer that question.

Two backup arguments fared no better. Uber claimed the subpoena power operates only during an on-site workplace inspection. The statute says no such thing, and the court refused to read in a limit the Legislature never wrote. Uber then argued that once the agency issued a citation carrying a small penalty, the subpoena went moot, meaning the live dispute was over. Wrong again. The six-month deadline Uber leaned on governs citations, not investigative subpoenas. Read Uber’s way, a company could simply stall until the clock ran out, and courts don’t hand businesses that kind of escape hatch.

The Limit That Matters

Uber didn’t walk away empty-handed. The trial court had ordered all twenty categories produced without cutting one, and several reached far past Park. Some swept in records on every “user” of the platform, a definition wide enough to scoop up ordinary customers. The court couldn’t see how customer data illuminated a delivery driver’s death, so it reversed that piece and sent the case back to trim the demands to what’s actually relevant. The point cuts both ways. A regulator’s investigative power runs broad, and it still has a floor, and that floor is relevance.

What This Means for Employers and Platform Companies

The classification label on your workforce won’t wall off an investigation into whether the label is right. That call belongs to the agency first, and a subpoena built to make it is enforceable. For gig and platform businesses, Proposition 22 may govern the ultimate question of who counts as an employee, but it doesn’t stop an agency from investigating whether the conditions for contractor status are even met. And for any company staring down a regulatory demand, stonewalling is the weakest hand at the table. The move that actually worked for Uber wasn’t refusing to engage. It was engaging, then fighting the demand on scope.

Bottom Line

The moment to call counsel is when the agency first makes contact, not after a judge has ordered you to comply. By then the only argument left, that the demand sweeps too far, arrives with your credibility already spent getting there. There’s real room to narrow an overbroad investigation. There’s almost none to argue the agency can’t investigate at all. Horst Legal Counsel advises businesses on regulatory investigations, worker classification, and the decisions that land the day an agency comes knocking. If you’d rather know where your company stands before that day, let’s talk.

The post When Cal/OSHA Comes Knocking, “They’re Not Our Employees” Won’t Stop the Subpoena appeared first on Horst Legal Counsel.

That’s the lesson of Quinteros v. Harbor Distributing, LLC (Cal. Ct. App., 1st Dist., June 11, 2026), where the First District affirmed sanctions against a law firm and three of its attorneys after a brief filed under their names turned out to be built on citations to cases that don’t exist and quotations nobody ever wrote. The firm’s defense was that an outside contract attorney did the drafting and apparently used AI to do it. The court wasn’t moved.

How a Routine Motion Became the Worst Misconduct the Judge Had Ever Seen

The underlying dispute was ordinary. The Lipeles Law Group filed a wage-and-hour class action in Los Angeles, then filed a nearly identical one in San Francisco against the same defendants six months later. The defense moved to stay the second as a duplicate. That’s a routine request. The firm opposed it, and that’s where everything came apart.

The trial court found the brief contained two case citations that were entirely fabricated, meaning the cases simply do not exist, plus no fewer than eight quotations falsely attributed to real cases. The judge called it the worst attorney misconduct he had seen from the bench. He sanctioned the firm and its three attorneys $6,000, jointly and severally, meaning each is on the hook for the full amount, and flagged the matter for the State Bar.

When confronted, the firm pointed at its contract attorney, who had signed a declaration swearing he used a legitimate research tool, ran a citation check three times, and never touched AI. The lawyers whose names were on the brief said they trusted him. Two admitted they never read it before it went out.

Generative AI Doesn’t Change Who Answers for It

On appeal, the firm raised three arguments and lost all three, though not all the same way. Two of them, the procedural timing complaint and the objection to paying the other side, the court wouldn’t even reach, on forfeiture, the rule that you can’t raise on appeal an objection you didn’t make in the trial court first. The firm never invoked the statute’s 21-day safe harbor, a window to withdraw a bad filing and avoid sanctions, while it was before the trial judge. It buried its central request in a footnote. It even stipulated to the tentative ruling it later attacked. The third argument, that the conduct didn’t merit sanctions, the court did reach, and rejected on the merits as within the trial judge’s discretion.

The part that matters for everyone else is what the court said about responsibility. Drawing on a fast-growing line of California decisions about AI-fabricated authority, the panel held that the duty to verify every citation cannot be handed off to any technology, or to any other person. The lawyers’ names were on the brief. One of them signed it. That signature certifies that the contents are warranted by existing law, and you don’t get to walk it back because a contractor or a chatbot did the typing.

Why This Matters Beyond the Courtroom

The holding is about lawyers, but the principle reaches any business that uses AI or outside vendors. If your team uses AI to draft a contract, a compliance filing, or a regulatory submission, accountability for the result sits with the human who releases it. The fluent, confident, fabricated output is the dangerous one, because it reads as authoritative right up until somebody checks.

For in-house counsel and executives who supervise outside firms and vendors, the case is a prompt to ask one question. Who actually reads the work before it carries our name? “We trusted the vendor” lost here, and it loses anywhere the buck is supposed to stop with you.

For anyone wiring AI into a workflow, the rule is simple. A human who understands the subject reviews the output before it goes anywhere, every time. The speed is real. So is the exposure when nobody checks.

The Bottom Line

AI is now part of how work gets produced, and courts have stopped treating “the AI did it” as an excuse. Quinteros confirms that delegation, whether to a contractor or to a machine, doesn’t move responsibility off the person whose name is on the result. The businesses that get hurt by this won’t be the ones that banned the tools. They’ll be the ones that used them without deciding, in advance, who reads the output and signs off. That decision is far cheaper as a policy than as a sanction. Horst Legal Counsel advises businesses on AI governance, professional responsibility, and litigation risk. If you want to pressure-test how AI-assisted work moves through your organization before it becomes a problem, we’re glad to talk it through.

The post Generative AI Wrote the Brief, and the Lawyers Who Signed It Paid the Price appeared first on Horst Legal Counsel.

The case is Askins v. CRST Expedited, Inc. (Cal. Ct. App., 1st Dist., No. A172921, June 4, 2026), and the facts are about as ordinary as employment disputes get. Terry Askins applied online to drive for CRST, a trucking company, and received a stack of forms that included a disclosure that the company would run a background check. He later sued on behalf of a class of applicants, claiming CRST’s forms didn’t comply with the FCRA’s rule that the disclosure appear in a clear, standalone document. The trial court certified the class, clearing it to proceed as a group claim. Then the Fifth District Court of Appeal decided Limon v. Circle K Stores Inc., holding that an FCRA plaintiff in California must show a concrete injury to have standing, the legal right to bring a claim at all. Relying on Limon, the trial court decertified the class, calling Askins’s confusion about the forms merely “informational.” The First District reversed, and it didn’t hedge.

Why Background Check Class Actions Just Got Easier

Start with the part that lands on your desk. For a willful violation of the FCRA, meaning a knowing or reckless one, the statute lets a consumer recover either actual damages or statutory damages of $100 to $1,000. The second option requires no proof of loss. No denied job. No inaccurate report. No measurable harm. A viable class action all the same.

How the court got there matters, because it explains why this won’t be easy to undo. Federal courts operate under Article III of the Constitution, which limits them to actual cases and controversies, so a federal plaintiff generally has to show concrete harm. California courts carry no such constraint. When a claim rests on a statute, standing turns on what that statute says, read with its purpose and history. So the court read the FCRA, and the text answered the question. The statutory damages clause deliberately drops the words “sustained by the consumer” and “as a result of the failure.” Congress titled the 1996 amendment that created it “Minimum Civil Liability for Willful Noncompliance.” And Congress allowed statutory damages only for willful violations, while holding negligent ones to actual damages. Those choices, taken together, show that proof of injury was never the price of admission. The denial of the disclosure Congress promised is the injury the law exists to prevent.

The court then took Limon apart. Limon leaned on a 2019 dictionary definition of “damages,” and the court noted the FCRA was amended in 1996, when the controlling definition plainly reached technical invasions of rights with no measurable loss. It lined Askins up next to a string of recent California rulings reaching the same result under parallel consumer statutes. The split between the districts is now open and acknowledged, which is usually how cases find their way to the California Supreme Court.

What This Means for California Employers

The takeaway is blunt. A plaintiff who lost no job and saw no inaccurate report can still build a class action out of your hiring paperwork, and every willful violation carries $100 to $1,000 in statutory exposure multiplied across each applicant in the class. Anyone who might fail the harm test in federal court now has a reason to file in state court, or to stay there. The defense that worked under Limon is no longer safe in the First District.

The fix isn’t a litigation strategy. It’s paperwork. The FCRA requires the background check disclosure to stand alone in its own document, clear and conspicuous, free of extra releases, waivers, and clutter. That’s exactly the kind of form a company drafts once and reuses for years without a second look. If yours bundles the disclosure with other content, or buries it, that’s the defect these cases are built on.

The Bottom Line

Askins doesn’t change what the FCRA asks of employers. It changes who can sue you for getting it wrong, and in California state court the answer is now nearly anyone you ran a check on, harmed or not. Pull your background check disclosure and authorization forms and have them reviewed against the standalone-document rule before a plaintiff’s lawyer reviews them for you. Horst Legal Counsel works with employers on FCRA compliance and employment litigation, and if you want a clear read on where your forms stand, we’re glad to take a look.

The post In California, a Background Check Class Action No Longer Needs a Victim appeared first on Horst Legal Counsel.

The decision is Guild Mortgage Company v. CrossCountry Mortgage, filed on May 27, 2026, by the Fourth District Court of Appeal. The trial court had thrown out the entire case at the pleading stage, largely on the theory that California’s trade-secret statute swallowed up most of the claims. The Court of Appeal reversed across the board and sent the case back to be litigated. The opinion deserves attention because the trial court’s reasoning tracks the defenses competitors raise all the time, and the appellate court rejected each of them.

An Eighteen-Month Raid Run From Inside the Company

Guild and CrossCountry are rival nationwide residential mortgage lenders. According to Guild’s allegations, over roughly eighteen months beginning in January 2020, CrossCountry recruited and conspired with several employees at Guild’s Kirkland, Washington branch to dismantle it from within. While still employed and paid by Guild, those employees allegedly recruited their own colleagues to jump to CrossCountry, diverted Guild’s customers, and converted Guild’s pipeline of active loan applications to the competitor. They are also alleged to have accessed Guild’s computer systems without authorization and copied confidential information, including borrower data, customer financial information, and employee compensation details, to help CrossCountry gain an edge.

At the center was the branch manager, whom Guild had trusted to run the office, hire and supervise loan officers, and safeguard customers’ sensitive financial information. Two other managers were also involved, and all three had signed agreements promising not to solicit or divert Guild’s clients or employees. The alleged result was a mass resignation that cost Guild essentially the entire branch. In a separate arbitration against the three employees, an arbitrator later awarded Guild more than $10.6 million against the branch manager alone. This lawsuit targets the competitor that allegedly orchestrated the scheme.

Employees Can Plan to Leave, but They Cannot Switch Sides on Your Payroll

The first question was whether the departing employees owed Guild any duty that CrossCountry could be liable for helping them breach. California law has long recognized that an employee owes undivided loyalty to the employer while still employed. An employee is free to look for another job and to make ordinary preparations to compete before resigning, but the employee cannot transfer that loyalty to a competitor while still drawing a paycheck. Acting against the employer’s interests during employment breaches the duty.

The trial court had relied on a 2018 decision that some read to mean a disloyal-employee claim sounds only in contract, not in tort. The Court of Appeal declined to follow that reading. It explained that the earlier case had overlooked settled authority and a Labor Code provision requiring employees to prefer the employer’s business, and it confirmed that conduct of the kind alleged here violates a social policy that supports tort liability. The court also held that the branch manager could be a fiduciary as a matter of law. Fiduciary status does not turn on a person’s title or on whether he had unilateral authority. What matters is the level of trust, confidence, and discretion the employer placed in him. A manager entrusted with running a branch can owe fiduciary duties even without the title of officer.

Trade-Secret Law Does Not Swallow Every Claim

The trial court’s central rationale was that California’s Uniform Trade Secrets Act displaced Guild’s interference and computer-fraud claims. This is a familiar defense move. When a competitor is sued for poaching employees, customers, and data, it often argues that the dispute is really just a trade-secret case, so that every related claim must rise or fall with trade-secret law.

The Court of Appeal rejected that framing here. Courts look to the gravamen, or gist, of the complaint to decide whether the trade-secret statute displaces a claim. Guild did not even plead trade-secret misappropriation, and the heart of its case was not the theft of confidential files. It was a coordinated scheme to sabotage an entire branch from the inside, which caused damage far beyond the loss of any particular document. On those allegations, the interference claims were not displaced.

The court went further on Guild’s computer-fraud claim under the Comprehensive Computer Data Access and Fraud Act. No published California decision had resolved whether the trade-secret statute displaces a civil claim under that computer-fraud law, and federal courts had split on the question. The Court of Appeal held that it does not. The two statutes address different harms, and the Legislature expanded the computer-fraud remedy over time in a way that would make little sense if trade-secret law quietly absorbed it. The practical upshot is that unauthorized access to your systems can support its own claim, whether or not the data taken qualifies as a trade secret.

What This Means If a Competitor Targets Your Team

For employers, the decision is a useful counter to the playbook competitors use when they recruit a team away. Your employees owe you loyalty while they work for you, and that loyalty is enforceable in tort, not only under whatever contract they signed. Managers you entrust with real responsibility may owe fiduciary duties even if they are not officers. And a competitor who knowingly assists or induces that disloyalty can be on the hook for aiding and abetting, and for interfering with your contracts and customer relationships.

Just as important, you are not confined to a trade-secret theory, and you should resist being forced into one. If the real injury is the loss of a team, a customer base, or a book of business, build the case around that conduct rather than around a handful of copied files. And if someone reached into your systems without permission, the computer-fraud statute is a separate tool that does not depend on proving a trade secret. On the prevention side, this is a reminder to keep loyalty and non-solicitation terms current in employment agreements, to cut off system access for departing employees promptly, and to act quickly when a pattern of coordinated departures starts to emerge.

Bottom Line

The Court of Appeal did not decide that Guild wins. It decided that Guild is entitled to prove its case, and it cleared away the defenses the trial court had used to end the lawsuit before it started. For any California business that depends on its people, its clients, and its data, the decision confirms that a competitor cannot orchestrate a raid from inside your company and then hide behind trade-secret law to escape the consequences. Horst Legal Counsel helps businesses protect their teams and client relationships, and pursue the parties who try to take them.

The post A Competitor Gutted a Rival’s Branch From the Inside. A California Court Just Revived the Lawsuit. appeared first on Horst Legal Counsel.

The California Supreme Court decided J.O. v. Superior Court on May 28, 2026, in a unanimous opinion authored by Justice Groban. The Court overruled part of a 1977 precedent and held, for the first time, that when a party abuses the judge-disqualification statute to force a particular judge off all of their cases in bad faith, a court can look behind the paperwork and ask what’s really going on. For anyone who litigates in California, and especially for anyone who litigates against an institutional opponent, the rules around judicial disqualification just shifted.

The Tool at the Center of the Case

California’s Code of Civil Procedure section 170.6 gives every litigant a powerful right. By signing an affidavit, or simply stating under oath, that a judge is “prejudiced” against them, a party can force that judge off the case. No proof required. No hearing. The disqualification is automatic, and a new judge gets assigned. The idea behind the rule is sound. Sometimes a litigant has a good-faith belief that a judge is biased but can’t prove it, and the law would rather remove the judge than force a party to litigate in front of someone they distrust.

The problem is what happens when the tool gets weaponized. If a district attorney’s office, a public defender, a county counsel, or even a private firm that handles most of one kind of case decides it wants a particular judge gone, it can file the same challenge in case after case. Done at scale, this isn’t about prejudice in any single case. It’s about removing a judge the office doesn’t like, often because the judge ruled against them once. Courts call this a “blanket challenge.”

What Happened Here

The petitioner, identified only as J.O., is under a conservatorship in San Joaquin County. According to the allegations, after Judge Erin E. Guy Castillo admonished a county counsel attorney for improper conduct, the county counsel’s office began disqualifying her across the board in conservatorship cases. Petitioner’s counsel estimates the office filed roughly 325 section 170.6 challenges against her in under four months. The result, as alleged, was that Judge Guy Castillo got reassigned out of the department handling mental health and conservatorship matters and into one hearing misdemeanors, traffic, and small claims.

The trial court felt its hands were tied. Under the 1977 precedent, Solberg v. Superior Court, blanket challenges were treated as immune from this kind of constitutional objection, so the court rejected the challenge to the practice without ever examining whether it was made in bad faith. The Court of Appeal denied relief. The Supreme Court took the case to decide whether Solberg still held up.

The Big Move

It doesn’t, at least not on this point. The Court explained that the judiciary of 1977 looks nothing like the one operating today. Caseloads have ballooned. In 1977 there were about 54,000 felony filings statewide. In the most recent year measured, there were nearly 180,000. Courts now run specialized calendars for things like conservatorships, family law, and drug and mental health treatment, all of which depend on assigning judges with particular training. Budgets are tighter and judicial vacancies are real. In that environment, letting a party force a specialized judge off an entire category of cases does real damage to the court’s ability to run itself.

That damage, the Court held, is a separation of powers problem. The California Constitution gives the judiciary, through the presiding judge, the authority to assign its own judges. When a litigant uses blanket challenges in bad faith to override those assignments, it lets one party effectively seize a function the Constitution reserves for the courts. So the Court overruled Solberg to the extent it barred courts from examining blanket abuses, while leaving the statute itself, and every good-faith individual challenge, fully intact.

How It Works Now

The Court borrowed the familiar burden-shifting framework from jury-selection challenges. First, the party opposing a section 170.6 motion has to timely object and make a preliminary showing that the other side is lodging bad-faith blanket challenges, often by pointing to a pattern of repeated strikes against the same judge after an adverse ruling. If that showing is made, the burden shifts to the party that filed the challenge to give a genuine, case-specific reason for believing the judge is prejudiced. Then the court decides whether the challenge was made in good faith or as part of a bad-faith blanket policy. A single good-faith challenge is still automatic and still requires no proof. Only the abusive, across-the-board pattern is now open to scrutiny.

One detail worth noting for civil practitioners. The Court made clear this applies to everyone, not just prosecutors. A private law firm that handles the bulk of a particular kind of case in a small county could just as easily abuse the statute to push out the one judge hearing those matters. The constitutional problem comes from the conduct, not the identity of the party.

What This Means for Litigants

If you litigate in California, the integrity of who hears your case just got a little more protected. The practice of quietly running a judge off the bench by paper, which has frustrated courts for decades, now has a check on it. Institutional players who relied on blanket challenges as a strategic tool need to rethink that approach, because the affidavit that used to be unreviewable can now be examined when a pattern of bad faith is shown.

At the same time, the Court was careful about what it did not do. It did not touch the facial validity of section 170.6, and it rejected an amicus proposal to bar government attorneys from using the statute at all, calling that solution a step too far. Your right to disqualify a judge you genuinely believe is biased, in your own case, is exactly where it was. What changed is the ability to weaponize that right across an entire docket.

The Bottom Line

J.O. v. Superior Court restores a piece of authority the courts thought they had lost. For most litigants, the practical takeaway is reassurance that the forum is harder to manipulate. For institutional and high-volume litigants who treated blanket challenges as part of the playbook, the takeaway is a warning. The pattern that used to be invisible is now something a court can be asked to examine, and the time to reassess that strategy is before the objection lands, not after.

If your matter involves questions about judicial assignment, disqualification, or litigating against a repeat institutional opponent in California, this decision may affect how you plan your approach. Reach out to Horst Legal Counsel to talk through what it means for your case.

The post California Courts Can Now Ask Why You Keep Firing the Judge appeared first on Horst Legal Counsel.