Step-By-Step Guide to the San Francisco Health Care Security Ordinance

The San Francisco Health Care Security Ordinance (HCSO) became effective on January 9, 2008. The HCSO requires most San Francisco employers to make minimum health care expenditures for their employees, to track such expenditures, and to confirm compliance. Folger Levin & Kahn LLP has prepared a summary of the HCSO intended to be a step-by-step guide to help businesses understand the basic requirements of the ordinance. If you have any questions about the application of the HCSO to your business, please contact any of us in the Labor and Employment Practice Group.

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New Legal Developments for California Employers

This posting provides a summary of many new developments in California Employment Law for 2008, including summaries of new statutes, case law, and regulations that will impact California employers. If you have any questions about the application of any of these laws to any particular situation effecting your company, please contact one of us in the Labor and Employment Practice Group.

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Food Warnings To Undergo Changes in Method, Content under California’s Proposition 65

The One Sentence Summary: Retailers selling food now have the opportunity to advise a California regulatory agency about making new rules on methods for giving consumers warnings, and the content of such warnings, regarding exposure to chemicals that cause cancer or birth defects, as provided under the state’s “Proposition 65”.


Full Posting:

On February 15, 2008 the California Office of Environmental Health Hazard Assessment (OEHHA), part of Cal/EPA, announced that it is seeking input concerning the content of warnings for exposures to listed chemicals in foods. In particular, OEHHA is looking for language that conveys the required warning message without undue confusion for consumers. Based on input, OEHHA will develop proposals for amending the existing, and rather limited, regulations that dictate options for both the method and the content of warnings for exposures to listed chemicals in foods.

Examples of such input would be ideas about on-product labels, off-product signage, centralized warnings for all affected food products in the store, in-store warning information kiosks, print media warnings or web-based information.

Proposition 65 is a California law requiring that businesses of ten or more employees provide warnings before exposing people to certain listed chemicals that cause cancer or birth defects. Detailed regulations have been enacted regarding specific “safe harbor” language that may be used in the warnings, as well as the methods for providing warnings, such as signs posted at point-of-sale. The law, titled the Safe Drinking Water and Toxic Enforcement Act of 1986, Health and Safety Code section 25249.5, et. seq., has given rise to litigation around chocolate, certain cooked foods, and fish. The law applies to products offered for sale in California, regardless of origin.

The deadline for providing input on better ways to provide consumer warnings about chemicals in food sold by retailers is March 28, 2008. Stakeholders may also participate in a public workshop on March 14, 2008, from 10 a.m. to noon, at the Cal/EPA headquarters in downtown Sacramento, California.

More information is available in the OEHHA announcement at http://www.oehha.ca.gov/prop65/law/regproc021508.html

Retailers will have additional opportunities to comment formally on revised warning methods and language after OEHHA publishes draft proposed rules.

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Landlord Must Provide Tenant with Supporting Documentation of Actual Common Area Expenses Incurred

Case: McClain v. Octagon Plaza, LLC, Case No. B194037 (Cal. Ct. App. 1/31/08)

The One Sentence Summary: Where retail lease requires tenant to pay its share of common area expenses based on landlord's statement of the expenses, tenant is entitled to review landlord's supporting documentation to verify that the stated expenses were incurred and that the amounts are accurate.


What They Were Fighting About: Plaintiff McClain, doing business as A+ Teaching Supplies, entered into a lease for space at a shopping center owned and managed by defendant Octagon Plaza. The lease stated that the leased premises were "approximately 2,624 square feet" and occupied 23 percent of the shopping center. In addition to paying base rent, tenant was required to pay as additional rent 23 percent of the common area expenses within a specified time period after landlord provided tenant with a "reasonably detailed statement" of the actual expenses. After entering into the lease, plaintiff discovered that her unit occupied only 2,438 square feet, or 186 square feet less than stated in the lease and represented by defendant during their lease negotiations. The shopping center was also 965 square feet or 8.1 percent larger than represented by landlord. As a result, plaintiff's share of the common area expenses should have been 19 percent rather than 23 percent. The size differences increased plaintiff's rent and additional rent payments by more than $90,000 during the lease term. The lease contained exculpatory language that any statement of size was an approximation and agreed to by tenant as reasonable and that any payment based thereon was not subject to revision if the actual size were different. Plaintiff filed suit alleging claims including misrepresentation, breach of the implied covenant of good faith and fair dealing, and an accounting. The trial court sustained a demurrer without leave to amend on the misrepresentation and implied covenant claims, and after trial ruled that plaintiff failed to establish her claim for an accounting (or an unrelated claim for alleged violation of the Consumer Credit Reporting Agencies Act). The court of appeal reversed with respect to the claims for misrepresentation and an accounting.

Court Holdings:

• With respect to the accounting claim, the court held that the implied covenant of good faith and fair dealing entitles tenant to review documentation supporting landlord's statement of common area expenses. Because tenant's share of the common area expenses is based on the actual expenses incurred by landlord, tenant is entitled to verify that the expenses listed in landlord's statement were actually incurred and in the amounts shown.
• However, the court emphasized that tenant's right to review supporting documentation was limited. The court permitted landlord to decide whether to provide tenant with copies of the documents or allow tenant to review the originals. Moreover, the court rejected tenant's request to audit landlord's records in order to determine whether certain expenditures were necessary or appropriate. Tenant was only entitled to verify that the stated expenditures were actually incurred.
• The court further held that tenant adequately pled a fraud claim based on landlord's misrepresentations about the size of the leased premises and its percentage of the entire shopping center's square footage. Tenant alleged that had she known the correct size, she would not have agreed to the base rent and share of common area expenses stated in the lease. Landlord's use of the term "approximation" did not preclude liability for a material misrepresentation about size.
• Tenant's fraud claim was not barred by exculpatory language in the lease. Under California Civil Code section 1668, contractual provisions that would protect one against liability for his own fraud are against public policy. Thus, the lease provisions stating that the size approximations were reasonable, agreed upon, and not subject to revision regardless of actual size could not defeat a fraud claim.
  
  

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