Procedural Posture

Defendants, a publishing company and its subsidiary, by a writ of supersedeas, appealed an order from the Superior Court of Alameda County (California), issuing a preliminary junction that restrained defendants from conditioning the employment of plaintiff job applicants, and of any other member of the named class seeking employment with defendant subsidiary, upon submission of mandatory urinalysis testing for drugs and alcohol.

Overview

Plaintiff job applicants obtained a preliminary injunction restraining defendants, a publishing company and its subsidiary, from conditioning employment of certain categories of job applicants upon submission to Penal Code 166 Violating a Court Order mandatory urinalysis testing for drugs and alcohol. On appeal, the court reversed. The court held that Cal. Const. art. I, § 1 recognized a right to privacy and was intended to protect that right from both governmental and private intrusion. However, in the context of private action, the test was whether the conduct complained of so substantially burdened plaintiff's right of privacy that it was constitutionally unreasonable. Because employers were authorized to condition employment on results of a medical examination under Cal. Code Regs. tit. 2, § 7294.0(d) and Cal. Gov't. Code §§ 12920, 12921, 12926, and 12994, and a urinalysis was a routine part of any medical examination, job applicants should reasonably anticipate such testing. The testing was only slightly more intrusive than other aspects of the job-seeking process; the subject applicants were given advanced notice of the testing; and the procedures used minimized the intrusiveness of the drug-screening program.

Outcome

The trial court's order granting the preliminary injunction was reversed. While defendant subsidiary's preemployment drug and alcohol testing program did intrude upon a recognized expectation of privacy, it did not so substantially burden the right to privacy that it was constitutionally impermissible; nor was the program otherwise unlawful. Plaintiff job applicants had no likelihood of prevailing on the merits.

Procedural Posture

Plaintiff, a shareholder in a company acquired in a merger transaction, sued defendant, the law firm that represented the acquiring company, for fraud and negligent misrepresentation. The Superior Court for the County of Los Angeles (California) sustained the law firm's demurrers and dismissed the shareholder's complaint with prejudice. The shareholder appealed.

Overview

The shareholder alleged that the law firm concealed so-called "toxic" terms of a third-party financing transaction, and thus defrauded him into exchanging his stock in the acquired company for "toxic" stock in the acquiring company. The law firm demurred, contending that it had no duty to disclose the financing terms to an adverse party in the merger transaction. On appeal, the court held that the demurrer to the cause of action for negligent misrepresentation was properly sustained, as no positive assertions were alleged. However, the court concluded that the complaint stated a fraud claim based on nondisclosure. The complaint alleged the law firm, while expressly undertaking to disclose the financing transaction, provided disclosure schedules that did not include material terms of the transaction. Additionally, the court rejected the argument that the fraud claim was barred by the statute of limitations as set forth in Cal. Code Civ. Proc. § 338(d). The court could not say, as a matter of law, that the shareholder's knowledge that a $ 10 million financing transaction would occur, standing alone, should have made him suspicious that the transaction might contain "toxic" terms.

Outcome

The order dismissing the complaint, construed as a judgment of dismissal, was reversed, and the cause was remanded for further proceedings.