California attorneys should review recent amendments to the California Rules of Court clarifying the unique procedures applicable when appealing in limited civil cases. In limited civil cases, decisions are appealed to the appellate division of the superior court and not to the Court of Appeal. The deadlines for appealing a decision in a limited civil case are significantly shorter than in unlimited civil cases. Generally in civil appeals, a notice of appeal must be filed within 60 days of the date notice of entry is served or, if no notice was served, within 180 days of the date the appealable judgment or order was entered. (CRC 8.104.) The rules regarding appeals in limited civil cases were previously not clear because

the appellate rules had not been amended to reflect the unification of the municipal and superior courts. Courts usually pointed to former Rule 122(a), a 1964 rule for “Appeals from Municipal and Justice Courts in Civil Cases,” and applied that rule to appeals in limited civil cases.
    The recent reorganization of the rules includes new rules specifically applicable to appeals in limited civil cases. Rule 8.751 provides that a notice of appeal must be filed on or before the earliest of (1) 30 days after the clerk mails a notice of entry, (2) 30 days after a party mails a notice of entry, or (3) 90 days after entry of the judgment or appealable order. Under Rule 8.752, if a motion for new trial is filed, the time to file a notice of appeal is extended until 15 days after entry of the order denying the motion or denial of the motion by operation of law, but in no event may the notice of appeal be filed later than 90 days after the date of entry of the judgment. A cross appeal must be filed within 10 days after the trial court clerk mails a notification of the first appeal or within the time period otherwise prescribed by local rules. These short deadlines cannot be extended by the court or by agreement. When appealing in a limited civil case, these deadlines must be honored or your appeal will be dismissed for lack of jurisdiction.

   The Second Circuit, in a case of first impression, has held that the time period for filing an appellant’s brief in a bankruptcy appeal only begins to run when the clerk sends notice that an appeal has been docketed. This issue arose in the Enron bankruptcy proceedings. Glatzer filed proofs of claim seeking compensation for an alleged misappropriation by Enron of Glatzer’s idea to scrutinize oil and gas reserves. The bankruptcy court sustained Enron’s objections to the proofs of claim, and Glatzer filed a timely notice of appeal in the bankruptcy court on April 19, 2004. Notice of Glatzer’s appeal was docketed in the federal district court for the Southern District of New York on June 23, 2004. No notice of the docketing of his appeal was ever sent to Glatzer. On December 27, 2004, Glatzer filed a letter requesting permission to adjourn his appeal and lift the automatic stay so he could join Enron in a state court action where he was pursuing the same claims. Enron responded by moving to dismiss the appeal for failure to file an opening brief within the 15-day time period established by Bankruptcy Rule 8009. Glatzer claimed the time period for filing his brief had not yet run because he had not received notice that the appeal had been docketed. The district court dismissed Glatzer’s appeal, holding that the Rule 8009 time period began to run when the appeal was docketed.
   In Glatzer v. Enron, 475 F.3d 131 (2d Cir. 2007), the Second Circuit reversed, concluding that the district court abused its discretion by dismissing the appeal. Rule 8009 requires an appellant to file a brief within 15 days after the appeal is docketed pursuant to Rule 8007.

Rule 8007 requires that when the record on appeal is complete, it is to be transmitted to the district court clerk (or the clerk of the bankruptcy appellate panel), and the clerk is required to docket the appeal and give prompt notice to all the parties of the date on which the appeal was docketed. The court rejected the district court’s conclusion that the time period began to run when the appeal was docketed, concluding that notice requirements are generally an integral part of the time limits found in both the Bankruptcy Code and the bankruptcy rules of procedure. The Second Circuit, joining the Third and Fourth Circuits, held that in bankruptcy appeals, the time period for filing a brief runs from the date the clerk sends notice that the appeal has been docketed. The court indicated that ruling otherwise would prejudice appellants when the notice was not mailed properly, which would cut into the already short time period in which a brief must be filed. If notice is not sent, an appellant cannot be certain when the appeal was actually docketed and therefore cannot know precisely when its brief is actually due. The court also rejected Enron’s contention that because Glatzer had actual notice of the date the appeal was docketed, he failed to timely file his brief. Instead, the court concluded that the time period cannot begin to run until notice is sent by the clerk, regardless of whether the appellant had actual knowledge. Bankruptcy practitioners should be aware of this interpretation of the appellate time periods.

   A New York court has recently made it clear that the absolute privilege applicable to statements made during litigation is to be construed and applied liberally. In Sexter & Warmflash, P.C. v. Margrabe, 2007 WL 14694 (N.Y. 1st Dep’t 2007), Elizabeth Margrabe and her brother Anthony Rusciano hired the law firm of Sexter & Warmflash to represent them in a business dispute regarding a family-owned business. The retention letter with the firm advised Margrabe and her brother that there might be a conflict of interest between them related to the value of their interests in the business entities. On behalf of Margrabe and her brother, the firm filed a lawsuit in New York state court. A preliminary settlement was reached, the terms of which were placed on the record in open court. As negotiations continued regarding the form of the settlement’s final documentation, Margrabe appointed her husband as her attorney in fact for purposes of those negotiations. Margrabe’s husband became concerned that during these negotiations, the firm was giving Rusciano’s interests priority over Margrabe’s. Margrabe and her husband sent the firm a 12-page letter that included a long list of complaints regarding the firm’s representation and also accused the firm, inter alia, of making numerous legal and drafting errors, manipulating their clients, making concessions adverse to Margrabe’s interests, and making misleading communications. Copies of the letter were sent to other lawyers retained by Margrabe and to Rusciano.

The firm sued Margrabe and her husband alleging a single cause of action for defamation based on the statements made in the letter.
   On appeal, the Appellate Division, First Department dismissed the complaint based on the absolute privilege applicable to communications made as part of judicial proceedings. The court began its analysis by noting that an absolute privilege applies to otherwise defamatory statements made during litigation regardless of whether the statements were made with malice. New York courts have repeatedly applied such an absolute privilege to statements made in the course of legal proceedings by judges, jurors, counsel, witnesses, and parties to the proceedings when the statements are at all pertinent to the litigation. The privilege will only be withdrawn when a statement is obviously impertinent to the judicial proceeding in which it was made – that is, the statement is so outrageously out of context that it clearly was motivated only by a desire to defame. The court applies a very liberal test to the issue. If a statement is possibly or plausibly relevant or pertinent, the privilege applies. The court noted that the privilege is not limited only to statements made during oral testimony or argument or set forth in written litigation documents. Instead, the privilege extends to all pertinent communications among the parties, counsel, witnesses, or the court, whether the communication was on or off the record, made in or out of court, or made orally or in writing.
   The court held that the statements made in Magrabe’s letter fell within the ambit of the absolute privilege. The letter was directly pertinent to the quality of the firm’s representation during the litigation and the settlement negotiations. Because the Margrabes only sent the letter to the firm, other parties, and their own attorneys who had been retained for advice regarding the litigation, there was no evidence that could support a claim that the statements were outrageously out of context. When considering filing a defamation claim related in any way to litigation, New York practitioners should be aware of the broad application given by New York courts to this litigation privilege.

   The Texas Supreme Court has clarified the standards for determining whether or not a covenant not to compete is valid in the context of at-will employment. Alex Sheshunoff Management Services, LLP v. Johnson, 209 S.W.3d 644 (Tex. 2006), raised the question of whether an at-will employee who signs a covenant not to compete is bound by that agreement if, when the agreement was made, the employer had no corresponding enforceable obligation. Under the court’s 1994 decision in Light v. Centel Cellular Co., 883 S.W.2d 642 (Tex. 1994), such an agreement would have been invalid because it was not enforceable at the time it was made. In Alex Sheshunoff, however, the court modified its holding in Light and held that an at-will employee’s covenant not to compete becomes enforceable when the employer performs the obligations it made in exchange for the covenant.
   Johnson began working for Alex Sheshunoff Management in 1993 as an at-will employee. He was promoted in 1997, and a few months later, the company presented Johnson with an employment agreement containing a covenant not to compete, which the company told Johnson was a condition of continued employment. The employment agreement was at-will because it did not include a fixed term of employment and allowed either party to terminate the agreement at any time for any reason. The agreement obligated the company to give Johnson special training regarding its business methods and give him access to certain confidential and proprietary information. The covenant provided that for a period of one year after his termination, Johnson would not provide consulting services to or solicit any of the company’s clients. It was undisputed that after the agreement was signed, the company did provide Johnson with confidential information and training, which it had no preexisting obligation to do. The trial court entered summary judgment in favor of the company and the court of appeals affirmed, holding that under Light, the covenant was not enforceable because at the time it was signed,

the promises made by the company to provide special training and confidential information were illusory. The court of appeals also cited the Covenants Not to Compete Act, Tex. Bus. & Com. Code section 15.50, noting that the Act requires an agreement to be enforceable when it is made.
   The Supreme Court disagreed. The court noted that under Light and the Act, a covenant not to compete must be ancillary to or part of an otherwise enforceable agreement at the time the agreement was made. The court of appeals held that the agreement was illusory insofar as it required the company to provide confidential information and training because the company could have fired Johnson at any time. The Supreme Court did not disagree with this reasoning but did modify the holding in Light to recognize that a unilateral contract may be made enforceable by subsequent performance and still comply with the Act. The court concluded that the Act only requires that a covenant be ancillary to or part of another agreement at the time it is made and that a unilateral contract formed at the time the employer performs a promise that was illusory when made can still satisfy the Act’s requirements. In reaching this determination, the court found that while the Act was intended to make certain that a covenant was supported by new consideration, there was no requirement in the Act that the employer’s consideration have been provided at the time the covenant was signed. Instead, if the employer’s consideration is later provided by performance, there is no reason not to enforce such a covenant under the Act. In this case, the consideration was provided when the company gave Johnson the promised training and gave him access to confidential information. Because the company performed its promise under the agreement, the unilateral contract formed in the agreement made the covenant enforceable. The decision in Alex Sheshunoff will make it significantly easier to enforce covenants not to compete under Texas law.