Summarizing, explaining and commenting on legal developments impacting California Lawyers and Judges
The Second District holds claims of concealment under the guise of attorney-client privilege are protected petitioning activity under California’s Anti-SLAPP statute.
Rafael Suarez consulted with Trigg Laboratories and its owner Michael Trygstad to increase company profit and growth, prepare Trigg for an eventual sale, and raise capital under an oral agreement. After Suarez partially performed and deferred payment, Trygstad complained Suarez’s compensation was excessive and refused to reduce their agreement to writing. Suarez sued Trysgstad for quantum meruit.
Trygstad engaged other consultants to help sell the company. He instructed these consultants not to send a letter of intent by an interested investor to him directly, but through an attorney to keep the contents privileged. Suarez agreed to settle his claim unaware of the interested investor. … Read full Post
The Ninth Circuit holds a claims about post-settlement failure to disburse settlement funds and to report information to a carrier as mandated by California’s independent counsel statute do not involve protected petitioning activity and are not barred by the litigation privilege.
Robert Hirsh was retained to represent Travelers’s insured as independent counsel. When Travelers sued him for failing to release settlement funds received in the litigation, he filed a motion under California’s anti-SLAPP statute, C.C.P. § 425.16.
The Ninth Circuit affirmed the District Court’s denial of the motion. Anti-SLAPP motions involve a two-step process. The court decides whether the defendant has made a threshold showing the challenged cause of action is one arising from activity to further the constitutional right of petition or free speech. If so, the court then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. … Read full Post
The Ninth Circuit holds an attorney can be liable under securities laws and common law torts if he goes beyond his proper role, and actively participates in the client’s fraud.
ESG Capital Partners, L.P. (“ESG”) was a group of investors formed to purchase pre-Initial Public Offering Facebook shares. Timothy Burns, ESG‘s managing agent, negotiated a purchase with “Ken Dennis,” an alias for Troy Stratos. When the purchase turned out to be a fraud, ESG sued Stratos and his attorneys, David Meyer and Venable LLP.
ESG alleged Meyer helped Stratos form Soumaya Securities, LLC which allowed Stratos to conduct business without detection. Soumaya was never authorized to do business in California, had no bank accounts, and filed no tax returns. Stratos masqueraded as “Dennis” for all Soumaya transactions. Its operating documents, which Meyer prepared, listed Stratos as Soumaya’s manager and sole member and the fictional “Dennis” as its CEO. … Read full Post
The Second District holds an attorney cannot benefit from a client’s estate plan presumed to result from undue influence.
John A Patton had been a client of John F. LeBouef. Patton suffered from depression, alcohol abuse, and many health problems. After Patton’s partner died, LeBouef befriended him. When Patton died, LeBouef proffered an estate plan that benefitted him. This was a radical change in Patton’s prior estate plan, which benefitted his nieces and a long-time friend.
In affirming the trial court’s decision to invalidate the trust, the Court of Appeal upheld the trial court’s admission of evidence the inferences it drew. There was ample evidence LeBouef had manipulated Patton, and engaged in other dishonest acts. … Read full Post
The First District refuses to overturn an arbitration award on the grounds an arbitrator failed to make sufficient disclosures to reveal bias. The Court held there was no basis to award attorney’s fees for the work of a female attorney at a rate lower than that of a male attorney with similar credentials.
Baxter filed a request for Mandatory Fee Arbitration (MFAA) against his former clients, Michael and Lorie Bock. The parties stipulated to a binding award. Baxter appealed an award in the Bocks’ favor asserting, the arbitrator was biased.
Baxter asserted Schratz told the parties only that he had worked for an insurance company in the past, and had previously served as an arbitrator. He did not reveal he had built his reputation as a legal fee auditor. The Court of Appeal concluded Baxter’s evidence, which comprised articles Schratz wrote about billing practices; profiles written about Schratz’s work; and a declaration of an attorney who claimed Schratz targeted attorneys, did not demonstrate disqualifying bias. … Read full Post
The Second District holds a press release reporting a trial result is privileged under C.C. §47(d), a fair and true report of an official proceeding.
J-M, a manufacturer of PVC pipes used in underground water systems, was sued by Phillips & Cohen’s clients for false claim act violations. J-M represented its pipes met industry standards established by the American Water Works Association (AWWA) and the Underwriters Laboratories (UL) for long-term strength and durability. Phillips & Cohen alleged J-M falsely claimed all its pipes met the standards and were manufactured in a substantially identical manner to a pipe originally determined to comply with the standards. Phillips & Cohen introduced evidence J-M had altered its manufacturing process to meet increased production goals and paid employee bonuses to achieve these goals. Phillips & Cohen emphasized this was not a products liability case and it did not need to show the pipes had failed. The jury agreed J-M falsely represented uniform compliance with the industry standards.
After this phase of the trial Phillips & Cohen issued a press release stating a jury found J-M manufactured and sold substandard plastic pipe used in water and sewer systems which could expose it to potentially billions of dollars in damages. The release explained the trial was bifurcated between liability and damages. J-M responded with a complaint for defamation and trade libel alleging the press release was not a fair or accurate report of the proceedings. … Read full Post
The Second District holds an attorney’s violations of pre-trial evidentiary rulings warrant a sanction of dismissal.
Rebecca Osborne retained Glenn Murphy to sue Todd Farm Service and Berrington Custom Hay Stacking and Transport, Inc. (Berrington) when she was injured by a hay bale that unexpectedly gave way as she was tossing it. There was scant evidence that the hay bale was supplied by Berrington, and the broker Todd used multiple hay suppliers.
Murphy failed to timely designate experts, and attempted to remedy this error by serving a “supplemental” designation, which Berrington successfully moved to strike. Motions in limine precluded Osborne from testifying as an expert about the supplier of the hay bale, including her opinion about the geographic origin of the hay bale based on its color and texture, or the manner it was cut, harvested, baled, manufactured, stored and moved. … Read full Post
The Fourth District holds a court may not conduct an in camera review of attorney-client communications once the holder of the privilege makes a prima facie showing of privilege.
Robert Obarr worked closely with his assistant, Christi Torres Galla, and was represented by Attorney Kimes in a variety of matters. Obarr sold a piece of real property to two competing buyers, Pham and Westminster, and became involved in litigation with them on claims and cross-claims. Cheadle became the representative of Obarr’s estate after his death.
Pham’s counsel received Obarr’s attorney client communications from Galla, but failed to notify Cheadle and used them to oppose a summary adjudication motion. Pham argued Galla voluntarily provided the communications, one of which was not privileged. Obarr and Cheadle had waived the privilege by disclosing them to third parties, by failing to reasonably try to preserve the privilege, and by putting the communications at issue. Cheadle objected to the communications and sought Pham’s counsel’s disqualification. … Read full Post
The Ninth Circuit holds courts need not apply conflict of interest automatic disqualification rules applicable to individual litigant cases in class actions in favor of a more flexible “balancing of interests” approach.
“White Plaintiffs,” named class members, were represented by “White Counsel.” A different set of class representatives in a related separate case, the “Hernandez Plaintiffs,” were represented by “Hernandez Counsel.” Hernandez Counsel was appointed lead counsel after the cases were consolidated.
A proposed settlement included incentive awards for each named class representative who did not object to the settlement. White Counsel asserted the incentive settlement awards created a conflict of interest between the class representatives and the absent class members. In a prior appeal the Ninth Circuit agreed, because the incentive award motivated the class representatives to maximize receipt of an incentive award over protecting absent class members. The conflict extended to class counsel, who simultaneously represented clients with conflicting interests. … Read full Post
The Fourth District holds disqualification is proper in successive representation cases even if the matters have no substantial relationship to each other where the client proves the attorney actually received confidential information in the prior representation that is or could be pertinent to the later representation.
Robert Buckley represented Leslie Costello in an easement dispute with her neighbor. Leslie was dating Robert’s brother Peter, and she shared confidences with Robert about her relationship with Peter. When Leslie and Peter split, Robert offered to withdraw as counsel in the dispute with the neighbor, but Leslie elected to continue with his representation.
Sometime later Leslie sued Peter to recover money she had loaned him. Peter retained Robert who served Leslie with requests for admissions demanding she admit she gave Peter money with no expectation of repayment due to their romantic relationship. Leslie moved to disqualify Robert because he had acquired confidential information in the previous representation he could use against her. … Read full Post