Justia Legal Ethics Opinion Summaries

Richard Fournier and Wendy Crossland (collectively, the Fourniers) filed an action (the Fournier case) against Monster Energy Company (Monster) and a related defendant. The Fourniers were represented by the R. Rex Parris Law Firm (Parris) and Bruce Schechter (collectively the Attorneys). In 2015, the Fourniers and Monster entered into an agreement to settle the Fournier case. The parties agreed to keep the terms of the settlement confidential. Brenda Craig was a reporter for Lawyersandsettlements.com. Lawyersandsettlements.com “provide[s] a source of information about [readers’] legal rights” and also “help[s] lawyers reach out to the clients they seek.” Shortly after the Fournier case settled, Craig interviewed Schechter about cases his office was handling that involved energy drinks. In general, Schechter discussed other cases against Monster, as well as what he viewed as the negative health effects of Monster’s products. Lawyersandsettlements.com published an online article that included statements Schechter told Craig. Lawyersandsettlements.com sent the leads that it generated to attorneys who had signed up to be “advertisers.” It had “forwarded hundreds of thousands of requests for legal representation directly to lawyers.” One employee of Lawyersandsettlements.com was also a non-lawyer employee of Parris. Monster filed this action against the Attorneys, asserting causes of action for: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) unjust enrichment, and (4) promissory estoppel. The Attorneys filed a special motion to strike under Code of Civil Procedure section 425.16 (SLAPP motion), arguing, among other things, that Monster could not show a probability of prevailing on its breach of contract claim because they were not parties to the settlement agreement. In opposition, Monster argued, among other things: (1) Schechter’s statements were commercial speech and therefore unprotected, and (2) the Attorneys were “[c]learly” bound by the settlement agreement. The trial court denied the motion with respect to the breach of contact cause of action but granted it with respect to the other causes of action. When a settlement agreement provides that plaintiffs and their counsel agree to keep the terms of the agreement confidential, and plaintiffs' counsel signs the agreement under the words "approved as to form and content," the Court of Appeal held plaintiffs' counsel could not be liable to defendant for breach of the confidentiality provision. View "Monster Energy Co. v. Schechter" on Justia Law

Defendants contracted to purchase a Lafayette home, waived contingencies, discovered undisclosed matters, terminated the contract, and sought to recover their $116,220 deposit, hiring the MMB law firm. Their claims went to arbitration. MMB informed defendants that they owed $431,141.92 in legal fees, providing a draft settlement agreement for a discounted payment of $331,000 with an affirmative representation that the parties each had received independent counsel. Defendant sent MMB revisions, stating that “Clients further contend that Law Firm failed to adhere to the Clients’ direction on one or more occasions and further question the Law Firm’s handling, strategy and representation.” The arbitrator awarded the seller $116,250 on his breach of contract claim, and $75,000 in attorney fees and costs. Defendants executed the Agreement. agreeing to pay MMB $150,000. The Agreement contains mutual general releases. waiving all claims “whether now known or unknown.” MMB’s assignee, SCJLW, sued. Defendants asserted the agreement was unenforceable for lack of consideration because MMB committed legal malpractice; that their signatures were fraudulently induced; and that MMB failed to disclose its malpractice exposure in violation of their ethical duties. They admitted not making payments under the Agreement. The trial court entered judgment for $150,000, plus $81,460.20 in interest. The court of appeal affirmed. Plaintiff set forth a prima facie case for breach of contract; defendants failed to make even a prima facie case for lack of consideration. View "Property Cal. SCJLW One Corp. v. Leamy" on Justia Law

As a high school student in North Dakota, Dagny Knutson was an internationally ranked swimmer. She committed to Auburn University because one of its coaches, Paul Yetter. In March 2010, Mark Schubert, USA Swimming’s head coach, told Knutson that Yetter was leaving Auburn University. Schubert advised Knutson to swim professionally rather than at Auburn or another university. He orally promised her support to train at a “Center for Excellence” formed by USA Swimming in Fullerton, California, including room, board, tuition, and a stipend until she earned her degree. At Schubert’s suggestion, Knutson retained a sports agent, and shortly thereafter, she turned professional, accepted prize money, and signed an endorsement agreement. A few months after Knutson moved to Fullerton, Schubert’s employment was terminated by USA Swimming. Schubert told Knutson not to worry, and assured her that USA Swimming would keep the promises he had made to her. However, Knutson became concerned because she was not receiving any money from USA Swimming. Knutson retained attorney Foster to represent her in an attempt to get USA Swimming to honor the oral agreement made by Schubert. Foster did not disclose to Knutson his close personal ties to the aquatics world, or that he had long-time relationships with USA Swimming, and other swimming organizations. Knutson testified that Foster never told her that he represented Schubert or that he declined to represent Schubert against USA Swimming because he felt there was a conflict of interest due to his relationships with people within USA Swimming. In September 2014, Knutson sued Foster for fraudulent concealment and breach of fiduciary duty. After a three-week trial, the jury found in favor of Knutson and awarded her economic and noneconomic damages. The trial court granted Foster’s motion for a new trial on the grounds that Knutson did not prove Foster’s conduct was the cause of Knutson’s damages and that Knutson had failed to offer substantial evidence of her emotional distress damages. The Court of Appeal reversed and reinstated the jury's verdict because the motion for a new trial was granted on erroneous legal theories. The Court held: (1) claims of fraudulent concealment and intentional breach of fiduciary duty by a client against his or her attorney are subject to the substantial factor causation standard, not the “but for” or “trial within a trial” causation standard employed in cases of legal malpractice based on negligence; and (2) where the plaintiff’s emotional distress consisted of anxiety, shame, a sense of betrayal, and a continuing impact on personal relationships, the testimony of the plaintiff alone was sufficient to support emotional distress damages. View "Knutson v. Foster" on Justia Law

The Court of Appeal reversed the trial court's order denying a petition to vacate an arbitration award and granting a petition to confirm it. In this case, the arbitrator did not comply with several applicable disclosure requirements, which gave rise to multiple grounds for disqualification. The court held that the arbitrator was actually aware of at least one of the grounds for disqualification, and thus the resulting arbitration award was subject to vacatur. The court held that, by not disclosing the four pending arbitration with counsel for Chase, the arbitrator violated the continuing disclosure duties under Ethics standard 7(d). View "Honeycutt v. JPMorgan Chase Bank, N.A." on Justia Law

In 2015, the Sacramento News and Review (the newspaper), published by appellant Chico Community Publishing, Inc., investigated Sacramento’s then-Mayor Kevin Johnson and his staff’s use of city resources in the take over and eventual bankruptcy of the National Conference of Black Mayors (the National Conference). As part of that investigation, the newspaper made a request to the City of Sacramento (the City) pursuant to the Act for e-mails in the City’s possession that were sent from private e-mail accounts associated with Johnson’s office. In the City’s review of the records on its servers, it identified communications between Johnson’s office and the law firm which represented the National Conference in its bankruptcy proceedings and Johnson, along with the National Conference, in litigation connected with Johnson’s contested election as the National Conference’s president. The City flagged these e-mails as potentially containing attorney-client privileged information. It then contacted the law firm to notify it that the City was compelled to release these emails because the City had no authority to assert attorney-client privilege over the records on behalf of outside counsel. The law firm contacted the newspaper and asked it to agree the City could withhold any records it determined included attorney-client communications. The newspaper refused and contacted the City, which admitted telling the law firm that some of the emails may have been privileged. Following the newspaper’s refusal to allow the City to withhold e-mails containing attorney-client communications, the National Conference, Johnson in his official capacity as the former president of the National Conference, and Edwin Palmer in his official capacity as Chapter 7 Trustee for the National Conference filed a petition for peremptory writ of mandate against the City and its City Attorney’s Office to prevent disclosure of records to the newspaper. A requester of public records who successfully litigates against a public agency for disclosure of those records is entitled to reasonable attorney fees under the California Public Records Act. The issue this case presented for the Court of Appeal's review was whether the Act also allowed for an award of attorney fees to a requester when the requester litigates against an officer of a public agency in a mandamus action the officer initiated to keep the public agency from disclosing records it agreed to disclose. The Court concluded the answer was "no." View "Nat'l Conference of Black Mayors v. Chico Community Publishing, Inc." on Justia Law

The law firm of Crowell & Moring (Crowell) was vicariously disqualified from this insurance coverage action based on a newly-hired, but disqualified discovery associate in a geographically distant office. Then, while the disqualification appeal was pending with the California Court of Appeal, the associate left Crowell. At that point, Kirk v. First American Title Ins. Co., 183 Cal.App.4th 776 (2010) became the controlling authority. "Kirk" also involved a disqualified attorney who left a vicariously disqualified law firm during the pendency of an appeal, and the result was that the order of disqualification had to be reversed and remanded back for reconsideration by the trial court. In the process Kirk outlined a number of factors that controlled the case on remand with regard to the efficacy of what is called an ethical screen in retroactively deciding whether any of a former client’s confidential communications had been actually disclosed. Following Kirk, the Court of Appeal reversed the disqualification order and returned the case to the trial court with directions to reevaluate its disqualification decision in light of Kirk – specifically the Kirk factors as to whether any confidential information has actually been disclosed. View "Fluidmaster v. Fireman's Fund Ins. Co." on Justia Law

While serving as an administrative law judge for the State Personnel Board (SPB), Richard Fisher joined the law firm of Simas & Associates as “of counsel.” Simas & Associates specialized in representing clients facing administrative actions, including those heard by the SPB. The Simas law firm represented a CalTrans employee in a high-profile case that was being heard before the SPB while Fisher was serving his dual roles. Unaware Fisher was working for the law firm representing the CalTrans employee, the SPB administrative law judge hearing the high-profile case discussed the matter in a meeting attended by Fisher and even sent a draft opinion to her SPB colleagues, including Fisher. Fisher, however, never informed anyone at the SPB of his connection with the Simas law firm. Fisher’s connection with the law firm came to light only when another administrative law judge was asked about the matter during a local bar function. The SPB dismissed Fisher from his position as an administrative law judge. Fisher challenged the dismissal, which was affirmed after a hearing before the Office of Administrative Hearings. After a petition for mandamus relief was denied by the superior court, Fisher timely filed this appeal, arguing he should have been reinstated to his position because he was never personally served with notice that working for a law firm specializing in administrative matters constituted an impermissible activity for an SPB administrative law judge. Fisher additionally argued: (1) the 2013 incompatible activities statement adopted by the SPB was “an invalid ‘underground regulation;’ ” (2) conflicting evidence “fairly detracts from the findings” that he engaged in neglect of duty and other failures of good behavior; (3) the SPB’s decision “failed to address the Skelly[2] violation” of a missing document that was not disclosed to him prior to his hearing; and (4) his termination from employment at the SPB was not a just and proper penalty. The Court of Appeal rejected Fisher’s arguments that an SPB administrative law judge must expressly be informed it was impermissible to work for a law firm actively litigating cases before the SPB; Fisher’s conduct violated Government Code section 199903 and the SPB’s incompatibility activities statements that were in effect throughout his tenure as an SPB administrative law judge. The Court determined substantial evidence supported the findings of the administrative law judge who heard Fisher’s case that Fisher “displayed an appalling lack of judgment when he became of counsel with Simas & Associates” and “continued to demonstrate poor judgment when he failed to disclose his of counsel relationship to SPB.” The SPB did not abuse its discretion by dismissing Fisher. Accordingly, the Court affirmed the judgment. View "Fisher v. State Personnel Bd." on Justia Law

The case was filed in 2013. In November 2016, the court granted defendants terminating sanctions on Moofly’s claims, finding that Moofly had abused the discovery process and displayed “utter disregard for the court.” Moofly moved for reversal of the terminating sanctions under Code of Civil Procedure section 473, which allows relief from defaults and dismissals entered as a consequence of mistakes or neglect. Defendants argued that that Moofly’s motion was an incorrectly-labeled motion for reconsideration under section 1008. On December 20, the court denied the motion, issued an order to show cause regarding sanctions against Moofly, and set the hearing for January 23, 2017. Moofly filed a response on January 18. On February 2, the court granted the motion for sanctions ($10.499.51) against Moofly and its attorney. The court of appeal reversed. Code of Civil Procedure section 1008 establishes the rules for motions for reconsideration, providing that a court may impose sanctions for violations “as allowed by [s]ection 128.7.” A court may not sanction a party for violating section 1008 without allowing the party a 21-day safe harbor to withdraw the offending motion, as required by section 128.7(c). Moofly did not receive the required 21-day notice to withdraw its motion fand avoid sanctions. View "Moofly Productions v. Favila" on Justia Law

Lujan had a Chase credit card account, governed by an agreement with a provision stating “federal law and the law of Delaware” govern the agreement and a provision for attorney’s fees. When Lujan’s account had an unpaid balance in 2007, Chase assigned its claim to interim assignees. In 2011, PCC filed suit, alleging a debt of $8,831.90. PCC Vice President Shields verified the complaint. Lujan cross-complained against PCC, Shields, and interim assignees seeking damages under the Fair Debt Collection Practices Act, 15 U.S. C. 1692, and the Rosenthal Fair Debt Collection Practices. The court granted Lujan summary judgment as to PCC, applying Delaware’s three-year statute of limitations. On the cross-complaint, the court granted the other defendants summary judgment, finding that none met the statutory definition of a debt collector. The judgment is silent om statutory damages, leaving Lujan with only “attorney fees and costs" as provided by statute. The court awarded Lujan $140,550.51 in fees against PCC but denied the other defendants fees because the cross-complaint was not an action “on a contract” under Civil Code 1717. The appeals court affirmed Lujan’s summary judgment against PCC, Lujan’s award of attorney’s fees, and the interim assignees’ summary judgment and denial of fees. The court reversed summary judgment in favor of Shields and PCC’s attorney. View "Professional Collection Consultants v. Lujan" on Justia Law

Defendants Peter Holt, Holt Law Firm, and Bethany Holt (collectively Holt) appealed the denial of their special motion to strike (also known as an anti-SLAPP--Strategic Lawsuit Against Public Participation--motion). Peter Holt and his law firm briefly represented Charles and Victoria Yeager and successfully sued Victoria Yeager to obtain his fees in an action known as Holt v. Yeager (Super. Ct. Nevada County, No. L76533). Yeager then sued Holt, alleging professional negligence, misappropriation of name, and other claims. Holt moved to declare Yeager’s suit to be a SLAPP suit. The trial court found this suit did not chill protected expressive conduct or free speech on an issue of public interest. The Court of Appeal agreed and affirmed. View "Yeager v. Holt" on Justia Law