2017 IN REVIEW
When "continuous representation" ceases for purposes of evaluating the statute of limitations, the limits of attorney disqualification, and issues concerning privileges continued to be of interest to the appellate courts in 2017. The Court of Appeal also broke ground assessing the actual innocence element required in malpractice cases arising out of post-conviction criminal representation, and the California Supreme Court addressed the interim adverse judgment rule in malicious prosecution cases.
Underlying Criminal Cases
Criminal legal malpractice plaintiffs generally must establish "actual innocence" of their crime in order to prevail -- although, as the court explained in Jones v. Whisenand, 8 Cal. App. 5th 543 (2017), not when their claim arises out of certain post-conviction proceedings unrelated to the underlying conviction. Even so, the court did not let the convicted malpractice plaintiff entirely off the hook, as it imposed what effectively amounts to a further element mandating that the plaintiff still plead and prove favorable termination of the post-conviction proceeding.
The plaintiff in Jones was deemed a sexually violent predator following his release from prison after serving 16 years, a designation warranting further involuntary commitment of individuals who suffer from mental disorders which predispose them to committing further violent acts. He asserted his lawyer's malpractice prolonged the resolution of his challenge to the designation, causing him to be involuntarily committed to a mental health facility indefinitely. Although Jones agreed that requiring a sexually violent predator to allege actual innocence would be at odds with the statute, which did not indicate an intent to absolutely preclude a sexually violent predator from pursuing legal malpractice claims (a sexually violent predator is, by designation, an individual who has been found guilty of a crime), it nonetheless decreed that the plaintiff show he would have defeated the sexually violent predator designation had his attorney acted competently. Or, to put it another way, that the plaintiff is actually innocent of the charge that he would reoffend.
Statute of Limitations
The legal malpractice statute of limitations (Code of Civil Procedure Section 340.6) is tolled so long as the client objectively maintains a reasonable expectation that the attorney will provide further legal services, which according to the court in Flake v. Neumiller & Beardslee, 9 Cal. App. 5th 223 (2017), may not extend beyond the filing of a motion to withdraw, even if the order formalizing the withdrawal is not entered until later. After losing an underlying trial, the attorney defendants in Flake informed their clients that successor counsel would have to handle their appeal, and that they were withdrawing. A little over a month later, the motion to withdraw was granted.
Less than a year after that, but more than a year from service of the motion to withdraw, the plaintiffs sued their former lawyers, contending that they subjectively believed their trial attorneys continued to represent them until the order relieving the attorneys was entered. However, the Flake court explained, subjective beliefs are irrelevant. Rather, the representation ceased no later than when the plaintiffs in Flake received notice that their attorneys intended to withdraw since at no time thereafter did the attorneys provide any indication that they would perform further legal services.
It was anticipated that the Supreme Court in Parrish v. Latham & Watkins, 3 Cal. 5th 767 (2017), would decide whether malicious prosecution cases against attorneys have a one-year statute of limitations under Section 340.6 (resolving a split in the lower courts, a minority of which held that the limitations period specific to malicious prosecution should control over the attorney statute of limitations), however the court punted on that issue, determining that the defendants should prevail regardless, under the interim adverse judgment rule.
In Parrish, the Supreme Court concluded that malicious prosecution defendants who had previously defeated summary judgment in an underlying case could not be found liable even when a later ruling deemed its activities to have been taken in bad faith under the Uniform Trade Secrets Act. Parrish explained that the interim adverse judgment rule precludes plaintiffs from proving malicious prosecution if their prior motion for summary judgment was denied, as the denial itself demonstrates meritoriousness sufficient to establish probable cause. That rationale holds true "even if the court later rules, after the evidence has been subject to adversarial testing, that the inferences [on which the case relied] have proved false," as a bad faith finding does not necessarily correlate with the absence of minimal probable cause.
Disqualification and Privilege Issues
The attorney-client privilege is not waived when the client inadvertently forwards an email from his smartphone to a third party, according to the court in McDermott Will & Emery LLP v. Superior Court, 10 Cal. App. 5th 1083 (2017), and an adverse law firm utilizing the privileged information against the client may be subject to disqualification, even if it received the information from its client, and not directly due to the inadvertent disclosure.
McDermott arose out of a dispute over an estate plan during which the client accidentally forwarded an email from his attorney to a third party who then forwarded it to an adversary. Relying heavily on the client's expressed subjective intent, the McDermott court accepted the trial court's finding that the disclosure was inadvertent, and concluded that therefore, the adverse firm's use of the email violated its ethical obligation to either return the inadvertently disclosed material, or destroy it.
The adverse firm in McDermott contended that even so, its exposure to the confidential information was not prejudicial to the client, however the McDermott court disagreed. The firm was disqualified on the basis that its use of the email demonstrated a likelihood that their continuing involvement could affect the outcome of the action and would undermine the public trust in the integrity of the State Bar since the memory of what was disclosed could not be erased from the firm's consciousness.
Conversely, the court in Lynn v. George, 15 Cal. App. 5th 630 (2017), which arose out of an attempt to disqualify long-standing counsel for an adversary on the basis that counsel had dispensed legal advice to the plaintiff as part of a real property transaction, reversed a disqualification premised on a finding that a law firm had engaged in a confidential relationship with the plaintiff while representing a partnership. The court explained that disqualification would only be justified if the plaintiff could point to specific confidential information that was shared with the firm. The plaintiff could not make this showing in Lynn because the subject information had also been shared with third parties.
A similar rationale carried the day in Beachcomber Management Crystal Cove, LLC v. Superior Court, 13 Cal. App. 5th 1105 (2017), in which the court reversed and remanded a trial court disqualification arising out of a law firm's successive representation of managing members of an LLC against a derivative lawsuit. The Beachcomber court explained that it is the duty of confidentiality which precludes the continued representation of a client with adverse interests to a former client. But, the court reasoned, in derivative lawsuits against closely held companies, the member defendants are often the source of the company's confidential information that the law firm would have received in the prior representation. Thus, the prior representation of the company would not generally disclose to the law firm any information that its insider clients would not already have. Beachcombert nonetheless declined to impose a blanket rule in that circumstance, instead remanding to permit a review to determine if the law firm acquired any confidential information in its prior representation of the company which its present insider clients otherwise would not have been privy to.
Meanwhile, the identity of the holder of the work product privilege was the primary issue in Tucker Ellis LLP v. Superior Court, 12 Cal. App. 5th 1233 (2017), in which the court held that under the circumstances presented, the lawyer who creates work product relinquishes the corresponding privilege upon departure from his law firm.
Tucker Ellis involved the law firm's disclosure of the lawyer's email correspondence with experts expressing skepticism as to the cause of mesothelioma in response to a subpoena arising out of a separate case not involving the lawyer. After the disclosure, the lawyer sued his prior firm contending that the disclosure of the emails damaged his ability to practice in asbestos litigation, ultimately resulting in his termination from his new firm.
After the trial court granted the lawyer's summary adjudication motion finding the existence of a duty on the part of the firm to keep the lawyer's work product confidential, the appellate court reversed, granting the law firm's writ of mandate contending that no such duty existed. The law firm is the holder the work product privilege, the Tucker Ellis court held, not the employee, and therefore, the law firm was not required to obtain the lawyer's permission before disclosing his communications. That conclusion turned on the interpretation of the reference to "attorney" in Code of Civil Procedure Section 2018.030, which Tucker Ellis determined described the law firm which retained the relationship with the client, and not the departed attorney who should not be able to intrude on an existing attorney-client relationship to which he was no longer a part.
Anti-SLAPP/ Litigation Privilege Cases
Two litigation privilege/anti-SLAPP cases were decided at the end of the year. The more celebrated of the two cases is Dickinson v. Cosby, 2017 DJDAR 11084 (Nov. 21, 2017), which held that Civil Code Section 47(b)(2) extends to so-called pre-litigation demand letters only to the extent that they relate to litigation seriously contemplated in good faith, a circumstance that entertainer Bill Cosby could not establish as a matter of law. As a result, the court held that the anti-SLAPP statute did not preclude a defamation action brought by Janice Dickinson alleging that Cosby and his lawyer, Marty Singer, falsely branded her a liar in demand letters sent to various media outlets arising out of allegations that Cosby raped her.
The court noted that the subject demand letter was sent to media outlets prior to their publication of Dickinson's allegations, and that Cosby had not sued any of them thereafter despite publishing Dickinson's story. Furthermore, the court rejected the contention that by calling Dickinson a "liar," Singer was merely expressing a non-actionable opinion, explaining that as Cosby's lawyer, Singer was speaking for his client who would have personal knowledge of whether Dickinson was lying about the rape, or not. Therefore, the court reasoned, the fact of whether Dickinson was a "liar" was sufficiently provable, one way or the other, to comprise an actionable defamation claim. Singer, for his part, merely joined in Cosby's motion, and still has the opportunity to file his own anti-SLAPP motion on remand.
Dickinson presents a host of procedural issues for anti-SLAPP junkies, including the ability to amend a complaint, and issues pertaining to a discovery stay.
The litigation privilege was also the subject of the recently published Optional Capital Inc v. Akin Gump, 2017 DJDAR 11659 (Dec. 7, 2017), case, arising out of lawyer defendants' representation of parties adverse to the plaintiff in underlying forfeiture proceedings. In applying the litigation privilege, the court rejected the plaintiff's suggestion that the lawyer defendants' alleged participation in a conspiracy to convert funds owed to plaintiff constituted out of court conduct not sufficiently related to litigation activity, refusing to infer, without more, "an attorney-client conspiracy from the mere existence of an attorney-client relationship." The court affirmed the granting of two anti-SLAPP motions to the two sets of defendant attorneys, despite previously reversing the granting of an anti-SLAPP motion to the defendants attorneys' mutual client in Optional v. DAS Corp., 222 Cal. App. 4th 1388 (2014). The court held the "law of the case doctrine" was inapplicable.
What to Watch for in 2018
It is likely that both Singer and Cosby will file petitions for review by the Supreme Court in the Dickinson case, and it would not be surprising to see one or both of those petitions granted. Even more likely to occur in 2018 is a ruling by the Supreme Court in the Sheppard Mullin v. J-M Manufacturing Co. Inc., case, in which a former client seeks a total forfeiture of a sizeable fee due to an alleged insufficient disclosure of a conflict in an advance conflict waiver. Finally, pending before the Supreme Court is a wholesale revamping of the Rules of Professional Conduct; it remains to be seen when that will be acted upon. Have a great 2018.