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A new decision is giving lawyers acid reflux

By Diane Karpman

Diane Karpman
Diane Karpman

Litigators continually face “hazards and pitfalls.” In a recent case, Justice Richard Mosk suggests in the dissent that the bench is demonstrating a “diminished understanding” of those obstacles. Franklin Mint v. Manatt, Phelps & Phillips, LLP,_Cal.Rptr. 3d_184 Cal. App. 4th 313 (Cal. App. 2d. May 3, 2010) is a shocking decision to many in the legal community, because of California’s historically minimal probable cause standard necessary to bring a claim. The standard for many years has been that “no reasonable attorney” would have brought the case, but that may have changed dramatically with this perplexing case.

The facts are unusual and the law in the case was exceedingly complex, but that’s not what is causing some lawyers acid reflux or nightmares, according to one commentator (Timothy Ruben). The case may be turning the law of malicious prosecution upside down, and in particular the requirements of probable cause. The trial judge, in granting the motion for nonsuit after a 17-day jury trial explained:

“[I]t is overwhelmingly clear that [the firm] had probable cause to bring [t]his action and indeed confronted with a client seeking a remedy and having … consulted with other lawyers to determine whether or not that client’s cause had merit, had [the firm] failed to file a cause of action, one would have had a serious question of whether or not [the firm] committed malpractice.”

The firm filed several other claims in the underlying federal court action that were not attacked in the malicious prosecution action. Note, the firm (in the federal court action) defeated a motion to dismiss. Therefore, a federal judge inferentially supported the existence of probable cause. In addition, a powerful dissent by Justice Mosk asserted that the claim had merit.

In terms of simple math, three judges believed the case had merit. Although some might disagree, most California lawyers would presume that agreement by three members of our bench qualifies as “reasonable,” and their collective determinations regarding the merit of the claims would therefore satisfy the threshold “reasonableness.” Supreme Court review has been sought, because the fact that three judges decided the claims had merit should have been the end of the story. The Los Angeles County Bar Association has authorized its Amicus Committee to write in support of review.

Absent review, the firm may be liable for millions of dollars. However, that pales in comparison to the level of confusion that the case will engender in the California legal community.

Historically, it’s important to understand that the California legal community prides itself on bringing unique claims that are eventually widely accepted in the United States. For example, the first claim applying strict liability for defective products was brought in California (Greenman v. Yuba Power Products 58 Cal. 2d 57 (1963)). The California environment encouraging broad pleading has had a profound impact on the entire country.

We are all familiar with Brown v. Board of Education, 347 U.S. 483 (1954), but I doubt many of you are aware that most of the lawyers who brought that action actually cut their teeth on Mendez v. Westminister School Dist., 64 F. Supp 544 (1946), a California case prohibiting discrimination against Mexican Americans in public schools. Or, that the California Supreme Court banned statutory prohibitions on interracial marriages as a violation of the equal protection clause in Perez v. Lippold, 32 Cal. 2d 911 (1948). The U.S. Supreme Court decision in Loving v. Commonwealth, 147 SE 2d 78 (1966) addressing the same prohibitions occurred almost 20 years later.

Don’t dismiss this as a walk down memory lane because these issues still continue to resonate strongly in our legal community. Perez was one of the linchpins for In Re Marriage Cases 43 Cal. 4th 757 (2008), that led to the infamous Proposition 8 battle. (These opinions are my own.) Oral arguments in the Proposition 8 case took place June 16, as this article was drafted.

Creative pleading is a historic core value in the vibrant California legal community. Being able to stand in the footprints of the lawyers who brought Perez, Mendez and Greenman creates strong bonds of pride in the California legal community. Hopefully, Franklin Mint will not change those traditions.

Legal ethics expert Diane Karpman can be reached at 310-887-3900 or at karpethics@aol.com.