Thursday, June 3, 2004
S.C. Asked to Uphold Lawyer Liability for Hiring Away Firm’s Staff
By DAVID WATSON, Staff Writer
Two attorneys should be held liable in tort for hiring staff from the law firm they had just left, a lawyer representing the firm told the state Supreme Court in Los Angeles yesterday.
Attorney John J. Manier of Universal City urged the justices to affirm a Los Angeles Superior Court judgment against Daniel P. Hanlon, Colin T. Greene, and the immigration law firm they formed in 1999 after leaving Robert L. Reeves & Associates. Manier said the appellate court’s Div. Four, in a February 2003 opinion by Justice Daniel A. Curry, properly declined to follow GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 409.
Presiding Justice David G. Sills, writing for the Fourth District’s Div. Three, explained in GAB that only an employee—not an employer—can sue for tortious interference with an at-will employment contract.
Manier said Curry was right to look instead to the state high court’s 1944 decision in Buxbom v. Smith, 23 Cal.2d 535, which upheld damages in favor of a publisher whose distribution staff was raided by a client for whom he had agreed to produce and distribute a weekly advertising newsletter. The client, who owned a chain of markets, breached his contract with the publisher and began doing the work himself.
Manier told the justices that Hanlon and Greene hatched a “scheme to basically take the—business” of the Reeves firm, for which they were both working. The scheme involved stealing a client list, abruptly resigning, contacting their former firm’s clients, sending the clients a “confusing” notice announcing their formation of a new firm, and “fomenting” discontent among the Reeves secretaries and paralegals, he said.
Because the nonlawyer employees were bilingual and the attorneys were not, they were of special importance in dealing with the firm’s immigration practice clientele, Manier said.
The behavior of the two attorneys could be used as a “textbook on how not to leave a law firm,” Manier declared.
Only about $20,000 of the $150,000 awarded to Reeves by Judge Jan A. Pluim related to the hiring of the at-will staff members, Manier said. Most of the damages were based on findings that Hanlon and Greene wrongfully persuaded some 144 clients to switch the Reeves firm to Hanlon & Greene.
Justices Joyce Kennard and Kathryn M. Werdegar questioned Manier closely about what the elements of a cause of action for tortious interference with an at-will employment contract should be, if the court decides to recognize it. Werdegar noted that Curry suggested a party sued for the tort bears the burden of showing its action was not “unjustifiable,” while Kennard observed it “all depends on whether the means used are fair.”
Werdegar queried Manier about how “unfair” differs from “unjustifiable” and pointed out that either standard would permit recovery even if the conduct of the defendant was “not necessarily unlawful.”
Attorney Toni Rae Bruno of Dwyer, Daly, Brotzen & Bruno in Los Angeles argued on behalf of Hanlon and Greene that none of the evidence in the case established that any of the allegedly wrongful conduct caused the employees to leave the Reeves firm.
Under GAB, Bruno said, the appropriate remedy for a plaintiff in Reeves’ position would be an unfair competition suit. Though she declined to concede that any retreat from GAB was needed, she said that if the cause of action at issue were to be recognized it should require at least a showing of an “independently wrongful act that was utilized in the hiring” of the at-will employees.
No such showing was made by Reeves, she asserted.
But Manier said the defendants “intentionally demoralized the firm’s employees” in preparation for their sudden departure while they were “still fiduciaries of the law firm.” The conduct was part of a single scheme, he asserted, and Reeves was not required to show with specificity which parts of the plan caused the workers to leave.
Justice Marvin Baxter appeared to agree, commenting:
“It seems to me that they’re kind of the flip sides of the same coin.”
Bruno and Manier differed sharply on the number of employees who left Reeves & Associates to join Hanlon & Greene. Bruno asserted there were only four, including the secretaries of the two departing lawyers and a paralegal whom one of them had brought into the firm.
Curry’s opinion for the Court of Appeal states that six paralegals and secretaries “followed” Hanlon and Greene to the new firm and that they “eventually hired” 11 former Reeves employees, adding that the Reeves firm had eight lawyers and a support staff of about 30 at the time of the break-up.
Copyright 2004, Metropolitan News Company