Monday, February 22, 2010
Page 1
Court Revives Malpractice Suit Over Lost Documents
By SHERRI M. OKAMOTO, Staff Writer
The First District Court of Appeal has reinstated a malpractice action against a San Francisco law firm which allegedly lost documents critical to its former client’s case.
In an unpublished decision Thursday, Div. Three ruled that San Francisco Superior Court Judge Thomas Mellon Jr. erred in excluding an expert declaration proffered by the Fullerton Medical Group to establish that the litigation it had retained Sideman & Bancroft LLP to pursue had merit.
Fullerton Medical was established in 1994, implementing what it claimed was a new method for providing health care to patients in subacute care settings. Within two years of its formation, Fullerton Medical had contracts with 55 physicians, managed emergency services at California Pacific Medical Center, and had a contract to implement its method and provide exclusive on-site hospitalists for all 32 of Guardian Health Care’s Northern California skilled nursing facilities.
The company claimed that it was later driven out of the hospitalist market by a conspiracy among other health-care providers and hired Sideman & Bancroft to explore the possibility of suing those entities for antitrust violations. Fullerton asserted that it delivered various documents to the firm to facilitate its analysis of the case.
Fullerton eventually hired Townsend, Townsend & Crew LLP as its litigation counsel, but the firm later withdrew due to a conflict of interest and Fullerton retained the services of Blecher & Collins.
The company said it asked Sideman & Bancroft to forward the documents it had provided the firm to Townsend Townsend and then to Blecher & Collins, but Sideman & Bancroft failed to comply with either request.
Cartwright Act Claim
Blecher & Collins filed a complaint on behalf of Fullerton Medical in November 2001 alleging violations of the Cartwright Act and unfair competition against the alleged conspirators before being replaced as counsel by King & Kelleher LLP.
After King & Kelleher successfully moved to withdraw from its representation of Fullerton, the antitrust action was involuntarily dismissed for lack of prosecution.
Fullerton claimed that it had been unable to retain new counsel because Sideman & Bancroft had lost the corporate files and records that it claimed were critical to its ability to prove an antitrust violation and filed suit against the firm for legal malpractice, breach of fiduciary duty, constructive fraud, fraud and deceit, negligent misrepresentation, and conversion.
After the complaint was filed, a box of Fullerton’s documents was found in storage by a former Sideman & Bancroft partner who had moved to another law firm, but the parties disputed whether all the allegedly missing materials were recovered.
Sideman & Bancroft moved for summary judgment or summary adjudication on the basis that Fullerton’s malpractice claim had no merit because the underlying antitrust violation could not be proven.
Fullerton opposed the motion, supported by a declaration from a UC Berkley public policy and economics professor which stated that the defendants in the antitrust case had harmed competition in the relevant product and geographic markets.
Declaration Inadmissible
Mellon found the declaration was inadmissible due to a lack of foundation and granted summary adjudication on Fullerton’s malpractice and breach of fiduciary duty claims. He denied summary adjudication on the remaining causes of action for fraud and conversion, but the parties stipulated to dismiss those claims with prejudice and Fullerton appealed from the ensuing judgment in Sideman & Bancroft’s favor.
Writing for the appellate court, Justice Peter J. Siggins opined that Sideman & Bancroft was not entitled to summary adjudication because the declaration was admissible and was sufficient to raise a triable issue of material fact.
Siggins explained that Fullerton was required to prove that it could have prevailed in the antitrust case but for Sideman & Bancroft’s negligence, which meant that it had to establish that the alleged conspiracy from the underlying action had a substantial adverse effect on competition in a relevant product and geographic market.
Although Fullerton described the relevant market as being “for hospitalist services in Northern California” in its complaint and as “the San Francisco area” in its answers to interrogatories, the justice reasoned this fact was “not significant” since the descriptions were not “fundamentally inconsistent” with each other.
As for the excluded expert declaration, Siggins said the declarant was not required to independently demonstrate the basis for his knowledge of the services provided by Fullerton, or identify specific competitors in the Fullerton medical product market.
He added that no authority required the declarant to use any particular methodology in order to decide upon the relevant geographic market and that the declaration provided a reasoned explanation for its determination that the relevant geographic market was the City and County of San Francisco.
Siggins noted that the declarant’s opinion was based on his study of health-care plans and their relationships with physicians’ organizations but posited “there is no obvious reason the analysis would not be the same and apply to consumers of physician services” and declined to find the application of the findings from the declarant’s study was “so conjectural or speculative that it provide[d] no reasonable basis for his opinion in this case.”
The justice further emphasized that the declarant relied upon metrics commonly used by the Department of Justice to conclude that the relevant market was highly concentrated and that the alleged conspirators had market power.
He went on to reject Sideman & Bancroft’s challenge to the declarant’s academic research on market concentration because the time relevant to the case was 1996 to 1997 and the declarant analyzed data from 2001 to 2002, as the firm proffered no reason why the more recent information would be inaccurate or irrelevant when compared to market concentration for the earlier period.
Siggins concluded that Sideman & Bancroft had failed to carry its burden to establish that Fullerton lacked, and could not reasonably obtain, evidence to establish a prima facie case of injury to competition in a relevant product and geographic market and therefore had not been entitled to summary adjudication.
The justice went on to question whether Sideman & Bancroft’s summary adjudication motion should have been brought on such a “paltry evidence showing,” and criticized the firm for its 4,000-plus-page motion.
“Division Two of this court recently recognized the potential for abuse of the summary judgment procedure by deep pocket defendants who file oversized motions and sometimes persuade trial courts to make determinations properly reserved for the finder of fact, thus requiring plaintiffs ‘to essentially prove their case at the summary judgment stage,’ ” he said.
“It is not an appropriate means to test the sufficiency of a party’s evidence just because the moving party disagrees with it,” Siggins continued. “That seems to be what happened in this case.”
Justices Stuart R. Pollak and Martin J. Jenkins joined Siggins in his opinion.
Copyright 2010, Metropolitan News Company