Opposition ObjectionsCal. Super. - 6th Dist.March 9, 201510 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 W 2 “£5 KEVIN R. ALLEN, SBN 237994 0/6 05f I 7ALLEN ATTORNEY GROUP 1 4/17 8. , 2121 North California Blvd, Suite 290 ' lb Walnut Creek, CA 94596 fir ”5*1'3'5155 I 21;; .4, Phone: (925) 695-4913 \“4‘ Cijgc’cfim Fax: (925) 334-7477 p \m kevin@allenattornevgroup.com ' Tong ’ “’3‘ Attorney for Plaintiff Illel‘ (leg IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA (UNLIMITED JURISDICTION) DAVID MARKEVITCH, an individual, Case No. 1-15-CV-277789 Plaintiff, PLAINTIFF’S OPPOSITION TO DEFENDANT’S MOTION FOR vs. JUDGMENT NOTWITHSTANDING VERDICT PAGANO & KASS, PC, a Professional Corporation, and DOES 1 through 50, Date: October 28, 2016 inclusive; Time: 9:00 a.m. Judge: Hon. Derek Woodhouse Defendants. Dept: 4 F”, Q1 75.44“ Ext! 1“ a! ‘1; i Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. II. III. TABLE OF CONTENTS INTRODUCTION AND SUMMARY OF ARGUMENT .......................................................... 1 LEGAL ARGUMENT ............................................................................................................... 2 A. DEFENDANT’S MOTION MUST BE DENIED AS THERE IS SUBSTANTIAL EVIENCE IN SUPPORT OF THE VERDICT .............................................................................. 2 l. There is Substantial Evidence t0 Support the Jury’s Verdict .............................................. 3 2. Defendant Confuses Contract Formation with Contract Interpretation and Should Not Be Permitted To Evade its Obligations Because of Ambiguities It Created ................................... 6 B. RPC RULE 2-200 IS INAPPLICABLE TO A REFERRAL FEE IN AN EMPLOYMENT AGREEMENT AND CLASS ACTION JURISPRUDENCE DOES NOT REQUIRE THAT THE COURT APPROVE SUCH AGREEMENTS ..................................................................... 10 1. Rule 2-200 Does Not Apply to Agreements with a Law Firm’s Employee ..................... 11 2. Defendant’s Authority Does Not Require Disclosure of Employee Fee Agreements to Federal Courts in Class Actions ............................................................................................... 13 CONCLUSION ....................................................................................................................... 14 ii Plaintiff s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict NOLA#UJN 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Anderson, McPharlin & Connors v. Yee (2005) 135 Cal. App. 4th 129, 133 ............................ 11, 12 Banner Entertainment, Inc. v, Superior Court (1998) 62 Ca1.App.4th 348 ....................................... 8 Blane Homeowner’s Ass'n v. Department 0f Veterans Aflairs (1998) 67 Cal.App.4th 743 ............... 6 Campbell v. Cal-Gard Sur. Services, Inc. (1998) 62 Cal.App.4th 563 ............................................. 2 Castro v. State ofCalif (1981) 114 CA3d 503 .............................................................................. 6, 9 Chambers v. Kay (2002) 29 Cal. 4th 142, 145 ........................................................................... 12, 13 Clemmer v. Hartford Ins. C0. (1978) 22 Cal.3d 865 ......................................................................... 2 County ofSan Joaquin v. Workers Comp. Appeals Bd. (2004) 12 Cal. Rptr 3d 406 ......................... 9 Fountain Valley Chateau Blanc Homeowner’s Ass’n v. Department 0f Veterans Affairs (1998) 67 Cal.App.4th 743 ......................................................................................................................... 2, 6 Grail Semiconductor, Inc. v. Mitsubishi Electric & Electronics USA, Inc. (2014) 225 Cal.App.4th 786 .................................................................................................................................................. 2 Hale v. Farmers Ins. Exch. (1974) 42 Cal.App.3d 681 ...................................................................... 3 Hauter v. Zogarts (1975) 14 Cal.3d 104 ............................................................................................ 2 Henrioulle v. Marin Ventures, Inc. (1978) 20 Cal.3d 512 ................................................................. 4 In re ”Agent Orange ” Product Liability Litigation (2nd Cir. 1987) 818 F.2d 216 ......................... 12 Indenco, Inc. v. Evans (1962) 201 Cal.App.2d 369 ........................................................................... 9 Jewel v. Boxer (1984) 156 Cal. App. 3d 171 ................................................................................... 12 Ladas v. California State Auto Assn. (1993) 19 Cal.App.4th 761 ..................................................... 7 Mark v. Spencer (2008) 166 Cal.App.4th 219 ................................................................................. 14 Meyser v. American Bldg. Maintenance, Inc. (1978) 85 Cal.App.3d 933 ......................................... 3 Moore v. San Francisco (1970) 5 Cal.App.3d 728 ............................................................................ 2 Reynolds v. Willson (1958) 51 Cal.2d 94 ........................................................................................... 3 Taylor v. Nabors Drilling USA, LP (2014) 222 Cal.App.4th 1228 .................................................... 2 Transport Ins. C0. v. TIG, Inc. Co. (2012) 202 Cal.App.4th 984 .................................................... 10 Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793 ............................................... 7, 8 Woodcock v. Fontana Scaflolding & Equip. C0. (1968) 69 Cal.2d 452 ............................................ 4 111 Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Statutes Rule 2-200 .......................................................................................................................................... 1 Rules Rule of Professional Responsibility 2-200 ................................................................................ passim iv Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict [\J NOMAD.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION AND SUMMARY OF ARGUMENT Defendant Pagano & Kass APC’s (“Defendant” or “P&K”) Motion for Judgment Notwithstanding Verdict appears to makes two arguments. First Defendant argues that, because the parties presented different interpretations of a provision in the referral fee agreement t0 the jury, this somehow means no substantial evidence exists to support an award of damages for breaching that agreement. Defendant attempts to confuse the concepts of contract formation with interpretation of contract. It cites cases where the parties failed to agree on the essential element of a contract by not addressing it in any way whatsoever or agreeing to address it the fiJture. Those cases are easily distinguishable as the referral fee agreement in this matter specifically described how a referral fee would be calculated and that it would be a percentage of business generated during the first twelve-months of the attorney-client relationship. Where parties have agreed to a contract but present different explanations for what certain words in the contract mean then the trier of fact applies long-standing rules of contract interpretation to the wording of the contract. The jury was presented with Judicial Council of California Civil Jury Instructions (CACI) which set out the specific requirements for the essential elements of this contract (No. 302), contract formation (No. 303), and contract interpretation (Nos. 314-318). As reflected herein the jury was presented with substantial evidence that supports its verdict and the award of $169,844.18 to Plaintiff. Second Defendant (again) asks the court to ignore the fact that Plaintiff is seeking a referral bonus arising from his employment with Defendant Pagano & Kass, PC and to apply fee splitting rules for attorneys at diflerenl firms so as to excuse it from paying him the compensation. This same exact argument was made in Defendant’s February 2016 Motion for Summary Judgment. As the Court held in its Order denying that motion “[t]he parties’ agreement, Plaintiff’s performance, and at least some of Defendant’s work on the Class Action that gave rise to the fee award occurred during his employment. Thus, even though he has been terminated, the disclosure and consent requirements [of PRC Rule 2-200] do not apply....Nothing in the Federal Rules of Civil Procedure. .. 0r other legal authorities cited by Defendant suggests that, under these circumstances, an associate must disclose a fee sharing agreement to the court [in a class action] if he or she is 1 Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict UIAUJN \OOOQQ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 terminated before the fees are paid.” Defendant offers n0 new law or argument that would command a different result. For the reasons stated herein (and in the accompanying Opposition to Defendant’s Motion for New Trial, which is incorporated herein through reference) the Defendant’s Motion for Judgment Notwithstanding Verdict should be denied. II. LEGAL ARGUMENT A. DEFENDANT’S MOTION MUST BE DENIED AS THERE IS SUBSTANTIAL EVIENCE IN SUPPORT 0F THE VERDICT A motion for judgment notwithstanding verdict is essentially a demurrer to the evidence on which the verdict is based. See Hauler v. Zagarts (1975) 14 Cal.3d 104, 110; Clemmer v. Hartford Ins. C0. (1978) 22 Cal.3d 865, 877; Grail Semiconductor, Inc. v. Mtsubishi Electric & Electronics USA, Inc. (2014) 225 Cal.App.4th 786, 794. For purposes of a INOV motion, a_ll evidence supporting the verdict is presumed true. The issue is whether these facts constitute a prima facie case 0r defense as a matter of law. Moore v. San Francisco (1970) 5 Cal.App.3d 728, 733; Fountain Valley Chateau Blanc Homeowner’s Ass'n v. Department 0f Veterans Affairs (1998) 67 Ca1.App.4th 743, 750. A JNOV motion is governed by the same rules that govern a motion for directed verdict 0r nonsuit. Hauler v. Zogarts (1975) 14 Cal.3d 104, 110; see Taylor v. Nabors Drilling USA, LP (2014) 222 Ca1.App.4th 1228, 1237 [trial court's power t0 grant JNOV is same as its power to grant directed verdict] The evidence is viewed in the light most favorable to the party securing the verdict: “If there is any substantial evidence, or reasonable inferences t0 be drawn therefrom, in support 0f the verdict, the motion should be denied.” Hauter v. Zogarts, supra, 14 Ca1.3d at pp. 110; Campbell v. Cal~Gard Sur. Services, Inc. (1998) 62 Cal.App.4th 563, 569; Taylor v. Nabors Drilling USA, LP, supra, 222 Cal.App.4th at 1237-1238, 1252 (order denying JNOV motion affirmed because substantial evidence supported verdict)]. Inconsistencies in a witness' testimony do not mean the testimony is insufficient to support the verdict. It is up to the jury to determine the weight to be given to internally inconsistent testimony. Clemmer v. Hartford Ins. C0. (1978) 22 Ca1.3d 865, 878. This is true even as to 2 Plaintiff‘s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 inconsistencies in the testimony 0f a single key witness. Meyser v. American Bldg. Maintenance, Inc. (1978) 85 Cal.App.3d 933, 940 [inconsistent testimony by plaintiff‘s expert witness]. Whether the court “concur[s] with the jury's evaluation 0f the testimony is not controlling. The controlling factor is that there was evidence from which the jury could have inferred” facts supporting the verdict. Hale v. Farmers Ins. Exch. (1974) 42 Cal.App.3d 681, 692. A JNOV in favor of defendant is proper only where no evidence of “sufficient substantiality” supports the verdict in plaintiffs favor. This is determined by disregarding evidence on defendant's behalf, giving plaintiffs evidence all the value to which it is legally entitled, and indulging in every legitimate inference that may be drawn from that evidence. Reynolds v. Willsorz (1958) 51 Ca1.2d 94, 99. 1. There is Substantial Evidence to Sgpport the Jgry’s Verdict The jury was presented with proper instructions and a verdict form consistent with California law regarding contract formation and contract interpretation. All 0f the relevant instructions were based on the Judicial Council of California Civil Jury Instructions (CACI). For instance, the parties agreed to present the jury with CACI jury instruction 302 which concerns the essential elements of a contract and CACI 303 which addresses contract formation. See Exhibit “D” [Jury Instructions] to Declaration of Kevin Allen ISO of Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict (“Allen Decl.”); Id. 11 3.1 Taken together those instructions inform the jury that Plaintiff Markevitch had to prove that the parties entered into a contract, that the contract terms were clear enough that the parties could understand what each was required to do, that the parties agreed to give each other something of value, that Mr. Markevitch did substantially all of the things require by the contract, that the conditions of the contract required Pagano & Kass to d0 some act which it failed to do, and that Mr. Markevitch was entitled to moneys under the contract. The Court used Defendant’s proposed Breach of Contract verdict form with one immaterial Unless noted otherwise all exhibits referenced herein are attached to the Allen Decl. 3 Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 1o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 revision.2 Defendant’s verdict form was premised on CACI form no. VF-300. See Exhibit “C” [CACI VF 3-300].)3 The final verdict form presented t0 the jury contained four yes/no questions and, if the jury answered all “yes” to all, a final question asking for the sum that Pagano & Kass should have paid Mr. Markevitch under the contract.4 Here the jury found there was contract formed and answered “yes” to all four questions and awarded Plaintiff David Markevitch the full $169,844.18 he requested? There was substantial evidence to support the jury’s verdict. Mr. Kass testified that Pagano and Kass drafted the offer letter containing the referral fee agreement in February 2009. Ex. “E” [“August 23 Transcript”) at p. 98228-9922. Plaintiff testified that he received the offer letter 0n February 6, 2009. See Ex. “E” at 41:20-42: l7. Plaintiff reviewed the offer letter (Ex. “E” at p 42:28-43: 1) and testified that the referral fee provision played a significant role in his accepting the job. (Ex. “E” at 4738-28). Mr. Markevitch testified that the provision entitled him to compensation “calculated based on the business that is generated within the first year... after the client hires the firm... as long as the money comes in.” Ex. “E” at pp. 45:23-46: 10. Mr. Markevitch originated his old law school roommate (Louis Morin) to the firm as a clienté and was the “only reason” he brought the case to the firm. Ex. “E” at 5424-1 1. Mr. Morin formally hired and signed a retainer agreement with the firm 0n May 27, 2010. Ex. “E” at 110:15-25, 116212-15. Pagano & Kass filed a class action complaint in the United States District Court on behalf 2 See Exhibit “A” [Defendant’s Proposed Special Verdict Forms] at pp. 2-3. Ex “F” at 76: 10- 7725. Defendant’s proposed verdict form for the Breach of Contract claim asked when “did the attomey-client relationship between Pagano & Kass and Louis Morin commence?” This was omitted from the final form presented to the jury as it was unnecessary. None 0f the other questions on the form were effected by the date selected. Furthermore the amount of damages awarded by the jury necessarily reflected the date it chose. 3 Even if the parties had not agreed to use substantively all of Defendant’s proposed verdict form, Defendant’s failure to object to the form before the jury was discharged would have acted t0 waive any defect. See Henrioulle v. Marin Ventures, Inc. (1978) 20 Cal.3d 512, 521; see also Woodcock v. Fontana Scaflolding & Equip. C0. (1968) 69 Cal.2d 452, 456. 4 See Exhibit “B” [Jury Form Presented to Jury]. 5 See Exhibit “J ” [Trial Transcript Polling and Verdict]. 6 This was stipulated to by the parties. 4 Plaintiff’s Opposition t0 Defendant’s Motion for Judgment Notwithstanding Verdict MN LII N0 1o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of Louis Morin and received a $415,000 fee award from the Morin lawsuit. Ex “F” 68:6-13. Mr. Markevitch testified that he calculated the amount of compensation that he would be entitled to by applying the sliding scale of percentages from the referral fee agreement to the first year’s billings on the Morin lawsuit. Ex. “E” at pp. 45:8-47:18. The lodestar billing report he relied on was prepared by Pagano & Kass and included all hours worked by all of Defendant’s attorneys on the Morin lawsuit. Ex. “F” at 68:6-13. Plaintiff testified that he was entitled to $169,844.18 which is the exact amount the jury awarded him. Ex. “E” at pp. 79:28-80:1. Although the Court is not called 0n to weigh credibility in this motion Plaintiff proffers that Pagano & Kass’s testimony revealed that it was trying to twist the words of the referral fee agreement in any way possible s0 as to avoid paying Mr. Markevitch. Mr. Kass testified that the referral fee agreement was only intended to apply to hourly fee cases. Ex. “E” at pp. 10425-15; 108223-28. . However Defendant knew of Plaintiff’s experience with contingency product liability and employment cases (Ex. “E” at 31:3-7) and hired him to work 0n existing contingency fee and class action cases (Ex. “E at pp. 104:21-105z22) and 0n “any cases we had.” Ex. “E” at pp. 109:5- 9. Defendant never told Plaintiff that the agreement would not cover class actions or contingency fee cases. Ex. “E” at pp. 4725-7. The referral fee agreement itself did not say anything about it only covering hourly cases and Mr. Kass testified that he just “didn’t think” of putting language in the agreement excluding class actions or contingency fee cases. Ex. “E” at 109123-1 10:1. Mr. Markevitch referred the firm a potentially lucrative class action client, just four months after he was hired, and Pagano & Kass never once told him the referral fee would not cover the referral as it did not cover class actions, Ex. “E” at p. 47:5-7, 50: 13-18. Additionally, Pagano & Kass offered various ambiguous and conflicting opinions as to when the attorney-client relationship started. The firm argued that “one way” the referral fee agreement’s twelve months could have started was when “an attorney and a client believe that they are exchanging information and that the client is consulting an attorney with an expectation that the attorney will be giving them legal advice.” Ex “E” at 111:12-22. According to Defendant the actual start date and questions of when the privilege attached using this definition were dependent on a variety of circumstances including whether Mr. 5 Plaintiff's Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Markevitch was acting as an agent of the firm at the time of the communication. See Ex. “E” at 112:13-28. Furthermore Defendants suggested a July 1, 2009 start date (Ex. “F” at 1928-20226) and a June 12, 2009 start date (Ex. “F” at 18:18-25). The above testimony is more than sufficient to support the trial court’s verdict. The party in whose favor the verdict was rendered is “entitled to the benefit 0f every favorable inference which may reasonably be drawn from the evidence and t0 have all conflicts in the evidence resolved in his favor.” Castro v. State 0f Calif (1981) 114 CA3d 503, 507 (emphasis added); Fountain Valley Chateau Blane Homeowner's Ass'n v. Department 0f Veterans Aflairs (1998) 67 Cal.App.4th 743, 750. 2. Defendant Confuses Contract Formation with Contract Interpretation and Should Not Be Permitted To Evade its Obligations Because of Ambiguities It Created Defendant’s motion argues that the parties’ different interpretations 0f language in the referral fee agreement somehow means there was never an agreement in the first place. The fact that the patties presented different explanations for what certain words meant does not mean the contract did not exist or that Defendant should relieved from its obligations under that agreement.7 As a preliminary matter the jury instructions go through great pains to ensure that contract formation and interpretation are addressed separately. As discussed above the jury was presented with CACI 302 and 303 regarding contract formation and the essential elements of a contract. The jury was also presented with CACI instructions for contract interpretation including those regarding disputed words (CACI No. 314), the meaning of ordinary words (CACI No. 315) and technical words (CAC No. 316), construction of contract as a whole (CACI N0. 317), and construction by conduct (CACI No. 3 1 8). The jury was also provided CACI No. 320 which told them that “[i]f, after considering 7 This is also contrary to its assertions at trial where Defendant called this a “simple breach of contract claim and that the issue for jury was whether “the promise” in the contract was met. See Ex. “E” at 30: 18-21. 6 Plaintiff s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict DONOUIAUJN \D 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 these instructions, you still cannot agree on the meaning 0f the words, then you should interpret the contract against Pagano & Kass, PC since it caused the uncertainty.” Defendant cites cases where the parties failed to agree on the essential element of a contract by failing to address it in any appreciable way or agreeing to address it in a future agreement. Under such circumstances a court or trier of fact did not any basis to know what was agreed t0 and could not apply rules of contract interpretation because there was nothing to interpret. In Ladas v. California State Auto Assn. (1993) 19 Cal.App.4th 761, 771, Plaintiffs were insurance sales representatives who claimed that their employer had breached a contract t0 “consider” parity with other insurance companies in setting compensation rates. The Ladas court held that a promise to “consider” what employees at other companies are earning is not definite enough to give rise to the level of a contractual duty.”8 Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793 involved a sound editing company (Weddington) and a former employee (Flick) who left the company but attempted to continue to use the company’s library of recorded sounds. The parties entered into a one-page memorandum settlement agreement that provided the parties would “formalize” additional material terms and would enter into a licensing agreement and provide for “fully paid up license.” Id. at p. 799. The settlement agreement failed to address a laundry list of materials termsg and failed to explain what the terms of the license were or what was intended by “fully paid up license.” Id. The trial court enforced the one page memorandum agreement by essentially drafting a fourteen page licensing agreement for the parties. Id. at p. 805-806. 8 Id. at 771 (“By what standard would a court or a jury determine that the [employer] failed to meet its obligation t0 ‘consider‘ commissions earned by competitors? By what standard would a court or a jury determine that the [employer] failed to meet its obligation to ‘consider' commissions earned by competitors? What would be the relevant market on which such a duty would be predicated? [The employer's] four major competitors? All insurers in the state? Eighty companies nationwide? How would ‘damages’ be calculated? By totaling up all yearly commissions earned by other agents, averaging them and subtracting the difference? By coming up with an ‘industry standard' factor and increasing [the employer's] unit value ratio by that factor? The nature of the obligation asserted provides no rational method for determining breach or computing damages." The court thus found no contract”) 9 Id. at 801-802 (“... disputes involved material issues such as how the library should be defined and exactly what it encompassed; the scope of the uses permitted to the Flick Parties; the scope of the Flick Parties‘ permitted access to the master tapes; whether different Flick entities, such as both Mr. Flick and the corporation Creative Cafe, could simultaneously utilize the library for different projects and possibly in different locations; the copyright implications of the 7 Plaintiff’ s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The appellate court held that this was improper as the licensing agreement was a material term of the settlement: “If there was no licensing contract, then there was n0 contract at all.” Id., at pp. 815. “[T]he parties never objectively manifested agreement... to such material terms as the scope of the license, permitted uses, grounds and procedures for termination, indemnity provisions, whether the license would contain an arbitration clause... It is therefore clear that n0 specifically enforceable license contract was ever formed.” Id. at p. 8 16. Banner Entertainment, Inc. v, Superior Court (1998) 62 Cal.App.4th 348 involved an attempt to enforce the arbitration clause of an unsigned written agreement that, by its terms, indicated it was not effective until certain additional terms were negotiated and the agreement was signed. Id. at p. 358. A11 0f these cases are clearly distinguishable fiom the present matter. Here Plaintiff and Defendant agreed to calculate the referral bonus based on business attributable to the new business as measured during the first twelve months of the ”attorney client” relationship. Plaintiff and Defendant present different interpretations of this provision and Defendant’s own motion concedes that Plaintiff’s construction is plausible which is shows, as a matter 0f law, that the language is ambiguous. See Motion at p 722-3 (“...Defendant accepts Plaintiff’s construction of this clause in the Referral Fee Provision as plausible. . .”) Defendant also argues that it was Plaintiff‘s obligation to prove that “the parties shared an understanding of the provision” and cites Civil Code Section 1636. This again attempts to confuse contract formation and interpretation. Civil Code Section 1636 governs contract interpretation and forms the basis for CACI No. 314 (Meaning of Disputes Words) which was presented t0 the jury in this matter along with the meaning of ordinary words (CACI No. 315) and technical words (CAC No. 3 16), construction of contract as a whole (CACI No. 3 17), and construction by conduct (CACI N0. 318). Licensing Agreement; what duties the Flick Parties would have, if any, to protect Weddington's interests, such as possibly to provide insurance; whether the Flick Parties had the duty to indemnify Weddington and, if so, under what circumstances; whether the Licensing Agreement could be terminated by Weddington and, if so, on what basis and by what procedure; whether the Licensing Agreement would contain an arbitration clause, or whether the parties would retain their right to trial by jury in case of a dispute; whether, if arbitration was specified, the arbitrator would be authorized to engage his or her own experts, etc.”) 8 Plaintiff‘s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Finally Defendant does not adequately address the rule of interpretation set forth in Civil Code Section 1654 which forms the basis for CACI No. 320 (construction against the drafter”). See Civil Code 1654. (“In cases 0f uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist”). Pagano & Kass admits it drafted the agreement“) Defendant cites to several cases to argue that, despite the fact it drafted the contract, ambiguities should not be construed against it in this matter. See Motion at FN 3. Those cases are off point and in fact support Plaintiff’s position. In Indenco, Inc. v. Evans (1962) 201 Cal.App.2d 369 the ambiguous terms in the contract at issue “were admittedly arrived at by negotiations between two parties.” In the present matter there is no evidence whatsoever that any negotiations took place. In County ofSarz Joaquin v. Workers Comp. Appeals Ba’. (2004) 12 Cal. Rptr 3d 406 the appellate court refused to construe an ambiguous provision against the drafter for the simply reason that the other party did not even “identify an ambiguity to be interpreted” and “simply want[ed] t0 nullify” the provision. Id. at 410. “A party attacking a meaning succeeds only if the attacker can propose an alternative, plausible, candidate of meaning.” Id. In contrast Plaintiff proffered an alternative meaning which was more than plausible given Plaintiff‘s testimony and the resulting jury verdict. Indeed for purposes of this motion ambiguities M be construed against Pagano & Kass since Plaintiff is entitled to “the benefit of every favorable inference which may reasonably be drawn fiom the evidence and to have all conflicts in the evidence resolved in his favor.” Castro v. State ofCalif (1981) 114 Ca1.App.3d 503, 507. 1° Ex. “”E at pp. 9828-992 9 Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict N Qmmkm 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. RPC RULE 2-200 IS INAPPLICABLE TO A REFERRAL FEE IN AN EMPLOYMENT AGREEMENT AND CLASS ACTION JURISPRUDENCE DOES NOT REQUIRE THAT THE COURT APPROVE SUCH AGREEMENTS Defendant argues that Rule of Professional Responsibility 2-200’s disclosure and consent obligations excuse them from having to pay Plaintiff the referral fee. Additionally they argue that they should be excused from paying the referral fee because there is no evidence they disclosed the referral fee With former employee David Markevitch to the United Stated District Court in the Morin v. LoJack matter. Both arguments fail for the simply reason that Plaintiff David Markevitch is seeking compensation from the time he was employed as an associate by Pagano & Kass and compensation agreements between an employee and employer are not subject to Rule 2-200 or the requirements applying to fee agreements in class action cases. Defendant raised this same argument in its February 23, 2016 Motion for Summary Judgment.” The Court denied the MSJ since Plaintiff is seeking unpaid compensation arising from work performed as an employee associate of Pagano & Kass.” An Ordering denying an MSJ based on a finding 0f a triable of issue of fact does not, by definition, preclude that issue from being raised at trial. See Transport Ins. Co. v. TIG, Inc. C0. (2012) 202 Cal.App.4th 984, 1009. However, there was no dispute of fact at the summary judgment stage 0n this issue. Indeed the Court’s ruling found that Defendant’s argument failed as a matter of law since the requirements Defendant argued for simply did not exist.” Defendant cites no case law showing that a legal finding in earlier 11 See Ex. “G” [Defendant’s MSJ]. 12 See Ex. “H” [Court’s ruling denying MSJ] (“The parties’ agreement, Plaintiff’s performance, and at least some of Defendant’s work on the Class Action that gave rise to the fee award occurred during his employment. Thus, even though he has been terminated, the disclosure and consent requirements [of PRC Rule 2-200] do not apply....Nothing in the Federal Rules of Civil Procedure... or other legal authorities cited by Defendant suggests that, under these circumstances, an associate must disclose a fee sharing agreement to the court [in a class action] if he or she is terminated before the fees are paid”) 13 See Ex. “H” [Court’s ruling denying MSJ] (“The parties’ agreement, Plaintiff’s performance, and at least some of Defendant’s work on the Class Action that gave rise to the fee award occurred during his employment. Thus, even though he has been terminated, the disclosure and consent requirements [of PRC Rule 2-200] d0 not apply....Nothing in the Federal Rules of Civil Procedure. .. or other legal authorities cited by Defendant suggests that, under these circumstances, an associate must disclose a fee sharing agreement to the court [in a class action] if he or she is terminated before the fees are paid”) 1 0 Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 proceeding on a dispositive motion, not linked to a dispute of fact, can be set aside by the court in the same proceeding. Assuming arguendo that the Court needs to consider this legal issue again the case law and legal authorities previously relied on by the Court in denying Defendant’s Motion for Summary Judgment on this issue have not changed. l. Rule 2-200 Does Not ADDlV to Agreements with a Law Firm’s Emplovee The California Court of Appeal held that fee-sharing agreements while attorneys are formally associated do not need to be disclosed under Rule 2-200. See Anderson, McPharlin & Connors v. Yee (2005) 135 Cal.App.4th 129, 133. In Anderson, the agreement “was made between Yee on the one hand and his partners on the other.” (Id.) Yee, a lawyer, became an AMC partner in 2001, at which time AMC and Yee executed a partnership agreement. . . Accordingly, each partner hereby agrees that if such partner departs from the firm and, subsequent to such departure, renders legal services (directly or through any law firm with which such partner associates subsequent to departure) with respect to any ‘Open Files’ (as that term is hereinafter defined), such partner shall pay over to the firm, as liquidated damages, an amount equal to 25% of the revenues for all legal services rendered on Open Files for 24 months after the departing partner leaves the firm, payable to the firm as received by such partner 0r such Associated Firm. As used herein, the term ‘Open Files’ means all pending matters with respect t0 which the firm has been engaged to perform legal services as of, 0r prior to, the date of the partner[‘s] departure from the firm. ...” Yee terminated his partnership interest in AMC 0n April 19, 2002. During the next 24 months and thereafter, he was a partner at Wolfe & Wyman (from April 22, 2002, to April 30, 2003) and then at Yee & Belilove (May 1, 2003 to the present). When Yee parted company with AMC, clients with 27 “Open Files” went with him to Wolfe & Wyman, then some went with him t0 Yee & Belilove. During the relevant 24-month period, those clients paid $ 526,635.80 in attorneys’ fees on the “Open Files,” 25 percent of which is $ 13 1,658.95. (Id. at pp. 131-132 [emphasis added].) The fees, which were calculated as a percentage of the revenue on open files, were not collected until after Yee was n0 longer partnered with the others who would collect fees. The Court of Appeal held that the contract “cannot be viewed as an agreement by Yee or by AMC with a l 1 Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict \OOOQON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 lawyer ‘who is not [his] partner.” Id. [quoting Rule 2-200]. “As the trial court observed, the State Bar of California and the Supreme Court (by approving the Rules of Professional Conduct) were apparently satisfied ‘that fee splitting agreements entered into M members were partners did not need client c0nsent.’” Anderson, supra, 135 Cal. App. 4th at p. 133 [emphasis added]. The Anderson Court made clear that Rule 2-200 simply did not apply. “Yee’s arguments all assume that rule 2-200(A) applies to this case. As we have explained, it does not.” Anderson, supra, 135 Cal. App. 4th at p. 133. Rule 2-200 does not apply to a law firm’s agreement with its partner just as it does not apply to an agreement with its associate. The disclosure requirements for a law firm’s partners are the same as the requirements for associates. See Rule 2-200 (“shall not divide a fee for legal services with a lawyer who is not a partner 0f associate 0f 0r shareholder with the member”). There is n0 distinction between disclosure requirements for partners and for associates. Thus, the Anderson decision applies and warrants a ruling that there was no need to disclose any fee sharing agreement between Mr. Markevitch and P&K. “Rather, rule 2-200’s language, reasonably read, appears to encompass any division of fees where the attorneys working for the client are not partners 0r associates of each other, 0r are not shareholders in the same law firm.” Chambers v. Kay (2002) 29 Cal. 4th 142, 148. A client has no right to dictate how a law firm distributes a fee award internally among employees or partners. “Once the client’s fee is paid to an attorney, it is of no concern to the client how that fee is allocated among the attorney and his or her former partners.” Anderson, supra, 135 Cal. App. 4th at p. 133 [citing Jewel v. Boxer (1984) 156 Cal. App. 3d 171, 178]. As in Anderson, Rule 2-200 does not apply in this case because Mr. Markevitch was an employee 0f P&K at the time services were performed. The cases cited by Defendant lack the key fact present here: the attorney’s status as an employee of the law firm. Chambers, 29 Cal. 4th at p. 145 [“even though Chambers and Kay worked together in Weeks and a few other cases, they were not members of the same law firm as defined by the Rules 0f Professional Conduct. ...not an agreement to employ Chambers as an associate”]; In re “Agent Orange” Product Liability Litigation (2nd Cir. 1987) 818 F.2d 216, 224 [“Finally, we do not find class counsel t0 have 12 Plaintiff s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict N \OOOQOUIALH 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 formed an ad hoc partnership. They merely are a group 0f individual lawyers and law firms associated in the prosecution of a single lawsuit, and they lack the ongoing relationship that is the essential element of attorneys practicing as partners.”].) Because none 0f Defendant’s authorities involve the key fact at issue here-that is, Mr. Markevitch’s status as an employee during all times he worked 0n the LoJack matter-Defendant has not supported its argument that the fee agreement needed to be disclosed. The purpose 0f Rule 2-200 supports Plaintiff’s position that the Rule does not apply to an agreement between the law firm 0f record and its employee. According to the California Supreme CouIt, the purpose of Rule 2-200 is to provide clients with information necessary to accept 0r retain representation. Chambers, supra, 29 Ca1.4th at p. 157 [“Such information may affect the client’s level of confidence in the attorneys and is indispensable to the client’s ability to make an informed decision regarding whether to accept the fee division and whether to retain or discharge a particular attorney.”.) Where a client’s current attorney wishes to associate a new attorney that is not a part 0f the law firm, Rule 2-200 requires disclosure so that the client may accept or reject the new attorney’s participation. In contrast Rule 2-200’s function would not be served by disclosure of how a law firm intends to compensate its associates because the client would not have the right to instruct a law firm to terminate an associate from its employment. Thus, the purpose behind Rule 2-200- allowing a client to reject participation of a new law finn-would not be furthered by requiring that law firms disclose how fees will be divided internally because a client has no right to tell its counsel of record to fire a particular employee. Accordingly, the purpose of Rule 2-200 supports the plain meaning interpretation that employment agreements and bonuses between a law firm and its employees need not be disclosed to clients. 2. Defengant’s Al_lthoritv Does Not Require Disclosure of Employee Fee Agreements t0 Federal Cogrts in Class Actions The Morin v. Lojack matter was a class action pending in the United States District Court Defendant. Defendant contends that Rule 23(h) bars the enforcement of the contract because Plaintiff did not submit a separate application for a fee award to the court in the Class Action. 13 Plaintiff’s Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 However, Plaintiff acted as an associate employed by Defendant’s firm when he referred Morin’s business and Defendant earned fees in the Class Action. Defendant’s reliance on California authority (such as California Rules 0f Court, rule 3.769) is misplaced because that rule only applies to cases in the superior courts of California. See Cal. Rules of Court, Rule 3.10. The Lojack Class Action was heard before a U.S. District Court and governed by the Federal Rules 0f Civil Procedure. Defendant’s reliance on Mark v. Spencer (2008) 166 Ca1.App.4th 219 (“Mark”) is misguided because it involves California Rules of Court, rule 3.769. (Mark, supra, at pp. 223-224.) Even if Mark v. Spencer did apply the case is distinguishable since it did not involve an employment agreement between an associate and his employer. Mark involved “a written agreement to act as cocounsel in a proposed class action” which clearly fell under CRC Rule 3.769 and RPC 2-200. Mark, Cal.App.4th at p. 224. Additionally the court found that a fee sharing agreement must be disclosed to the couIt only when it is within the scope of Rule 2-200(A). Mark, supra, at pp. 223-229. There is nothing in the Federal Rules of Civil Procedure or other federal legal authorities cited by Defendant that suggests that, under these circumstances, an associate of a law firm who is terminated must disclose an origination bonus in his employment agreement to the District Court in order to seek that unpaid compensation. III. CONCLUSION For the reasons stated herein, Plaintiff asks that the Court deny Defendant’s motion. Dated: October 17, 2016 Respectfully submitted, Kevin Allen, Esq. Allen Attorney Group Counsel for Plaintiff 14 Plaintiffs Opposition to Defendant’s Motion for Judgment Notwithstanding Verdict
