Parrish v. Latham & Watkins
221 Cal. Rptr. 3d 432
| Cal. | 2017Background
- Parrish and Fitzgibbons (former Indigo/FLIR employees) were sued by FLIR/Indigo for trade secret misappropriation after leaving to start a competing microbolometer business.
- Defendants moved for summary judgment arguing the new plan predated Indigo work; FLIR/Indigo opposed with expert declarations claiming the plan required proprietary FLIR/Indigo manufacturing knowledge.
- Trial court denied the summary judgment motions (finding triable issues) but after bench trial ruled for Parrish and Fitzgibbons and awarded them fees under the California Uniform Trade Secrets Act, finding FLIR/Indigo acted in subjective and objective bad faith.
- Parrish and Fitzgibbons then sued Latham & Watkins and partner Schecter (FLIR/Indigo's lawyers) for malicious prosecution; defendants filed an anti-SLAPP motion. The trial court granted on statute-of-limitations grounds; the Court of Appeal reversed that basis but held the interim adverse judgment rule (denial of summary judgment) established probable cause and affirmed reversal of anti-SLAPP dismissal.
- The California Supreme Court granted review to decide whether an initial denial of summary judgment (later followed by a trial finding of bad faith) precludes a subsequent malicious prosecution claim under the interim adverse judgment rule.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether denial of summary judgment in underlying case establishes probable cause for malicious prosecution purposes (interim adverse judgment rule) | Denial should not bar malicious prosecution when a later trial shows the suit was objectively specious or supported by materially false evidence | Denial of summary judgment is an interim merits ruling that establishes arguable merit and thus probable cause unless procured by fraud or perjury | Denial of summary judgment established probable cause; interim adverse judgment rule applies and bars the malicious prosecution claim (absent fraud/perjury) |
| Whether a trial court's later finding of "bad faith" under the Trade Secrets Act negates the effect of the earlier denial of summary judgment | Posttrial bad-faith finding (objective speciousness and subjective motive) shows lack of probable cause and should allow malicious prosecution suit | Bad-faith finding (as applied under Gemini) differs from the higher standard for lack of probable cause; it does not erase an earlier merits-based ruling | Bad-faith finding did not negate the earlier summary judgment denial; it did not meet the standard showing the claim was "totally and completely without merit" required to defeat the interim rule |
| Whether an exception to the interim adverse judgment rule is required for cases where opposition evidence was "materially false" but not fraudulently presented | A "materially false facts" exception is necessary when later proceedings show opposition evidence was false, because otherwise malicious prosecution claims are foreclosed even when the underlying plaintiff knowingly lacked probable cause | Existing fraud/perjury exception already covers cases where evidence was knowingly false; inadvertent or unclear opposing evidence does not defeat the interim rule | Court declined to create a new "materially false facts" exception; fraud or perjury remains the relevant exception to the interim rule |
| Whether the Court should decide issues of limitations and anti-SLAPP timing | Plaintiffs argued limitations and anti-SLAPP timing should allow the case to proceed | Defendants argued procedural bar (limitations) warranted dismissal | Court did not reach the limitations issue because it resolved the case on the interim adverse judgment rule (probable cause) |
Key Cases Cited
- Wilson v. Parker, Covert & Chidester, 28 Cal.4th 811 (stands for the interim adverse judgment rule: merits rulings establishing probable cause unless procured by fraud or perjury)
- Sheldon Appel Co. v. Albert & Oliker, 47 Cal.3d 863 (defines malicious prosecution elements and probable cause standard)
- Zamos v. Stroud, 32 Cal.4th 958 (clarifies "totally and completely without merit" standard for malicious prosecution)
- Lee v. Hanley, 61 Cal.4th 1225 (addressed statute-of-limitations issue and disapproved contrary Court of Appeal authority)
- Crowley v. Katleman, 8 Cal.4th 666 (related malicious prosecution principles)
- Gemini Aluminum Corp. v. California Custom Shapes, 95 Cal.App.4th 1249 (defines "bad faith" under CA Uniform Trade Secrets Act as objective speciousness plus subjective motive)
- Slaney v. Ranger Ins. Co., 115 Cal.App.4th 306 (Court of Appeal decision discussed re: limits of interim rule when jury findings suggest fraud or bad faith)
- Roberts v. Sentry Life Ins. Co., 76 Cal.App.4th 375 (acknowledges potential narrow situations where summary judgment denial might not irrefutably establish probable cause)