*1 June S104444. 2003.] [No. al., Plaintiffs Appellants, FERGUSON et
BRENT LLP, al., Defendants BERNSTEIN, et & CABRASER, LIEFF, HEIMANN and Respondents.
Counsel Walker, Becht, David J. (cid:127) (cid:127) (cid:127) Bruce and Ross L. Nye Adams Sinunu Nye Libenson for Plaintiffs and Appellants. Nemerovski, Rabkin, Falk, Jr., Howard, Rice, Falk & Jerome B. Canady, A. Kane for Defendants and Respondents. Ethan P. Schulman and Deborah Bird, Marella, Freeman for Los Angeles Boxer & and Thomas R. Wolpert Association, Bar Association and Hills Orange Beverly Bar County County Bar Association as Amici Curiae on behalf of Defendants and Respondents. Greines, Martin, & Richland and Robert A. Olson for Association Stein of Defend- California Defense Counsel as Amicus Curiae on behalf Southern ants Respondents. Smith, L. Martinez for & Richard B. Wolf and Raul Bisgaard
Lewis Brisbois Caro- Insurance Continental Casualty Company, Mutual Lawyers Company, as Amici and Admiral Insurance Company lina Insurance Casualty Company on behalf of Defendants and Respondents. Curiae Opinion action, to the certifi-
BROWN, J. In amass tort class counsel stipulated with to punitive of a class mandatory, non-opt-out respect cation To class counsel to dismiss agreed settle members, from some class class claims with prejudice. Despite objections claims and the trial court the approved dismissed counsel committed Two of these now contend class objectors settlement. have they seek to recover the legal malpractice now consider whether plaintiffs recovered but for counsel’s We negligence. action recover as may of their attorneys lost due to damages they allegedly negligence We conclude they in the underlying litigation (lost damages). not.
Facts
A. The Class Action Underlying Rodeo, California, at a released tower processing refinery sulfide and a toxic chemical called Catacarb into the hydrogen atmosphere. near The release of these substances affected thousands of residents living the refinery. thereafter, Cabraser, Bernstein, Lieff,
Soon Heimann & LLP respondent filed a class action lawsuit Union Oil (Lieff Cabraser), Company California sought, among owner (Unocal), refinery. complaint other Other also filed individual and things, punitive damages. law firms *5 class action Meadows & against lawsuits Unocal—including Casper, Schwartz into fee con- which had entered (Casper Meadows), contingent tracts with and filed suit on behalf of Brent and Floren- Ferguson appellants cia Prieto and other individuals. (collectively appellants) order,
Pursuant to a the trial court consolidated these actions pretrial Unocal and them The designated litigation. gave court complex the consolidated actions to a primary responsibility managing steering committee of Lieff counsel—which included Cabraser and plaintiffs’ Casper The and Meadows. court Lieff Cabraser as co-lead class counsel designated Meadows as co-lead direct action counsel. Casper Lieff Cabraser then filed a first amended model four complaint identifying medical classes: potential (1) personal injury, (2) property damage, (3) Several and Class monitoring, (4) punitive damages (Unocal Action). later, Cabraser, counsel, entered months Lieff its co-lead class and Unocal the the into a and order trial court. Under stipulation approved by stipulation the of the and the class action to withdraw plaintiffs agreed allegations order, to and classes. The also personal injury damage parties stipulated property and class of a mandatory, non-opt-out” punitive the “certification class of the medical monitoring schedule the issue of certification to agreed and order individuals gave and decision. the Finally, stipulation for briefing their to file damage days injury property with claims for personal certification of the personal and to seek right claims gave plaintiffs or substan- decertify classes if Unocal moved injury property class. modify tially Cabraser settlement engaged extensive Lieff
Following discovery, Daniel H. Judge under the of Retired aegis with Unocal negotiations After “extensive Weinstein, negotia- settlement master. court-appointed $80 discussion,” to an million global tentatively agreed tions and parties individual actions. The settlement of the consolidated class and settlement class claims with prejudice. the dismissal of the punitive required an all issues referring concerning then order stipulated parties of settlement the settlement and the allocation faith and good scope order, re- Judge Weinstein. Pursuant to this Weinstein Judge proceeds conducted at arm’s length by that the settlement “were negotiations ported about thoroughly knowledgeable counsel who were highly qualified $80 million settlement He concluded that the evidence and the law.” further reasonable, fair, settling settlement for all just parties.” was “a Class the settlement “could not have been achieved without Observing damages allega- with the punitive Counsel’s to dismiss agreement prejudice “the handful of class” and finding tions of the non-opt-out punitive Wein- Judge dismissal . . . to be unpersuasive,” to the objections proposed Counsel’s motion to dismiss “that the Court Class grant stein recommended claims with class prejudice.” dismissal of the punitive After notice of the proposed providing The motion included claims, Cabraser filed the motion to dismiss. class Lieff the individual plain- attorneys representing authorizations from the various *6 clients’ claims in ex- Meadows—to dismiss their tiffs—including Casper $80 million settlement. global in the change participation class received 12,000 members of the punitive damages Over individual motion; filed objections. Appellants eight, including appellants, notice of of the settlement and unfairness inadequacy focused on the purported $80 to the punitive million settlement solely the court to allocate asked the motion and on hearing himself attended the Ferguson claims. in the court. Appellants proceeded his objections voiced personally them Meadows refused represent because Casper propria persona the motion and settlement and because could not find another they opposing to assist them. attorney
At the the trial court the settlement and dismissed hearing, approved so, claims In the court stated: doing class with punitive damages prejudice. “I’m . . . satisfied that those concerns that have you objectors] [the [have] been considered the class-counsel that are this settlement. fully by proposing And I’m satisfied that this to be a fair and reasonable settlement for appears all . . . the settlement . . . involved. parties [^|] My understanding [is] $80 that the million all settlement does claims encompass punitive damages filed, that have been and I’m that I have a deal hearing everyone great of confidence in that this is settlement that should be and that the approved dismissal of the claims would be appropriate.” claims,
In its written order class the court dismissing concluded “that the interest in Unocal for its conduct” at public’s punishing its Rodeo and in Unocal from future such conduct has “refinery, deterring been achieved.” The court also issued an order that the settlement “is finding fair, faith, reasonable and made in as that term is used in Code of Civil good Procedure Section 877.6.” did not claims. the dismissal of the
Appellants appeal Instead, Meadows, in the represented by Casper they claims participated created $125,000 the settlement. an process Ferguson received award of $100,000 $80 and Prieto received an award of from the million settlement. Neither nor Prieto Ferguson otherwise these awards. appealed challenged
B. The Legal Action Malpractice A awards, few weeks after the settlement receiving filed appellants others, instant action Lieff Cabraser and the against, among individual at Lieff attorneys Cabraser involved in the settlement of the Unocal Class Bernstein, Arbitblit, Action—respondents William Donald C. and Jonathan D. initial Selbin After demurrer (collectively respondents). mlings by court,1 trial filed a third amended appellants stated complaint. complaint 11 causes of including: negligence, (1) (2) malpractice, (3) fraud, fraud, breach of intentional breach fiduciary duty, (4) fiduciary (5) (6) contract, fraud, (7) constructive breach of the covenant of (8) implied fraud, good faith and fair to commit dealing, conspiracy unjust 1 Intheir demurrer complaint, respondents appellants initial contended could not demurrer, ruling apparently rejected recover lost on the the trial court *7 this contention. and related that the settlement
enrichment. The was gist complaint their fiduciary duty that breached notices were and inadequate respondents damages by certifying non-opt-out punitive and committed malpractice settlement, class, refusing support negotiating recommending damages, As compensatory appel- settlement. objections appellants’ Unocal damages against award of lants lost alleged they potential far below the amount they an award of compensatory and received tortious conduct. have received but for respondents’ the fraud- demurrers to The trial court sustained initially respondents’ for court later granted summary judgment related causes of action. The evi- because the undisputed on claims remaining respondents appellants’ of collateral “barred the doctrine dence established that these claims were because appellants found no due violation process The court also estoppel.” Action. in the Unocal Class notice of the adequate proceedings received claim because respon- enrichment unjust the court barred Finally, appellants’ to these findings, benefit at Pursuant expense. dents received no appellants’ entered in favor of respondents. the court judgment that the trial court affirmed. The court found The Court Appeal of action fraud-related causes sustained demurrers appellants’ properly all and notices by [Casper because relevant events “knowledge Meadows] be- summary judgment to them.” The court then upheld was imputed a matter of could recover no as respondents cause appellants in the claims First, the held that by participating law. court appellants, Second, their claims of compensatory damages. waived process, inadequate law, lost are not the court held that “as a matter of Because legal malpractice.” as for compensatory damages recoverable it not address other issues. any found no did cognizable damages, court are lost punitive damages review to determine whether solely We granted not. action and conclude are they in a legal malpractice recoverable
Discussion 1, 14 (1992) Cal.App.4th Merenda v. Court
Citing Superior the value of the contend 87], they merely Cal.Rptr.2d appellants “seek[] negligence”—i.e., lost through [respondents’] [they] Because these lost puni have recovered from Unocal. should damages they the context of a legal not punitive,” tive “are compensatory, these damages contend recover they may action (ibid.), they or mali fraudulently, act did not though oppressively, even respondents Code, 3294, counter appel Civ. subd. (a)). Respondents ciously (see lants not recover
1045 of under Piscitelli v. attorney negligence reasoning Friedenberg (2001) 87 953 allow- Cal.App.4th Cal.Rptr.2d According respondents, [105 88]. of lost contravenes the ing recovery purpose (Id. awards and cannot be “as a matter of at justified policy.” pp. We and find that 981-982.) agree with respondents, malpractice plain- tiffs not may recover lost as
“Detriment is a loss or harm suffered in
person
property.” (Civ.
Code,
contract,
“For the breach of an
not
3282.)
obligation
arising
§
measure
...
is the amount which will
all
compensate
detriment
caused
it
proximately
whether
could have been
thereby,
anticipated
Code, 3333,
Thus,
or not.”
italics
(Civ.
“an
added.)
attorney’s ‘liability,
cases,
in other
is for all
negligence
caused
damages directly
proximately
349,
his
v.
negligence.’” (Smith
Lewis
13 Cal.3d
362
(1975)
[118
621,
589,
Cal.Rptr.
530 P.2d
78
231],
A.L.R.3d
overruled on another point
in In re
838, 851,
Brown
15
Marriage
(1976) Cal.3d
fn. 14
Cal.Rptr.
[126
633,
561,
544 P.2d
94 A.L.R.3d
Pete
164],
v. Henderson
124
quoting
487,
78,
Cal.App.2d
P.2d
Applying understanding causation in the proximate context, we refused recently to hold a insurer liable for negligent PPG, assessed its insured. In an insurer refused to settle an action against its insured for an amount within the insured’s policy *9 result, $1 in
limits. As a the insured suffered a for million judgment punitive (PPG, at sued its insurer for 313.) 20 Cal.4th insured damages. supra, p. to breach of the covenant of faith and fair and recover dealing sought good $1 as “it to damages the million had been ordered as pay compensatory . .” . . at The trial court granted summary (Id. insurer, for the and the Court of affirmed. judgment Appeal (Ibid.) cause in fact of Although negligence We the insurer’s was the the agreed. award we punitive Cal.4th at nonetheless damages (PPG, supra, p. 315), that the did not cause the proximately concluded insurer’s award negligence conclusion, “three (id. at this we held that p. 316). reaching policy insured, the “strongly considerations” militate the against allowing morally lawsuit, in the third to shift to its insurance wrongdoer party culpable the damages the to from insured’s obligation resulting company pay punitive First, in fn. misconduct that lawsuit.” the egregious (Ibid., omitted.) allowing to its insured to shift insurer “its responsibility pay in action the third would violate or party public against reducing policy by for intentional of another.” offsetting liability wrongdoing negligence Second, at the insurer to for (Id. 317.) liability punitive assume p. allowing on the conduct of would defeat the its insured damages premised egregious the in- public damages. Finally, these policies underlying (Ibid.) requiring surer incurred its would violate “the punitive by insured pay damages (Id. 318, indemnification at public against punitive damages.” p. policy fn. omitted.) a similar we conclude that consid
Applying
analysis,
public policy
militate
a
to recover lost
strongly
allowing plaintiff
punitive
erations
First,
action.
damages
of lost
would defeat the
very purpose
allowing
punitive
“Punitive
definition are not in
damages by
behind such
but rather to
the tortfeasor
tended to
compensate
injured party,
punish
malicious,
him
action
and to deter
and
whose
was intentional
wrongful
Concerts,
v. Fact
Inc.
others from similar extreme conduct.” (Newport
266-267
L.Ed.2d
(Newport);
453 U.S.
S.Ct.
[101
616]
Code, 3294,
for the
“damages
see
Civ.
are
(a) [punitive damages
also
subd.
“That
is
defendant”].)
purpose
sake of
example
way
punishing
105, 110
a
Murakami
54 Cal.3d
(Adams
one.”
public
purely
“The essential
therefore
every
Making interest, commit had no attorney a societal because the did not not serve justifying over the intentional misconduct control negligent attorneys on for lost Imposing liability award. (see Newport, supra, tortfeasor therefore neither punish culpable ordinary at principles S.Ct. p. U.S. 2760] [“Under his made to suffer for retribution, himself who is it is the wrongdoer from committing that tortfeasor and others unlawful nor deter conduct”]), 1996) v. Lippman (S.D.N.Y. acts in the future wrongful (see Cappetta similar recover lost Indeed, allowing 306). appellants 913 F.Supp. *10 in such damages not effectuate the behind public purpose would damages found, “the because, Class Action the trial court in the Unocal this case as . . . and in Unocal deterring interest in Unocal public’s punishing $80 the million settlement. (See future such conduct has been achieved” by ante, at p. 1043.) as damages of lost
Allowing recovery punitive damages the violate because policy, actions would also public the attorney’s of the no relation to the of gravity amount award bears lost or his her A to recover seeking punitive misconduct or wealth. plaintiff an award “deliberately seeking from his is negligent attorney That to the to [attorney’s] ability pay. at least disproportionate (or unrelated) v. of damages.” (Adams result... is to the contrary public purpose punitive Murakami, 54 Cal.3d at supra, p. 122.) assertion, lost would awarding punitive damages to
Contrary appellants’ the encour damages by not further deterrent indirectly purpose care in or investigating defending “to exercise reasonable aging attorneys 2002) F.Supp.2d claims.” v. Oliver punitive damages (Jacobsen (D.D.C. “ ‘ where, as in [California], “The considerations state 102.) policy deterrence, for and would seem are awarded punitive damages punishment that as as on the nominally party rest well require ultimately ’ ” v. Court for the actually responsible wrong.” (Peterson Superior 1305], 642 P.2d italics added.) By Cal.3d fn. Cal.Rptr. an on ultimately nominally attorney, purporting imposing an wrong, and deter a who was not wrongdoer responsible punish of such award of lost frustrates punitive damages necessarily purpose damages. some indirect an award of lost have assuming punitive damages
Even effect, behind punitive deterrent it still conflicts with public purpose is an “The level of ultimately damages. proper it with little or no not so that the defendant can absorb amount low annihilates, that it or destroys, cripples discomfort nor so [citation], high 573, 621-622 defendant.” v. (Rufo Simpson (2001) Cal.App.4th Thus, an award of lost can further Cal.Rptr.2d 492].) only deterrence if it being (Adams deters “without excessive.” goal Murakami, 54 Cal.3d at Because an award of lost supra, bears no relation to the miscon gravity attorney’s wealth, duct or his or her it cannot further the deterrent behind such purpose Indeed, where, here, the intentional is a damages. wrongdoer wealthy whose misconduct was corporation alleged especially reprehensible, any to the award is to be likely “disproportionate (id. [attorney’s] ability 112) may financially destroy pay” Such a result would contravene the attorney. undoubtedly puni purpose deter, tive which “is to not damages, destroy.” (Ibid.) Second, violate the of lost permitting recovery not be public “[D]amages may policy speculative surmise, based sheer and the mere or even upon speculation possibility will result from conduct does not render it probability wrongful *11 1541, actionable.” re 1544 Easterbrook 200 (In (1988) Cal.App.3d [244 v. 652], on other Romero 8 Cal.Rptr. disapproved grounds by People (1994) 728, 744, 270, Cal.4th fn. 10 883 P.2d to be 388].) “Damage Cal.Rptr.2d [35 a the act as subject to award must be such as follows of proper complained 756, a . . . .” v. Parks legal certainty (Agnew 172 768 (1959) Cal.App.2d P.2d 118].) [343
Because an award of constitutes a moral determi punitive damages nation, lost are too to a cause of action punitive damages speculative support for damages attorney negligence. determining compensatory “ ‘the task is to determine what a reasonable jury’s ” or fact finder have done’ in the action absent judge underlying would Inc. Arthur & Co. 52 attorney negligence. (Mattco Forge, Young (1997) v. 780], 840 Brust v. Newton Cal.Rptr.2d quoting (1993) Cal.App.4th [60 “an 70 2868 P.2d The standard is Wash.App. 1095].) objective [52 however, one.” at damages, Lost (Mattco Forge, punitive “ are not amenable to an determination. ‘Unlike the measure of objective suffered, actual which a of historical or damages predictive presents question fact, not a “fact” “tried” [citation], really by level of is punitive damages Industries, Tool Inc. (2001) Inc. v. Leatherman jury.’” (Cooper Group, 1678, 1686, 674], 532 U.S. 437 S.Ct. 149 L.Ed.2d quoting [121 Humanities, Center Inc. U.S. S.Ct. v. 518 459 Gasperini [116 Instead, 2211, 2235, Scalia, of a 135 L.Ed.2d (dis. opn. J.).) 659] of is an of its moral con jury’s “imposition expression Industries, Indeed, at 432 S.Ct. at a p. 1683].) demnation.” (Cooper p.
1049 “ ” ‘entitled, damages to an award of right’ punitive is not plaintiff 791, P.2d Church 32 Cal.2d v. Second (Brewer Baptist 713] fraud, finds the defendant “guilty oppression, even if the (Brewer)), jury Thus, Code, award (a)), or malice” subd. (Civ. § what moral judgment the trier of fact must determine damages, punitive are Because moral judgments have been made a reasonable by jury. whether determine objectively punitive a cannot inherently subjective, jury amount of those have been awarded or the proper should 53, com. Lawyers, Rest.3d Law Governing with any legal certainty. (See § “calls for a h, speculative award of lost punitive p. [an are of a Lost jury’s reaction”].) reconstruction hypothetical a cause of action for legal malpractice. therefore too speculative support Parks, 1544; Easterbrook, In re at p. Agnew (See supra, Cal.App.3d 768.) supra, Cal.App.2d claims
Third, the for lost punitive standard complex proof applicable militates of such Because the stan- are different dards of proof governing compensatory law, Code, as otherwise Evid. (compare [“Except provided § burden of a with proof requires proof by preponderance evidence”] Code, 3294, Civ. damages only subd. recover (a) [plaintiff may it is evidence that the defendant has “where clear proven by convincing fraud, standard of been or malice” guilty oppression, (italics added)]), be, essence, a for lost will a standard within proof standard. To recover lost must a damages, prove by plaintiff *12 the evidence that but for would preponderance attorney negligence jury of have found clear and evidence of fraud or malice. In convincing oppression, standard, an of this mental to reach light complex gymnastics required “[t]he verdict be difficult to much less execute.” intelligent would comprehend v. 19 Cal.4th 544 (Wiley County Diego (1998) Cal.Rptr.2d San of P.2d additional difficulty This (Wiley)) pragmatic provides 983] for of lost in a barring recovery damages legal malpractice support punitive action. (See ibid)
Fourth, in this case would damages of lost allowing recovery punitive tort actions hinder the of trial courts to and resolve mass ability manage classes. the use of discouraging mandatory, non-opt-out punitive of class actions to handle mandatory have use encouraged “[C]ourts class actions avoid Mandatory claims in mass tort cases. a who win the race to the unfairness that results when few plaintiffs—those They a defendant in the early litigation process. courthouse—bankrupt also avoid the unfairness of a defendant over and over punishing possible Cir. for the same tortious conduct.” re Exxon Valdez again (In (9th 2000) liable for lost F.3d class counsel 795-796.) Making would, however, counsel from these classes discourage using mandatory because counsel would otherwise face the of specter multiple legal malprac- tice lawsuits from class members. disgruntled
Indeed, lost the overall allowing damages may adversely impact of courts to their caseloads settlement more ability manage by making difficult in cases claims. Because dissatisfied involving punitive damages clients seek such based on an may solely allegation negligent claims, undervaluation of the the settlement of such claims Faced with exposes plaintiffs’ attorneys potentially devastating liability. risk, this will be more hesitant to settle and more plaintiffs’ attorneys likely in their settlement demands. intransigent of lost
Finally, allowing recovery
punitive damages-
exact a
cost.
action
social
significant
to such
would
increase the cost of mal-
attorneys
liability
likely
Exposing
insurance, cause insurers to exclude
for these
practice
coverage
damages,
further
insurers from
insurance
discourage
providing professional liability
Ahem,
Do?,
California.
What’s a Firm to
S.F. Recorder (Dec.
2002)
(See
com-
California saw
nine insurance
past year,
departure
[“This
that
insurance to
panies
professional
liability
attorneys”].)
provide
diffi-
financial burden on
would
make it more
resulting
attorneys
probably
cult
to obtain
services or obtain
legal
for consumers
minimum, the
At a
malpractice.
specter
“
‘defensive’ law.”
19 Cal.4th at
encourage
(Wiley, supra,
practice
it
no one to
our
overburdened
behooves
already
system
‘“[I]n
resources
to build a record
merely
the additional
encourage
expenditure [of]
”
544-545,
a
claim.’
(Id. pp.
quoting Bailey
potential malpractice
Tucker
533 Pa.
A.2d
Even
114].)
though respondents
of horribles
and amici curiae
no concrete evidence
this
provide
parade
occur,
deem it
inflict the risk”
will
“we
unwise to
compelling
“[a]bsent
*13
reason” to do so.
And appellants compelling is the value mle that “the measure of a legal malpractice action] [in of lost punitive of the claim lost” does not us from barring preclude Lewis, 13 Cal.3d at for reasons. v. policy (Smith supra, public be made action “is entitled to only A plaintiff
1051 has been made whole be a plaintiff But should (Ibid.) presumed whole.” “[i]t Mutual Auto . . . .” Farm (State by for his injuries compensatory _ 1513, 1521, S.Ct. Ins. Co. v. 538 U.S. mobile Campbell [123 120 Murakami, 54 Cal.3d at p. Adams v. 585]; supra, 155 L.Ed.2d see also of the award by her a will be made whole his or injury, plaintiff [“Whatever Thus, are not definition “[b]y [punitive damages] damages”].) compensatory a suffered.” for loss intended to make the whole plaintiff compensating 6 Cal.4th 664 Industries (1993) v. Watkins Associated (Latin [25 though “An of damages, 863 P.2d award 179].) punitive Cal.Rptr.2d deterrence, of is a boon for the plaintiff. for societal reasons justified perhaps ” 120.) Although constitute a windfall . . . .’ (Adams, p. ‘Such ” “ he or she damages,’ is ‘entitled of right compensatory plaintiff [as] “ ” 32 Cal.2d at entitled to’ damages. (Brewer, supra, is ‘never punitive 801; P. Because 530].) Davis v. Hearst 160 Cal. [116 for their an award injuries by are made whole legal malpractice plaintiffs these to recover lost allowing punitive lost compensatory damages, plaintiffs true an undeserved windfall. This is especially them give where, here, their have been for fully compensated injuries. plaintiffs
The fear that for lost negligent attorneys liability insulating is Given the size will foster misconduct also overblown. potential and the fee typical contingent arrangements, awards these claims have a incentive to attorneys already strong properly pursue Moreover, for without them lost subjecting liability cases, are damages—which most potential liability an misconduct. attorney often deterrent substantial—provides adequate increases in Finally, premi- specter disciplinary ums, incen- and losses in future business more than gives attorneys enough event, In believe the overwhelm- any tive to handle their cases we properly. of lost against recovery considerations ing public policy militating at- risk of outweigh countervailing encouraging damages significantly any torney negligence.
Neither Sandberg (1990) Cal.App.3d Granquist nor Norton v. Court (1994) Cal.App.4th Cal.Rptr. Superior 109] the Court dictates a result. (Norton) contrary Granquist, Cal.Rptr.2d 217] of a deceased tort victim held that the Appeal personal representative in a legal malpractice recover suffering, disfigurement damages pain, that former Probate Code section Concluding action. at p. 185.) (Granquist, “to recovery by representative subdivision (c)—limiting personal *14 1052
loss or the decedent sustained or incurred to death”—did not prior the court found no reason to deviate from the rule that the apply, general measure of in a action is the value of the claim legal malpractice contrast, lost at consider- (Granquist, pp. 186-187). By strong public policy ante, ations militate against allowing lost recovery punitive damages. (See at pp. 1046-1050.) Norton,
Norton is also the Court of held that inapposite. Appeal the collateral source rule in actions as a matter of applied legal malpractice 24 at to the “practicality.” (Norton, According supra, Cal.App.4th p. 1758.) court, “the defendant in the stands shoes of tortfeasor attorney underlying insofar as the collateral is carefully source rule concerned.” court (Ibid.) limited its to the collateral source rule and did not holding address Indeed, causation. the court found that no question proximate apparently barred the of the collateral source rule. public policy application (See ibid.) ante, That is not true here. at the court (See 1046-1050.) Finally, pp. concluded that result... this case allows the in a merely plaintiffs “[t]he action to be made whole.” at legal malpractice {Norton, By contrast, an award of lost a windfall that damages gives appellants ante, were not entitled to in the action. at they 1050- underlying (See pp. 1051.) we decline to
Finally,
follow
out-of-state cases cited by appel
lants. Most of these cases
little or no
provide
analysis
permit
damages solely
lost
based on
rule that the measure of
general
in a
action is the value of the lost claim. These
cases
largely ignore public policy—including
public purpose
Oliver,
the federal court in Jacobsen v.
damages.2 Only
supra,
F.Supp.2d
101-102,
at
even
the relevant
pages
attempted
weigh
public policy
however,
it
considerations. Its
is
and we do not find
analysis,
incomplete,
ante,
for the reasons stated above.
persuasive
1046-1052.)
(See
pp.
we
with Piscitelli v.
Accordingly,
agree
Friedenberg, supra,
Cal.App.4th
953, 983,
302, 306,
v.
and Summer
Cappetta Lippman, supra,
F.Supp.
598,
ville
A.D.2d 213
hold that
599],
v.
N.Y.S.2d
Lipsig (2000)
[704
action
not
recover
plaintiff
Roach,
Hall,
Johnston,
2 (See, e.g., Ingram
(N.D.I11. 1996)
v.
Fisher & Bollman
1996 WL
*2;
1057];
(1987) 241
Haberer v. Rice
Hunt v. Dresie
Kan. 647
P.2d
279, 286;
(S.D. 1994) 511 N.W.2d
Patterson & Wallace v. Frazer
Disposition of the Court of Appeal. We affirm the judgment J., Chin, J., concurred. J., Baxter, C. George, that with the KENNARD, J., majority Concurring Dissenting. I agree com action not recover as may in a legal malpractice these two plaintiffs when, part damages they allegedly punitive pensatory for the class attorneys class a settlement in the underlying But, the class. of the damages sought to a dismissal stipulated the determination whether I would leave for another majority, day unlike context, when the class action to cases outside today’s holding applies a different here lead to may considerations different from those involved conclusion.
I. 12,000 who, to a toxic individuals after exposure Plaintiffs are two of over chemical a class action against from a leak at a emanating refinery, joined $80 among eight objectors owner. Plaintiffs were refinery’s of the settlement, included a for dismissal million which stipulation settlement, “the finding claims. The trial court approved the defendant had been . . . and deterring” interest in public’s punishing Proc., Civ. achieved, made in faith good (Code and that the settlement was 877.6). § trial settlement, jury free to seek the terms of the were plaintiffs
Under claims, do After receiv- but did not so. they on their compensatory damage awards, attacked the settlement collaterally their arbitration ing plaintiffs counsel, asking action class this through malpractice course, action if the plaintiffs 3 Of recover Code, themselves, fraud, (Civ. malice” subd. attorneys, guilty “oppression, are gravity attorneys’ depend on the (a)), but the measure and their wealth. misconduct them, settlement, lost to when as counsel to a part stipulated *16 dismissal claims of the class. punitive damage non-opt-out I with the that this case agree majority issues presents important public view, however, policy. my crucial issues from both the policy spring nature and resolution of the class action lawsuit. This court underlying long the use of ago acknowledged public encourages class actions. policy Industries, (Richmond 462, v. Dart Inc. Cal.3d 29 473 (1981) Cal.Rptr. 515, P.2d 629 Public settlement is 23].) policy favoring especially weighty 1222, class actions. Cir. 884 F.2d (Franklin (9th Kaypro Corp. 1989) 1229; 1326, Cotton v. Hinton Cir. F.2d (5th Settlement of 1977) 1331.) class actions is because “consume substantial encouraged precisely they judicial resources and risks for the re present unusually large litigants.” (In General Motors Truck Fuel Tank Products Corp. Pick-Up Liability Litigation 768, Cir. 55 F.3d (3d 1995) 805.)
If we
all dissident members of a class to
a
permitted
pursue malpractice
settlement,
action
class counsel for
by
relinquished
would have little incentive to
even
attorneys
class actions and
less
bring
incentive to settle them. Counsel
bono would be
acting pro
especially
to undertake
unlikely
class
Thomas v.
representation. (See
Albright (D.D.C.
a world
with numerous
1999)
F.Supp.2d
fraught
injustices
[“In
that can
be vindicated
the vehicle of a
only
through
attorneys
class
should not be dissuaded from
meritorious actions
the threat of a
bringing
And,
illustrates,
state court
law
as this case
malpractice
suit.”].)
permitting
Here,
such a collateral attack undermines the
very authority
judiciary.
12,000
two of
class members
from class counsel
sought
recoup
potential
based on a claim that had been
in ex-
bargained away
million,
$80
for a
settlement of
even
the trial court
change
global
though
found the settlement to have been made in
to have
expressly
good faith and
vindicated the
interest in
. . . and
the defend-
public
“punishing,
deterring”
ant’s conduct.
v. Murakami
54 Cal.3d
(Adams
Cal.Rptr.
318,
To to now attack what to be an permit plaintiffs collaterally they perceive lucrative settlement class action violates an insufficiently underlying this I overriding settlement class actions. On public policy favoring point, however, Unlike the I stress agree with majority. majority, narrowness of the for another whether the same con- holding, leaving day I my siderations would outside the class action context. outline apply concerns below.
II.
class
not arise from
claims do
majority
The vast
the most
settlements,
case. Probably
as in this
action
actions or from class
file
to timely
counsel fails
occurs when
of attorney malpractice
frequent type
a
no recourse
claim,
except
the client with
a
leaving
or preserve
complaint
mal
for legal
of damages
counsel. The measure
action against
13 Cal.3d
the claim lost
v. Lewis
(Smith
is the value of
practice
all detriment
231])
530 P.2d
78 A.L.R.3d
Cal.Rptr.
361 [118
Code,
But often an
3333).
the malpractice (Civ.
caused by
proximately
*17
loss or incurs substantial
a small economic
client suffers only
injured
the client’s
in
and cents. When
valued
dollars
easily
noneconomic harm not
conduct, the value of the client’s
egregious
is caused by especially
injury
recovery. (See
damage
in a
entirely
large punitive
claim
lie almost
America,
559, 582
S.Ct.
v. Gore
517 U.S.
North
Inc.
(1996)
BMW
[116
of
damages
1589, 1602,
compensatory
such cases low
L.Ed.2d 809] [in
for lost
recovery
By denying
ratio of
higher
punitive damages].)
will support
action,
of limiting
instead
damages
every
malpractice
punitive
settlement, the majority
the confines of a class action
today’s holding
a nominal
of
recovery
clients
but
anything
denies such
effectively
injured
com
fully
the
while
attorneys
failing
damages, insulating
the
malpractice.
the clients for the loss caused
pensate
as too
damages
specula
condemns a claim of lost
majority
punitive
awarded
Yet,
the
claim would have
underlying
whether a jury trying
tive.
the claim’s
but for
and how much it would have awarded
damages,
punitive
the client would have
forfeiture,
than whether
are no more speculative
much in compensatory
to trial and how
had the claim
prevailed
gone
like
other
damages,
any
Lost
the
would have awarded.
jury
punitive
action,
be
to a
must
proven
item
of compensatory
v. State
of reasonable
degree
certainty. (Clemente
of California
When here that an award of lost majority suggests a it inappropriately punishes merely negligent conflates lost attorney, puni- tive damages as one measure of with dam- compensatory damage ante, assessed ages particularly culpable party. (Maj. opn., If the has not is liable 1047.) attorney performed competently, attorney for the client’s client injury, including because deficient if an commits mal- attorney’s performance. Only attorney and does so practice oppressively, fraudulently, is attor- maliciously liable for ney damages. an could be liable for Conceivably, attorney both but types damages, analytically latter would be only
Not only are lost to at trial of the mal- punitive damages subject proof claim, but the amount of an practice award for lost is constrained due As the ultimately by United States Court process. Supreme held recently, “few awards a punitive damages] exceeding single-digit [of ratio between . . . compensatory damages satisfy will due Farm Mutual Automobile Ins. Co. process.” (State Campbell (2003) _ U.S. S.Ct. 155 L.Ed.2d The court went 585].) high substantial, on to note that are then a lesser compensatory damages “[w]hen ratio, to can reach the perhaps only equal compensatory damages outermost limit the due process guarantee.” (Ibid.)
The here observes that of lost majority recovery permitting in actions “exact a social cost” significant by insurers out of the California driving offering liability professional coverage ante, market. to the at That is an issue be addressed to (Maj. opn., Moreover, not to this court. observation assumes Legislature, majority’s now, that until both in this state and in the of other that majority jurisdictions have addressed the actions have not permitted question, malpractice of lost as an item of Not recovery compensatory damage. Thus, far, state so. So one excludes only can liable for general “Attorneys rule is this: be exemplary Smith, lost or because of their Mallen & negligence.” (3 imposed 20.7, The omitted.) ed. fn. Legal Malpractice (5th 2000) Damages, result crisis will insurance a why does not explain majority jurisdic- now in many until rule that has prevailed a leaving place tions, California. including the majority rationales policy that the sum, public I am not persuaded
In it announces. the broad rule advances support
III. follows from that its decision the majority’s suggestion I Finally, reject Industries, Co. (1999) Transamerica Ins. PPG Inc. v. court’s decision in this PPG, a driver (PPG). P.2d Cal.4th 310 Cal.Rptr.2d 652] installed windshield defectively because of a was seriously injured who the win against and punitive received an award insurer, to declined its we In later suit the installer by dow installer. for the punitive to the insurer its liability the installer to shift permit and cheaper way used a faster The installer had intentionally award. method recommended instead of the install windshields replacement on the manufacturer, an amount based charge but continued to truck’s that would policy We explained public recommended method. (Id. p. 314.) intentional insurer for its own liability not the installer to shift to its permit failed to settle the had negligently because the insurer wrongdoing merely said, installer, should not be able we case before trial. at p. 317.) {Id. wrongdoing. insurer for its own obtain indemnification from installer’s its duty pay punitive the installer to shift allowing We concluded and deterring not punishing serve public purpose insurer, parties, misconduct. Of the two egregious culpable installer’s *19 settle, actually responsible not “the party liable for was although failing that as PPG held the truck driver. {Ibid.) for the inflicted wrong” upon reasons prohib sound blameworthy policy parties, between two potentially installer, conduct about brought whose blameworthy ited allowing award, for shifting from damage responsibility before a to settle the case insurer, fault in lay failing its whose returned. verdict was {Id. unlike damages, an attorney In a client’s action against blamewor- attorney—is PPG, in one of only parties—the the situation first of the third party’s victim client is a victim twice over—a thy. an Such of the attorney’s malpractice. intentional tort and second attempt PPG, party’s not involve a more culpable in does unlike lawsuit its own intentional resulting a liability to a less culpable party to shift instead, it wrongdoing; involves a nonculpable to obtain party’s attempt full from a compensation for the culpable party financial loss complete caused culpable No party’s negligence. public forbids such policy compensation. above,
For the reasons I given join affirming of the Court judgment but I do not in either Appeal, join majority’s the broad reasoning of the rule it application announces. J., Moreno, J.,
Werdegar, concurred.