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High Court Rules for Pasadena Immigration Lawyer In Tortious Interference Suit Against Ex-Employees
By a MetNews Staff Writer
Interference with the relationship between an employer and an at-will employee is tortious if it is accompanied by “an independently wrongful act” such as an organized plan to undermine and disrupt the employerís business, the state Supreme Court unanimously ruled yesterday.
Rejecting a four-year-old Court of Appeal decision holding that interference with an at-will employment relationship can never be tortious, Justice Marvin Baxter said the court’s rule respects “both the right of at-will employees to pursue opportunities for economic betterment and the right of employers to compete for talented workers” and strikes “the proper balance between society’s interest in fostering robust competition in the job market and its interest in protecting against unlawful methods of competition.”
To recover under the rule, however, the employer who sues must prove an act “proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard,” Baxter said.
The ruling upholds a $150,000 award to a Pasadena immigration lawyer against two attorneys who abruptly left his employment to start their own firm, taking with them their old firm’s client lists, case files, secretaries, paralegals and company car.
The judgment in favor of Robert L. Reeves and his firm and against Daniel P. Hanlon and Colin T. Greene and their new firm was supported by sufficient evidence of interference with contractual relations, interference with prospective economic advantage, and misappropriation of trade secrets, Baxter said.
Of the 155 clients who left Reeves for Hanlon & Greene in 1999 and the subsequent two years, according to testimony,147 failed to pay their outstanding bills to Reeves, and 144 had Hanlon as their lawyer before he split with his old boss.
Los Angeles Superior Court Judge Jan Pluim found that the departing attorneys planned to cripple the Reeves firm’s ability to provide legal services by leaving without warning, damaging computer files, and failing to leave information about the status of their cases. Those findings were supported by substantial evidence, Baxter said.
The split came a little more than a year after Reeves agreed to give Hanlon a 15 percent interest in the firm and to rename it Reeves & Hanlon. The two lawyers entered into their contract in May 1998.
By the following February, the trial judge found, Hanlon had grown dissatisfied. Evidence showed he was unhappy with a $5,000 year-end bonus he believed should have been up to 10 times larger and was upset that Reeves reported there were no profits to share at a time when—Greene testified—Reeves bought a yacht and remodeled his home.
Hanlon also was said to believe Reeves would renege on his agreement to give him an equity interest. Evidence also showed Hanlon did not like the manner in which cases were assigned, was unhappy about the firm’s purchase of a conference table, and was upset about an end to the firm’s policy of paying for cell phone use.
Hanlon and Greene, an associate at the Reeves firm, agreed to form their own firm but did not tell Reeves about it. They printed out a list of the Reeves firm’s 2,100 clients, leased office space in Pasadena and set up an Internet site.
They resigned on the morning of June 30,1999, and immediately started their own practice. Evidence showed Hanlon kept some of the Reeves firm’s library books and retained a car that was leased by the firm.
Six paralegals and support staff followed the two lawyers to their new firm, and five more left Reeves to join Hanlon & Greene within the next two years.
Reeves and his bookkeeper testified that the clients who went with Hanlon & Greene left an outstanding balance of $121,000, and that based on past practice they expected to have gotten another $100,000 from those clients in future business. They also testified as to costs for recruiting replacement employees and printing up revised stationery and brochures.
“While the computer files and the confidential information all appear to have pertained to plaintiffsí clients, not their employees, and while Hanlon and Greene waited until after their resignations to offer jobs to plaintiffs’ employees, we cannot conclude the trial court abused its discretion in finding that defendantsí unlawful and unethical actions were designed in part to interfere with and disrupt plaintiffs’ relationships with their key at-will employees,” Baxter wrote.
Attorneys arguing in the high court were Toni Rae Bruno of Dwyer, Daly, Brotzen & Bruno of Los Angeles for Hanlon & Greene and John J. Manier of Universal Cityís Ballard, Rosenberg, Golper & Savitt for Reeves.
The Pacific Legal Foundation filed an amicus brief supporting Hanlon & Greene.
The case is Reeves v. Hanlon, 04 S.O.S. 4353.
Copyright 2004, Metropolitan News Company