Wednesday, September 4, 2013

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C.A. Rejects Employee’s Claim for Fees of Separate Counsel

Court Says Worker Sued Over Woman’s Death in Water-Drinking Contest Did Not Need His Own Lawyer

By KENNETH OFGANG, Staff Writer

A former employee of a Sacramento radio station, who hired his own counsel after being sued for wrongful death by the family of a woman who died after participating in an on-air water-drinking contest, is not entitled to recover his lawyer fees from the station’s owner, the Third District Court of Appeal ruled yesterday.

The court agreed with Sacramento Superior Court Judge Lloyd A. Phillips that Entercom Sacramento, LLC need not pay any of the more than $800,000 that Matt Carter was seeking under Labor Code Sec. 2802. The statute requires an employer to indemnify an employee for “necessary” fees and costs incurred by its employee in defense of a lawsuit arising from acts or omissions alleged to have occurred in the course and scope of employment.

Carter held a sales job at KDND, the Sacramento FM station that received worldwide publicity following its ill-fated 2007 “Hold Your Wee for a Wii” contest on its Morning Rave program. Contestants were required to drink 8-ounce bottles of water within two minutes, at 10-minute intervals, the object being to drink the most water without going to the restroom.

The prize was a Wii gaming console.

Contestant Died

One of the contestants, Jennifer Strange, called in sick at work after the event, complaining of a headache. She went home, and was found dead five to six hours later, a victim of water intoxication.

Reports said the 28-year-old mother of three hoped to win the console for her children, and that the contest went on even though a caller familiar with the subject—the station had reported extensively on a water-intoxication death two years earlier—told the disc jockeys that what they were doing was extremely dangerous.

One of the DJs—all of whom are reportedly now working at stations in other markets—responded that there was no problem because the contestants had all signed releases and couldn’t sue. Strange’s family and three other contestants later did sue, saying the releases didn’t bar the action because they dealt with publicity issues, not the risk of physical injury.

Within days after the incident, the station cancelled Morning Rave, and fired the disc jockeys and seven other employees linked to the contest.

In a complaint filed in January, not long after Strange’s death, her family named eight employees—including Carter, whose role was apparently limited to passing out water bottles—along with Entercom Sacramento and its parent company as defendants. Entercom tendered the defense to its insurance carrier, Vigilant Insurance Company, which accepted the defense on behalf of all defendants within a month.

By the time the carrier informed Carter it was representing him, the Sacramento County Sheriff’s Department had announced a criminal investigation—which ultimately closed without charges against anyone—and Carter had retained Glazer.

Plenty of Coverage

Charles Painter, the attorney assigned by the insurer, told Glazer that there was no need for separate counsel because Painter and his firm would represent Carter without a reservation of rights or conflict of interest, and that there was more than $50 million in coverage. But Glazer responded that Carter wanted Glazer to represent him exclusively.

The Strange family and the other plaintiffs, who filed their own suit in May 2007, eventually agreed to accept a total of $220,000 from the insurer for the release of all claims against the individual defendants only. A Sacramento Superior Court jury in 2009 returned a verdict for $16.5 million against Entercom Sacramento, which it found 100 percent responsible for Strange’s death.

In February 2010, Glazer sent the insurer a 108-page billing statement, seeking payment for 1,833 hours at $325 an hour for Glazer, nearly $33,000 in costs, and nearly $179,000 for co-counsel and associates, for a total of $807,421.22. Carter sued the station after it refused to pay.

He claimed that Sec. 2802 gave him an absolute right to his own counsel, and that he and the insurer had a conflict of interest because he was facing punitive-damage and criminal liability. But the trial and appellate courts rejected those arguments.

No Absolute Right

Justice Ronald Robie, writing for the Court of Appeal, said there is nothing in the statute that gives an employee the absolute right to choose his own counsel at his employer’s expense. Nor was there a conflict that made the hiring of separate counsel necessary in the sense contemplated by Sec. 2802, Robie concluded.

Exposure to punitive damages did not create a conflict, the justice explained, under the particular circumstances.

“Carter points to no reason why it would have been in Vigilant’s interest to pursue a theory that would have subjected Carter to an award of punitive damages, and because Vigilant was liable for any compensatory damages award against Carter, it was in Vigilant’s interest, just as much as (if not more than) it was in Carter’s interest, to vigorously defend against the Strange action,” Robie wrote.

Nor did Carter’s “bare assertion” that he needed counsel in the face of the criminal investigation establish the required necessity, Robie said.

“The mere fact that a criminal investigation was ongoing for two and one-half months and that the district attorney was not absolutely barred from bringing criminal charges even after she announced that she did not intend to do so at the conclusion of that investigation does not compel the conclusion that Carter needed to spend money on an attorney, especially when there is no evidence the attorney ever had anything to do whatsoever with the criminal investigation or ever took any action relating to the potential for criminal charges against Carter.”

The case is Carter v. Entercom Sacramento, LLC, 13 S.O.S. 4643.