Counsel Concerns

Manatt Phelps Wins Malpractice Suit By Football Players

By Petra Pasternak

Partners at Manatt Phelps & Phillips can breathe a little easier, because a federal judge tossed out a malpractice suit brought against the law firm by former NFL players, calling their claims baseless. Parrish v. Manatt Phelps & Phillips LLP, 10-cv-3200. Manatt has been in the news recently because of several cases against its lawyers, including a malicious prosecution suit over its work regarding the rights to Princess Di memorabilia.

Judge William Alsup of the U.S. District Court for the Northern District of California dismissed the claims made by retired NFL players who were suing over a class action settlement that Manatt and another firm, McKool Smith, helped broker in 2009. In his recent order, Judge Alsup left no room for amendment of the malpractice complaint, saying the deficiencies in the complaint couldn't be cured.

The malpractice suit stems from a class action, Adderley v. National Football League Players Association (NFLPA), 07-00943 (N.D.Calif.), which was tried to a jury verdict in favor of the players, then settled for $26.25 million while on appeal (The retired players alleged breach of group licensing agreements they had signed with the NFLPA.)

Judge Alsup found that those plaintiffs who were not members of the original class action ' and therefore not bound by the settlement ' could not have suffered injury at the hands of Manatt or McKool. “They remain free to sue the NFLPA independently,” he wrote.

As for those players who were part of the class, Alsup surmised that the group had numerous chances to raise objections about the lawyering during the course of litigation, including the three weeks of the actual trial in October and November 2008, as well as the eight-month period pending appeal at the U.S. Court of Appeals for the Ninth Circuit. “If the participating plaintiffs believed they had been the victims of malpractice or breach of fiduciary duty, they had a duty to specifically object to the settlement on those grounds. None did,” Alsup wrote. “Because they did not, the complaining class members now are estopped to make those objections (and the non-class member plaintiffs herein have no standing to complain anyway).”

Pamela Phillips, a partner at Howard Rice Nemerovski Canady Falk & Rabkin representing Manatt in the case, said her entire theory underlying the motion to dismiss the malpractice suit rested on the idea that there were no do-overs. “If you had an opportunity to litigate something and you got fair notice of it ' and the decision is made, you then cannot come back and challenge that same decision in a separate lawsuit,” Phillips said. “Otherwise people would constantly relitigate the same thing.”

Plaintiffs' counsel Maxwell Blecher, of Los Angeles' Blecher & Collins, said he was leaving the door open to both an appeal and a separate lawsuit against the NFLPA. “We're quite disappointed with the outcome, particularly on what I call the main claim for the participating class on which [Judge Alsup's] analysis does not withstand analytical scrutiny,” he said.

Blecher said the class members got less money than they should have [in Adderley] because important evidence about liability was never developed. He pointed out that Alsup himself observed that the damage presentation was inadequate to allow the jury to properly assess the actual loss. “He's now [gone] 180 degrees and concluded that they got adequately compensated because they got an adequate punitive damages award.” One doesn't offset the other, Blecher said, adding that they both should have been higher.

Blecher said the jury verdict itself was the focus of the malpractice claim, not the settlement. “The class members were victimized by an inadequate jury verdict,” he said, one they didn't know was faulty until Alsup pointed out its deficiencies. “At that stage, the jury verdict is done. There's nothing you can do about it,” Blecher said.

' Petra Pasternak is a Reporter for The Recorder, an ALM affiliate of
Entertainment Law & Finance.

By Kate Moser

Simpson Thacher & Bartlett has been thwarted again in its attempt to defeat a long-running malicious prosecution case filed against the law firm. The California Court of Appeal, Sixth District, upheld a decision to deny the law firm's anti-SLAPP motion in the case in Santa Clara County Superior Court. Li v. Simpson Thacher & Bartlett, H034948. (California's anti-SLAPP statute, Calif. Code of Civil Proc. '425.16, provides that a suit filed over constitutionally protected speech or petitioning activity may be dismissed.)

The malpractice litigation stems from the case of former PrediWave Corp. CEO Jianping “Tony” Qu, who allegedly fled the country after siphoning millions from PrediWave, which developed technology for video-on-demand delivery. Jimmy Li, a former PrediWave board member, accused Simpson Thacher of facilitating Qu's looting of the company, and that the firm sued him in Los Angeles Superior Court in 2004 when he began to investigate Qu. Li also claims the law firm had an irreconcilable conflict of interest while it raked in $16 million in attorneys' fees. The firm and partner George Newcombe continued to prosecute the case even after its internal investigation cast doubt on Qu, Li alleged.

In its unpublished opinion, the California Court of Appeal sided with Li, finding that he “met his burden to show a probability that he will prevail on his malicious prosecution claim because Simpson Thacher continued to prosecute the Los Angeles action after discovering that a cause of action for breach of fiduciary duty against Li lacked probable cause.” But the court of appeal emphasized that the decision was “not an expression of an opinion on the merits of Li's malicious prosecution action.”

PrediWave voluntarily dismissed the Los Angeles case against Li in 2007. Simpson Thacher maintains that there was probable cause to prosecute the case against him, arguing that Li mailed false letters to banks and disclosed confidential PrediWave information to a litigation adversary. Li says he lost his job as senior vice president of a leading film entertainment company because of the allegations in the suit that he was “an incompetent and treacherous director of PrediWave.”

Li was represented on appeal by Jeremy Rosen of Horvitz & Levy in Encino, CA. Simpson Thacher's lawyer was Bradley Phillips, a partner in the Los Angeles office of Munger, Tolles & Olson.

' Kate Moser is a Reporter for The Recorder, an ALM affiliate of Entertainment Law & Finance.

Manatt Phelps Wins Malpractice Suit By Football Players

By Petra Pasternak

Partners at Manatt Phelps & Phillips can breathe a little easier, because a federal judge tossed out a malpractice suit brought against the law firm by former NFL players, calling their claims baseless. Parrish v. Manatt Phelps & Phillips LLP, 10-cv-3200. Manatt has been in the news recently because of several cases against its lawyers, including a malicious prosecution suit over its work regarding the rights to Princess Di memorabilia.

Judge William Alsup of the U.S. District Court for the Northern District of California dismissed the claims made by retired NFL players who were suing over a class action settlement that Manatt and another firm, McKool Smith, helped broker in 2009. In his recent order, Judge Alsup left no room for amendment of the malpractice complaint, saying the deficiencies in the complaint couldn't be cured.

The malpractice suit stems from a class action, Adderley v. National Football League Players Association (NFLPA), 07-00943 (N.D.Calif.), which was tried to a jury verdict in favor of the players, then settled for $26.25 million while on appeal (The retired players alleged breach of group licensing agreements they had signed with the NFLPA.)

Judge Alsup found that those plaintiffs who were not members of the original class action ' and therefore not bound by the settlement ' could not have suffered injury at the hands of Manatt or McKool. “They remain free to sue the NFLPA independently,” he wrote.

As for those players who were part of the class, Alsup surmised that the group had numerous chances to raise objections about the lawyering during the course of litigation, including the three weeks of the actual trial in October and November 2008, as well as the eight-month period pending appeal at the U.S. Court of Appeals for the Ninth Circuit. “If the participating plaintiffs believed they had been the victims of malpractice or breach of fiduciary duty, they had a duty to specifically object to the settlement on those grounds. None did,” Alsup wrote. “Because they did not, the complaining class members now are estopped to make those objections (and the non-class member plaintiffs herein have no standing to complain anyway).”

Pamela Phillips, a partner at Howard Rice Nemerovski Canady Falk & Rabkin representing Manatt in the case, said her entire theory underlying the motion to dismiss the malpractice suit rested on the idea that there were no do-overs. “If you had an opportunity to litigate something and you got fair notice of it ' and the decision is made, you then cannot come back and challenge that same decision in a separate lawsuit,” Phillips said. “Otherwise people would constantly relitigate the same thing.”

Plaintiffs' counsel Maxwell Blecher, of Los Angeles' Blecher & Collins, said he was leaving the door open to both an appeal and a separate lawsuit against the NFLPA. “We're quite disappointed with the outcome, particularly on what I call the main claim for the participating class on which [Judge Alsup's] analysis does not withstand analytical scrutiny,” he said.

Blecher said the class members got less money than they should have [in Adderley] because important evidence about liability was never developed. He pointed out that Alsup himself observed that the damage presentation was inadequate to allow the jury to properly assess the actual loss. “He's now [gone] 180 degrees and concluded that they got adequately compensated because they got an adequate punitive damages award.” One doesn't offset the other, Blecher said, adding that they both should have been higher.

Blecher said the jury verdict itself was the focus of the malpractice claim, not the settlement. “The class members were victimized by an inadequate jury verdict,” he said, one they didn't know was faulty until Alsup pointed out its deficiencies. “At that stage, the jury verdict is done. There's nothing you can do about it,” Blecher said.

' Petra Pasternak is a Reporter for The Recorder, an ALM affiliate of
Entertainment Law & Finance.

By Kate Moser

Simpson Thacher & Bartlett has been thwarted again in its attempt to defeat a long-running malicious prosecution case filed against the law firm. The California Court of Appeal, Sixth District, upheld a decision to deny the law firm's anti-SLAPP motion in the case in Santa Clara County Superior Court. Li v. Simpson Thacher & Bartlett, H034948. (California's anti-SLAPP statute, Calif. Code of Civil Proc. '425.16, provides that a suit filed over constitutionally protected speech or petitioning activity may be dismissed.)

The malpractice litigation stems from the case of former PrediWave Corp. CEO Jianping “Tony” Qu, who allegedly fled the country after siphoning millions from PrediWave, which developed technology for video-on-demand delivery. Jimmy Li, a former PrediWave board member, accused Simpson Thacher of facilitating Qu's looting of the company, and that the firm sued him in Los Angeles Superior Court in 2004 when he began to investigate Qu. Li also claims the law firm had an irreconcilable conflict of interest while it raked in $16 million in attorneys' fees. The firm and partner George Newcombe continued to prosecute the case even after its internal investigation cast doubt on Qu, Li alleged.

In its unpublished opinion, the California Court of Appeal sided with Li, finding that he “met his burden to show a probability that he will prevail on his malicious prosecution claim because Simpson Thacher continued to prosecute the Los Angeles action after discovering that a cause of action for breach of fiduciary duty against Li lacked probable cause.” But the court of appeal emphasized that the decision was “not an expression of an opinion on the merits of Li's malicious prosecution action.”

PrediWave voluntarily dismissed the Los Angeles case against Li in 2007. Simpson Thacher maintains that there was probable cause to prosecute the case against him, arguing that Li mailed false letters to banks and disclosed confidential PrediWave information to a litigation adversary. Li says he lost his job as senior vice president of a leading film entertainment company because of the allegations in the suit that he was “an incompetent and treacherous director of PrediWave.”

Li was represented on appeal by Jeremy Rosen of Horvitz & Levy in Encino, CA. Simpson Thacher's lawyer was Bradley Phillips, a partner in the Los Angeles office of Munger, Tolles & Olson.

' Kate Moser is a Reporter for The Recorder, an ALM affiliate of Entertainment Law & Finance.