August 8, 2017

August 08, 2017

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August 07, 2017

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Employer’s Lawyer Who Defended Employee At Deposition May Be Liable To The Employee For Malpractice

Corporations may have free speech rights (Citizens United v. FEC, 558 U.S. 310 (U.S. 2010)) but they can’t talk.  Thus, any deposition testimony must come from the mouths of people who are the agents, employees and directors of the corporation.  These people usually come to the deposition with lawyers.  But whom do these lawyers represent – the corporations, the deponents or both? How this question gets answered can have significant legal ramifications as illustrated by an opinion issued yesterday by the Third District Court of Appeal in Yanez v. Plummer, Cal. App. Case No. C070726 (Nov. 5, 2013).

Yanez involved a malpractice suit against his former employer’s in-house counsel, Plummer.  The employee, Yanez, had written two statements describing a workplace accident.  Later, Yanez was deposed in the injured employee’s lawsuit.  Before entering the deposition, Yanez expressed concern about his job security because he thought his testimony would be unfavorable to his employer.  Plummer responded: “Yanez was a Union Pacific employee and Plummer was his attorney for the deposition; as long as Yanez told the truth in the deposition, Yanez’s job would not be affected”.  Later, during the deposition Plummer highlighted an inconsistency between one of Yanez’ two written statements and his testimony.  After the deposition, Yanez was fired for dishonesty.  He sued for wrongful termination and malpractice.  The trial court granted Plummer summary judgment and Yanez appealed.

The Court of Appeal reversed, noting that Yanez had presented evidence that Plummer had not informed him of possible conflicts or obtained his written consent in violation of State Bar Rules Prof. Conduct, Rule 3-310(C).  According to the Court of Appeal, breach of  this rule “constitutes evidence of malpractice liability and breach of fiduciary duty but does not, standing alone, prove the malpractice or the fiduciary breach.”  Nonetheless, court found that there was a triable issue of fact that but for Plummer’s alleged malpractice, breach of fiduciary duty, and fraud Yanez would not have been terminated.  This doesn’t mean that the Court of Appeal found the lawyer guilty of malpractice, but it does mean that the case will have to go to trial.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...