By Marisa Kendall, From The Recorder

SAN FRANCISCO — Lawyers for a Southern California construction company found themselves on the wrong side of a California appellate panel on Monday for what the court condemned as a meritless, “scorched earth” litigation campaign against opposing counsel in a trade secrets dispute.

In a scathing ruling, the Fourth District Court of Appeal said the 2013 suit filed by Finton Construction Inc. against the Newport Beach law firm Bidna & Keys was an abuse of the court system and called the tactics of lawyers led by Alston & Bird partner James Evans Jr. “conduct that brings disrepute to the entire legal profession.”

Though Finton reached a settlement with Bidna & Keys just days before oral argument, Justice Eileen Moore said she and her colleagues refused to dismiss the appeal in order to send a signal to the bar. We “publish this case as an example to the legal community of the kind of behavior the bench and the bar together must continually strive to eradicate,” Moore wrote in a unanimous 15-page decision joined by Justices Richard Aronson and David Thompson.

Alston & Bird’s Evans represented Finton in a suit against a former co-owner and several employees who left the company and launched a new home-building business. The suit accused the ex-employees of making off with various confidential documents including client lists, project plans, and contact information for vendors, suppliers and subcontractors.

Shortly after the suit was filed, Finton’s team demanded opposing counsel return a hard drive in the firm’s possession that allegedly contained confidential Finton records. Finton, which claimed Bidna & Keys’ possession of the hard drive constituted conversion and receipt of stolen property, filed a theft report with the Costa Mesa Police Department, lodged complaints with the State Bar of California against attorneys Howard Bidna and Jon Longerbone and ultimately sued the lawyers in Orange County Superior Court.

The Fourth District panel ruled Bidna’s possession of the hard drive was protected activity under California’s anti-SLAPP statute as it was evidence in the underlying trade secrets theft case. In fact, the trial court had previously issued an order specifically permitting Bidna to have a copy of the hard drive to use in the case.

“The only purported reason defendants are being sued is because they refused to unconditionally return the hard drive, which constitutes potential evidence in the underlying matter,” Moore wrote. “In reality, it seems they are being sued for representing their clients.”

Monday’s order upheld the lower court’s ruling dismissing the suit under the anti-SLAPP law.

The panel acknowledged that principals at Finton Construction were likely calling the shots. However, that didn’t provoke much sympathy for Evans and his team. “We remind FCI’s counsel—and indeed, all attorneys—that while they owe their clients a duty to zealously represent them, that zealousness does not trump the duty they owe the courts and the judicial process to prosecute only lawsuits with merit,” the decision states.

In an interview, Evans defended the lawsuit as a justified attempt by Finton to protect its records from exploitation.

Attorneys Philip Layfield and Bradley Wallace of Layfield & Wallace also are implicated in the opinion, as they replaced Alston & Bird in April 2014 and handled the case on appeal. Finton switched counsel after a falling out over Alston & Bird’s attorney fees, Evans said.

The case started with a dispute in 2012 over ownership of Finton Construction. Michael Reeves, who ran the Orange County branch office and owned 40 percent of the company’s stock, sued co-owners John Finton and Daniel Tontini, accusing them of conspiring to force him out. Reeves then went on to start a new home-building company, MA3 Corp., with several former Finton Construction employees.

Finton Construction struck back with a cross-complaint accusing Reeves of stealing Finton’s clients and wrongfully soliciting its employees.

In April 2013, former Finton Construction employee Nicole Lacuesta testified in deposition that she copied files from her Finton computer without permission before leaving the company. Immediately after, Evans wrote to Howard Bidna of Bidna & Keys demanding he hand over Lacuesta’s hard drive. The two sides couldn’t reach an agreement over the hard drive, and Finton Construction sued Bidna & Keys in May 2013.

Last year, Bidna & Keys moved to dismiss the case against them pursuant to California’s anti-SLAPP statute. Orange County Superior Court Judge Linda Marks sided with Bidna and dismissed the case, finding Bidna’s actions were protected as litigation privilege and Finton Construction’s lawyers failed to demonstrate a probability of prevailing on their claims.

Moore wrote that the appellate decision on the anti-SLAPP motion, which took less than two weeks, was a “very easy one.”

Finton’s lawyers had argued seizing the hard drive is illegal as a matter of law, and therefore the Bidna & Keys lawyers cannot take shelter behind anti-SLAPP law. But Moore wrote Finton has come nowhere close to establishing criminal conduct.

“No attorney can litigate a trade secret case without examining the disputed materials to determine if they constitute trade secrets or even contain any relevant data at all,” she wrote.

The court also appeared to take offense at being notified less than 48 hours before oral argument that the parties had reached a settlement. The court declined to cancel the oral argument.

“While we cannot be certain, it appears that [Finton Construction] deliberately decided to keep this action pending until the last possible moment in order to avoid the opinion we write today,” Moore wrote.

Layfield, whose firm argued the appeal for Finton Construction, objected to the bench’s assessment of what motivated the last-minute settlement. “It’s improper and surprising that court would engage in what I call wild speculation with no foundation and no basis,” he said in an interview Tuesday.

Layfield distanced himself from what he called the “scorched earth” litigation strategy of Alston & Bird. His firm pursued the appeal, he said, in order to correct the trial court’s oversimplified view of what is protected under anti-SLAPP law, he said.

Richard Keys, who argued for Bidna & Keys, did not immediately return a phone call seeking comment.

Moore awarded Bidna & Keys appellate costs, and expressed disappointment that as attorneys representing themselves, they aren’t entitled to legal fees.

IMAGE:

Justice Eileen Moore, California Court of Appeal for the First District Nick Koon

For more on this story go to: http://www.therecorder.com/id=1202731035106/Panel-Rips-Lawyers-Who-Sued-Opponents-Counsel#ixzz3eeOLOWHo