"An attorney can not be held liable for gross negligence under the Dragonetti Act unless the jury also finds that the attorney initiated or continued the underlying action for an improper purpose." - Judge Mark I. Bernstein.
That, in a nutshell, was the crux of the issue in the Winner Logistics case and what so many attorneys are afraid of when they take a case that they are not sure has much merit, as is what happened here.
The underlying case is relatively straightforward. David Wallover was employed by Defendants Labor & Logistics Management, Inc. and its president, Curtis Ball. In July 2002, Ball directed Wallover's supervisor to have Wallover sign an employment agreement, though he had already been employed for some time. Wallover refused and was promptly fired.
Then, Wallover started his own business which was a direct competitor to his former employer Labor & Logistics, Inc. Then Labor & Logistics, Inc. hired Fitzpatrick, Lentz & Bubba, P.C. (Attorney Defendants) to represent them in an against Wallover and Winner Logistics, Inc., Wallover's new company, for misappropriation of trade secrets and breach of restrictive covenant.
The attorneys first filed a complaint and a Motion for Emergency Injunctive Relief against Wallover and Winner Logistics, Inc. on behalf of Labor Logistics, Inc. and Ball. There was a non-jury trial held where Judge Rufe found no restrictive covenant existed because there was never a written contract of employment nor had Wallover ever agreed orally not to compete with Labor & Logistics, Inc. in the event of his termination. However, Wallover was enjoined from contacting former clients.
However, Judge Rufe was overturned by the Superior Court, who said that "our established precedent is clear that the type of information contained in LLM's customer lists does not qualify as trade secrets." Further, "an employee is free to take with him, when he leaves an employer, such information about the customers of the employer as he remembers."
This means that so long as the employee does not steal or take with him any documents, he can still work with anything in his head. The Superior Court explained "Wallover was free to solicit business from those customers for two reasons: first the customers' identities were not trade secrets; and, second, even if they were, the former employee cannot be enjoined from using trade secrets retained solely in his memory."
While this could have been the end of it, in our extremely litigious society, of course it was taken to the next step.Winner Logistics, who was the winner of the underlying suit, instituted an action for wrongful use of civil proceedings against LLI. Ball, and Defendant Attorneys.
As was stated above, the crux of the argument was whether or not the attorneys had enough of a leg to stand on in this case to proceed or if their actions fell under the Dragonetti Act. For those that may be unaware, the Act is as follows:
In order to state a claim for malicious use of process, a plaintiff must prove that
defendant initiated or continued civil proceedings against the plaintiff:
(a) without probable cause or in a grossly negligent manner;
(b) for an improper purpose; and
(c) that those proceedings were terminated in favor of the plaintiff.
42 Pa. C. S. A. section 8352 et. seq.
Further, probably cause in this case is defined as:
A person who takes part in the procurement, initiation or continuation of civil proceedings against another has probable cause for doing so if he reasonably believes in the existence of the facts upon which the claim is based, and either:
(1) Reasonably believes that under those facts the claim maybe valid under the existing or developing law;
(2) Believes as an attorney of record, in good faith, that his procurement, initiation or continuation of a civil cause is not intended to merely harass or maliciously injure the opposite party.
The questionable actions taken by the attorneys were proceeding with the case since they had an almost complete lack of evidence. They lacked a signed restrictive covenant or signed agreement. The attorneys stated that lacking that type of proof made the case more difficult, however they believed that an action seeking injunctive relief and damages on behalf of LLI against Winner and Wallover could be pursued and won.
Further, the clients claimed that they wanted to pursue the action without consulting with the retained counsel about whether or not proceeding was a good idea or their chances of succeeding.
The jury ultimately found that the attorneys did not "initiate, or continue the underlying lawsuit for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claims on which the proceedings were based" and that the attorneys did "reasonably believe in the existence of the facts upon which the claim was based and either reasonably believe that under those facts the claim may be valid under the existing law properly applied to those facts or believe in good faith that the initiation or continuation of the underlying case was not intended to merely harass or maliciously injure the opposite party". However, the jury could not come to a conclusion on whether the attorneys were grossly negligent. This however, was not enough to convict and ultimately the defendants were victorious.
Further, the court did find that "a client's ignorant hopeful intuition based upon a decision not to ask retained counsel whether a valid lawsuit could be brought under the existing or developing law is not acceptable. Since they affirmatively refused to ask counsel, defendants Labor Logistics and Ball must have acted 'primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based' when they proceeded in the underlying action".
The court further said that if the attorneys had been found guilty based solely on the gross negligence, then based on that reasoning, any time an attorney lost a case after acting in good faith but failing to perform a proper duty related to discovery, they would face "dire financial consequences".
The court also stated that "although an attorney may be fully aware that the chances are comparatively slight, it is her responsibility to present it in court for adjudication if the client so insists after she has explained to the client the nature of the chances for success".
That means that attorneys are still allowed to take on cases that they may not think have much of a chance to win and even when they lose, the attorneys are not grossly negligent. However, even someone is are allowed to, if an attorney were to make a practice of this, he may still be facing dire financial consequences, even if he does not face legal malpractice charges for every loss.