California SLAPP Law

The case of Mallard v. Progressive Choice Ins. Co. beautifully illustrates a point I discuss with all clients who want to make an emotional distress claim, while at the same time illustrating an important SLAPP rule of law.

Sometimes I will get a call from a potential client within minutes after they were fired. They want to sue for wrongful termination and they want to sue NOW!

But 15 minutes after an employee has been fired, what are the damages? When I ask the caller that question, they answer, “I was fired!” Yes, but what are your damages? “I was fired!”

Rather than to go on all day in this fashion, I explain. Damages are something you can put a dollar sign in front of. Being fired is not a damage, although obviously it can CAUSE damages. But 15 minutes after a termination, an ethical attorney should explain that there are no real damages at that point.

If the employee was making, say, $25 an hour, and they were fired two hours before their shift ended, then the damages at that moment they are calling me are $50, at least in terms of lost wages. But let’s carry it out a little. Let’s assume for our hypothetical that the employee had seen the writing on the wall and had already sent out some feelers for a new job before the axe fell. She makes a few calls, and a week later she starts a new job with the same title that pays $30 per hour with better benefits. What are her damages then?

Well, she went a week without being paid, so she lost $1,000 in wages. Her old employer should at least cut her a check for $1,000, right? But wait a second. Because of the termination, she will made $10,000 more for the year than if she hadn’t been fired. Fair’s fair. If you thought her employer should pay her for what she lost as a result of the termination, then it is only fair that she should pay to the employer the money she gained as a result of the termination, right?

I’m speaking tongue in cheek of course, but I want you to think in terms of the real damage to our terminated employee. Last week I discussed all the damages that flow from a wrongful termination, and if you look at that list, assuming our employee did not suffer any setback to her career track, then there are no real damages.

“But what about emotional distress damages?”, the caller asks. That’s a valid question. If your employer wrongfully terminated you, you might have suffered some emotional distress damages. Again, an ethical attorney then needs to explain what you open yourself up to when you claim emotional distress.

Which leads us to today’s case review.

Progressive Insurance issued an automobile insurance policy to Winly Mallard. She was involved in an auto accident, and her medical expenses exceeded the policy limits, so she proceeded under her insurance policy’s uninsured motorist claim because the driver of the other car involved in the accident did not have liability insurance.

A quick aside here. All the commercials you see with the helpful insurance agents are bull. Yes, you will be fine if you are in an accident that involves only property damages and perhaps some minor medical expenses, but if you ask for anything challenging, the insurance company will fight your coverage.

That was what happened to Winly Mallard. An attorney by the name of Rivers J. Morrell III was retained by Progressive with regard to Mallard’s claim. Morrell propounded form interrogatories to Mallard on Progressive’s behalf. In addition to listing her injuries to her neck and back, Mallard also stated that she had difficulty sleeping, and suffered “[s]hock” and “[n]ervous anxiety.” In addition, she stated she was pursuing a claim for loss of earning capacity.

There it is. Just like a wrongfully terminated employee who wants to assert emotional distress, Mallard had put at issue her mental health. Is she having trouble sleeping because of the accident and/or injuries, or is there something else that could be troubling her? Morrell wanted to know, so her mental health records were subpoenaed from health care providers identified in her verified responses.

Understandably, Mallard felt very invaded. She filed a complaint alleging claims for invasion of privacy and abuse of process against Morrell and Progressive, based on the act of subpoenaing third parties to obtain Mallard’s mental health records. Mallard served only Morrell with the complaint.

Morrell filed an anti-SLAPP motion to strike the complaint, which was opposed by Mallard. The trial court granted the anti-SLAPP motion and ordered the complaint dismissed with prejudice as to both defendants. Mallard appealed.

The trial court granted Morrell’s motion for attorney fees and costs, awarding him $13,756.64 in attorney fees and costs under section 425.16, subdivision (c). Mallard appealed, but the Court of Appeal agreed that the action against the attorney was a SLAPP, and upheld the judgment.

Morals of this story: A determination of an insured’s uninsured motorist coverage is always by way of an arbitration. Apparently Mallard’s attorney thought that an arbitration would not fall under the right of redress aspect of the anti-SLAPP statute, but he was wrong. As I discussed here, the standard is very broad – even a trial in Zimbabwe is considered an official proceeding.

Second, clients must be made aware that making an emotional distress claim leaves them open to very intrusive questions and discovery. That does not by any means mean that it is never appropriate to assert such a claim, but it should only be done after much consideration.