Martorana v. Marlin & Saltzman, 96 Cal.Rptr.3d 172 (Cal App. 2009)

Brief Summary
Class counsel did not breach any duty to a class member who failed to claim his portion of the class settlement because class counsel complied with the judicially approved settlement notice procedure and did not know of the class member’s alleged inability to comply with settlement notice procedures.

Complete Summary
Defendants in this case, including law firm Marlin & Saltzman, were plaintiffs’ counsel in a class action against Allstate Insurance Company (“Allstate”), which had settled. Ron Martorana was a member of the class who failed to submit a claim for his portion of the settlement, allegedly because he was suffering from prostate cancer.

Martorana sued class counsel, alleging legal malpractice based on the inadequacy of the settlement notice procedure and based on counsel’s failure to contact him personally about the submission of claim forms. Class counsel demurred and the trial court dismissed Martorana’s claims.

The California Court of Appeal affirmed, holding Martorana was collaterally estopped from attacking the settlement notice procedure because the procedure had been judicially approved during the class action proceeding. The court asserted that Martorana could and should have challenged the settlement notice procedure during a fairness hearing held by the class action court. The court also held that class counsel did not breach any duty to Martorana by failing to contact him personally because Martorana had not alleged that class counsel knew he was ill or otherwise incapable of responding to the notice.

Martorana also filed a complaint against Allstate. The trial court granted Allstate’s demurer and awarded Allstate sanctions because Martorana’s complaint was devoid of merit. The appellate court reversed the sanctions order because Allstate had not given Martorana the requisite 21 days notice required under California’s sanction law (i.e. section 128.7(c)(1)).

Significance of Opinion
This opinion limits lawyer liability in the context of judicially approved class action settlements to situations in which the lawyer knows or at least should have known of circumstances requiring special notice procedures for specific class members.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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Presented by Hinshaw & Culbertson LLP, The Hildebrandt Institute and WestLegalEdCenter

Date: December 2-3, 2009

Location

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Attend the industry's premier annual event focused on current and important developments in the law and litigation of malpractice claims, legal malpractice insurance and risk management strategies. Each conference panel examines recent case law and significant developments throughout the last year. One and one-half days will be devoted to legal malpractice (March 3-4), and one and one-half days will be devoted to risk management (March 4-5). The conference will be held in Chicago at The Westin Chicago River North Hotel.

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• The General Counsel Forum
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To speak with the Conference Planner, Katherine McCormack, please call 312-704-3329.