05/23/2005
CONTACT: Michael E. Diegel, (202) 554-9000
Sacramento, Calif. -- The California Supreme Court has an opportunity to curb the problem of frivolous lawsuits while maintaining defendants' rights to sue for malicious prosecution, according to the Legal Foundation of the National Federation of Independent Business.
The Foundation made the argument in an amicus curiae brief filed with the Supreme Court in the case of Thomas M. Siebel vs. Carol L. Mittlesteadt and E. Rick Buell II.
Siebel, chairman and CEO of Siebel Systems, Inc., a software company based in San Mateo, sued attorneys Mittlesteadt and Buell for malicious prosecution based on their representation of former SSI employee Debra Christoffers, who sued Siebel and SSI for sexual discrimination, fraud and unpaid commissions. A jury found in favor of SSI on all counts except for the unpaid commissions.
Both sides appealed and while the appeals were pending, the parties agreed to settle. In the settlement agreement, Siebel preserved any claims that he might have against the two lawyers. Subsequently, Siebel filed a malicious prosecution action, alleging that the lawyers willfully and purposely prosecuted baseless discrimination claims against him in order to coerce a settlement. The California Court of Appeals held that Siebel could proceed with his malicious prosecution claim despite the fact that he had settled with the plaintiff. The two attorneys then appealed to the Supreme Court.
"Frivolous lawsuits are an unfortunate reality and affect a number of victims," said Karen Harned, executive director of NFIB's Legal Foundation. "The obvious victims are the defendants, who must suffer through expense and hardship defending meritless suits. But another set of victims includes the businesses in the same market for liability insurance as the defendants. Frivolous lawsuits harm these businesses by putting upward pressure on the cost of liability insurance premiums."
In addition, Harned said, the court should recognize and preserve the value of counter suits as a remedy by not setting the bar for malicious prosecution suits so high that it prevents unscrupulous plaintiffs' lawyers from being held accountable.
"The threat of a suit for malicious prosecution acts as an important deterrent to frivolous suits. We're concerned that if the court makes it more difficult to file these actions, it will increase the number of frivolous lawsuits facing California businesses, especially those small businesses that can ill afford the high costs of defending themselves against frivolous suits," she said.
