In the past, I have posted more than one blog about the very fine line between puffing and misrepresentation in the course of negotiations. The audience I had in mind was both the parties and their counsel. ( See aslo, 2014  blog.)

A recent appellate decision indicates that my earlier post applies to neutrals as well. In JAMS, INC. et al v. The Superior Court of San Diego County (Kevin J. Kinsella- Real Party in Interest), Court of Appeal, Fourth Appellate District, Division One, State of California, Case No. D069862( filed July 27, 2016), the appellate court held that the lawsuit was not subject to an anti-SLAPP motion to strike (Code of Civil Procedure §425.16) as it fell within the commercial speech exemption contained in Code of Civil Procedure § 425.17(c). Thus, it can proceed forward. (SLAPP stands for strategic lawsuits against public participation, and such motions to dismiss are brought against suits of a “harassing nature…to challenge the exercise of protected free speech rights.” Id. at fn. 1 at 2.)

Real Party in Interest Kevin J. Kinsella (Plaintiff) was undergoing a marital dissolution, involving assets “‘valued somewhere north of eight figures.’” (Id. at 4.) He therefore sought a private judge that would understand “’…principles of business ventures and private equity funding.’” (Id.)  His wife suggested he look on the JAMS web site which he did.  Once on the website, he looked at the Honorable Sheila Prell Sonenshine’s (retired) biography and credentials. Based on the representations on the JAMS, INC.  website and on the biography and credentials of Judge Sonenshine (ret.), Mr. Kinsella retained her as a private judge to  adjudicate various issues related to his marital dissolution. (Id. at 2-4.)

Once the proceedings started, Mr. Kinsella “… became alarmed by what he saw and doubted that she possessed the business accomplishments her resume led him to believe she possessed.” (Id at 4-5.) Thus, he started investigating further and concluded that her biography “… ‘omitted key information’ causing him to question her integrity.” (Id. at 5.)

Consequently, he filed a complaint against both JAMS, INC. and Judge Sonenshine (ret.) alleging that her biography was dishonest in that it claimed she had certain business success that, in truth, she did not have, and that she was the founder of an equity fund, which, in truth, existed in name only. He sued JAMS, INC. because its website represented Judge Sonenshine (ret.) to have high ethical standards, and otherwise misrepresented her qualifications. The web site led him to believe that its neutrals adhered to the highest ethical and moral standards, had the utmost integrity and were “trusted experts”. (Id. at 3.)

The Complaint alleged causes of action under the Consumer Legal Remedies Act (Civil Code § 1750. et seq.), fraud, negligent misrepresentation, and violation of Business and Professions Code sections 17200 and 17500. (Id. at 6.)

In response, the defendants filed a motion to strike under California’s anti- SLAPP statute (C. C. P. § 425.16). Plaintiff opposed it contending that his complaint was exempt from this statute as the issue was commercial speech under C.C.P. §425.17(c). Finding that the exemption applied, the trial court denied the motion. Defendants filed a petition for writ of mandate or other relief. The appellate court stayed the proceedings pending its review.

As noted, the appellate court agreed with the trial court, and denied the petition and vacated the stay. The case will now proceed towards trial unless there is a settlement. Hopefully, it will be a mediated one. Given the concept of mediation confidentiality, reaching a settlement in mediation is probably the best resolution for all concerned.

… Just something to think about.



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