Monster Energy Co. v. Schechter

26 Cal.App.5th 54

236 Cal.Rptr.3d 669

MONSTER ENERGY COMPANY, Plaintiff and Respondent,

v.Bruce L. SCHECHTER et al., Defendants and Appellants.

E066267

Court of Appeal, Fourth District, Division 2, California.

Filed August 13, 2018

Bremer Whyte Brown & O'Meara, Keith G. Bremer, Jeremy S. Johnson, and Benjamin L. Price, Newport Beach; Grignon Law Firm and Margaret M. Grignon, Long Beach, for Defendants and Appellants.

Shook, Hardy & Bacon, Frank C. Rothrock, and Gabriel S. Spooner, Irvine, for Plaintiff and Respondent.

OPINION

RAMIREZ P. J.

When a settlement agreement provides that the "[p]laintiffs and their counsel agree" to keep the terms of the agreement confidential, and when the plaintiffs' counsel signs the agreement under the words, "Approved as to form and content," can the plaintiffs' counsel be liable to the defendant for breach of the confidentiality provision? We answer this question, "No."

IFACTUAL BACKGROUND

A. The Settlement Agreement .

Richard Fournier and Wendy Crossland (collectively the Fourniers) filed an action (the Fournier case) against Monster Energy Company (Monster) and a related defendant. The Fourniers were represented by the R. Rex Parris Law Firm (Parris) and Bruce Schechter (collectively the Attorneys).

On July 29, 2015, the Fourniers and Monster entered into an agreement to settle the Fournier case. The settlement agreement provided, among other things:

Recitals: "This Settlement Agreement and Release ('Settlement Agreement') is entered into as of July 29, 2015, by and between Wendy Crossland and Richard Fournier ... ('Plaintiffs'), on the one hand, ... and Monster Energy Company [and its co-defendant] ('Defendants'), on the other hand. Sometimes hereinafter, all of the above-named persons and entities shall be collectively referred to as the 'Parties' and/or individual settling persons and entities are referred to as a 'Party.'

"Said Settlement Agreement shall be on the behalf of the settling Parties, individually, as well as on the behalf of their, without limitation, respective beneficiaries, trustees, principals, attorneys , officers, directors, shareholders, employers, employees, parent company(ies), affiliated company(ies), subcontractors, members, partners, subsidiaries, insurers, predecessors, successors-in-interest, and assigns.

"The settling Parties represent ... : [¶] ... That each expressly has the authority to execute this Settlement Agreement, and that this Settlement Agreement as so executed will be binding upon each of them...." (Capitalization altered, italics added.)

Paragraph D: "[T]he Parties represent and warrant that each individual and/or Party executing this Settlement Agreement is duly authorized to execute this Settlement Agreement and expressly has the authority to execute this Settlement Agreement on behalf of all Parties and/or Insurers he/she/it represents as identified by his or her signature line, that it is binding in accordance with its terms, and that this Settlement Agreement as so executed will be binding upon him/her/it/them...."

Paragraph 1.1: "... Plaintiffs, individually and on behalf of themselves and their principals, beneficiaries, trustees, agents, attorneys , servants, representatives, parents, spouse, dependents, issue, heirs, insurers, predecessors, successors-in-interest and assigns (all of the foregoing, past, present or future) (the 'Releasing Parties') hereby completely release and forever discharge Defendants, together with their respective successors, divisions, affiliates, units, parents, subsidiaries, related companies/entities, shareholders, officers, directors, employers, employees, subcontractors, agents, insurers, attorneys , and representatives of all kinds (collectively 'Released Parties') from any and all claims...." (Italics added.)

Paragraph 7.0: "[T]his Settlement Agreement ... is the result of extensive good faith negotiations between the Parties through their respective counsel...."

Paragraph 8.0: "The Parties acknowledge that this Settlement Agreement ... is ... wholly binding upon them, as well as inure [sic ] to the benefit of the Released Parties, inclusive of, but not limited to, their respective successors, devisees, executors, administrators, affiliates, representatives, insurers, spouse, dependents, successors, heirs, issue, assigns, officers, directors, partners, agents, subcontractors, attorneys , employers, and employees." (Italics added.)

Paragraph 11.1: "The Parties understand and acknowledge that all of the terms, conditions and details of this Settlement Agreement including its existence are to remain confidential. Plaintiffs and their counsel agree that they will keep completely confidential all of the terms and contents of this Settlement Agreement, and the negotiations leading thereto, and will not publicize or disclose the amounts, conditions, terms, or contents of this Settlement Agreement in any manner....

"Specifically, and without limitation, Plaintiffs and their counsel of record ... agree and covenant, absolutely and without limitation, to not publicly disclose to any person or entity, including, but not limited to, newspapers, magazines, television, fliers, documentaries, brochures, Lawyers & Settlements , VerdictSearch (or the like), billboards, radio, newsletters, or the Internet ... :

"a) The Settlement Agreement and its existence, terms, conditions, and details; ... c) any amounts paid in settlement of this Action...." (Italics added.)

Paragraph 11.2: "In regard to any communication concerning the settlement of this Action, the Parties and their attorneys and each of them hereby agree that neither shall make any statement about the Action ... in the media, including but not limited to print, television, radio, or Internet." (Italics added.)

Paragraph 11.3: "Any comment made regarding the settlement of this Action shall be limited to the following, or words to their effect: 'This matter has been resolved.' "

Paragraph 11.4: "Plaintiffs, including those acting at Plaintiffs' request, shall not ... make, express, transmit, speak, write, verbalize or otherwise communicate in any way ... any remark, comment, message, information, declaration, communication or other statement of any kind ... that is derogatory, defamatory, critical of, or negative toward the Defendants and/or Defendants' products.... Nothing herein, however, shall be construed as a limitation on, or prohibition of ... Plaintiffs' attorneys' ability to disparage (within the confines of the law) Defendants or Defendants' products in connection with other current or future litigation against the Released Parties...."

There was a signature block signed by the Fourniers and Monster. Under that were the words, "Approved as to form and content" (capitalization altered), and under that was another signature block signed by the parties' respective attorneys. Schechter signed as follows:

"R. REX PARRIS LAW FIRM

"By: [Schechter's signature] [¶] ... [¶] ...

"Attorneys for Plaintiff [sic ] WENDY CROSSLAND and RICHARD FOURNIER ...."

Schechter later admitted, "I knew that Monster would not settle the case if [the Fourniers] did not agree to keeping it confidential."

B. The Alleged Breach of the Settlement Agreement .

Brenda Craig was a reporter for Lawyersandsettlements.com. Lawyersandsettlements.com "provide[s] a source of information about [readers'] legal rights" and also "help[s] lawyers reach out to the clients they seek."

On September 4, 2015, Craig interviewed Schechter. She said she wanted to talk to him about cases his office was handling that involved energy drinks. In general, Schechter discussed other cases against Monster, as well as what he viewed as the negative health effects of Monster's products. In particular, he said:

1. The recent case of a 14-year-old girl — who was at a mall with friends, had two Monster energy drinks, went into cardiac failure, and died — had been resolved.

2. In response to a question about what the resolution was, "[S]ubstantial dollars for the family."

3. Monster "wants the amount to be sealed."

4. Regarding Monster's energy drinks, "It is not the individual ingredients, it is the synergistic effect of these 26 ingredients" that is "deadly."

It is undisputed that the first three of these statements refer to the Fournier case.

On September 15, 2015, Lawyersandsettlements.com published an online article that included all four statements listed above.

The end of the article stated: "Monster Energy Drink Injury Legal Help [¶] If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to a drug and health supplements lawyer who may evaluate your Monster Energy Drink Injury claim at no cost or obligation."

Lawyersandsettlements.com sent the leads that it generated to attorneys who had signed up to be "advertisers." It had "forwarded hundreds of thousands of requests for legal representation directly to lawyers." One employee of Lawyersandsettlements.com was also a non-lawyer employee of Parris.

IIPROCEDURAL BACKGROUND

Monster filed this action against the Attorneys, asserting causes of action for: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) unjust enrichment, and (4) promissory estoppel.

The Attorneys filed a special motion to strike under Code of Civil Procedure section 425.16 (SLAPP motion). They argued, among other things, that Monster could not show a probability of prevailing on its breach of contract claim because they were not parties to the settlement agreement.

In opposition, Monster argued, among other things: (1) Schechter's statements were commercial speech and therefore unprotected, and (2) the Attorneys were "[c]learly" bound by the settlement agreement.

The trial court denied the motion with respect to the breach of contact cause of action but granted it with respect to the other causes of action. It explained, in part: "[T]he settlement clearly contemplates counsel as being subject to the agreement because ... plaint...