Tuesday, February 14, 2017

when is a law firm "national"? hub-and-spoke firm finds out

Cochran Firm, P.C. v. Cochran Firm Los Angeles, LLP, 2016 WL 6023822, No. CV 12-5868 (C.D. Cal. Aug. 18, 2016)

Previous 9th Circuit opinion affirming earlier unclean hands ruling discussed here. This case began with a legal partnership turned sour. In 1999, McMurray (principal of The Cochran Firm Los Angeles) joined The Cochran Firm’s (TCF’s) Los Angeles office. McMurray claimed to have received a letter from TCF principals Johnnie L. Cochran (now deceased), Givens, and Cherry, congratulating him on his elevation to named partner. In 2007, McMurray acquired TCF’s Los Angeles office, assuming all of its debts and obligations. He organized the office under a partnership called The Cochran Firm Los Angeles (TCFLA), formed with other parties Dunn and then adding Barrett.

TCFLA remitted a cut of its monthly case fees to TCF. Things soured, and McMurray was allegedly shut out of the TCFLA partnership. TCF sent a C&D to McMurray seeking to terminate his right to use the Cochran name. Dunn allegedly took over the remains of TCFLA’s practice, changing its name to The Cochran Firm California. TCF filed suit against McMurray and TCFLA. It initially obtained a preliminary injunction, but the Ninth Circuit remanded for consideration of whether TCF had unclean hands. The district ultimately dissolved the preliminary injunction after determining that TCF had unclean hands in the use of its trademark “because it improperly held itself out as a national law firm.”

Here, the court gets rid of a bunch of TCFLA’s tortious interference claims, but finds that a reasonable jury could find that TCFLA parties had standing to seek cancellation of TCF’s registered mark “THE COCHRAN FIRM.” Even though McMurray wasn’t currently using THE COCHRAN FIRM mark, and testified that he had no present intent to do so, he also testified that he “may change that depending on the outcome of this case.” McMurray established “a real and rational basis for his belief that he would be damaged by the registration sought to be cancelled, stemming from an actual commercial or pecuniary interest in his own mark.” TCF’s mark “prevented McMurray from advertising his relationship with Johnnie Cochran to the public.”

Lanham Act counterclaim: This counterclaim was based on TCF’s website, which featured statements such as “America’s Law Firm,” “Experience Trial Lawyers Who Deliver Results,” “With offices nationwide and a team of some of the country’s most experienced and aggressive personal injury attorneys and criminal defense lawyers,” and “While The Cochran Firm is a national law firm with multiple attorneys, we handle each case we take with equal dedication and tenacity. Your attorney may draw on the collective experience of his or her partners, but will continue to work personally with you throughout all legal proceedings,” and included a list of offices from around the country.

The court found that these statements were literally false; no further evidence of consumer deception or materiality was required. Though TCF “market[ed] itself as a traditional, national firm with regional offices around the country,” the firm’s structure more closely resembled a network of several partnerships, connected only through their relationship with TCF. “Semantic quibbling” over the prospect that national might not mean “single” was unpersuasive.

The McMurray parties also provided sufficient evidence of damages: McMurray testified that, despite having retained TCF’s original Los Angeles telephone number, he now receives significantly less of the types of cases that he typically got at TCFLA. Though this was “quite weak” evidence, given that a new law firm might reasonably get a lot less business than an old one, that was enough to show a triable issue on injury.

However, the court rejected counterclaims against the Dunn parties (TCF-CA) based on statements such as “Welcome to The Cochran Firm, Founded over 40 years ago by Legendary attorney Johnnie L. Cochran, Jr.,” “The Cochran Firm has grown to encompass 27 offices in 16 states around the country,” and “The Cochran Firm Los Angeles has been in the same location for 25 years, and remains committed to upholding Johnnie’ vision of ‘a diverse law firm which reflects society and is capable of handling cases throughout America.’ “ These claims weren’t literally false, and they were “much vaguer and more ambiguous” than the literally false claims by the other parties.

To show deceptiveness, the McMurray parties offered multiple court records in which former clients sued both TCF and a TCF-affiliated regional office for judgments owed, and an expert report analyzing those court records. The court found this evidence probative of deceptiveness, since it showed that, in multiple instances, former TCF clients attempted to collect monies owed from both TCF and an affiliated regional office under the assumption that they were one and the same. However, the McMurray parties failed to show materiality. Though there was evidence that consumers were deceived into believing that TCF was a “national” firm, there was no evidence that a consumer would choose TCF-CA over another law firm such as McMurray’s new law firm “out of some misplaced belief that TCF-CA had Johnnie Cochran’s imprimatur.”

McMurray also counterclaimed for violation of his right of publicity because TCF or TCF-CA used his image and biography on websites without his consent, using it to draw business. However, the court found no evidence of injury, as required to recover [note that courts will usually double-count benefit to the defendant as injury to the plaintiff where the plaintiff is a celebrity]. Broad statements by McMurray that he believed he’d been injured weren’t enough to show injury.

California UCL: Although the underlying conduct above could found a UCL claim, the only available remedy was restitutionary (since the McMurray parties weren’t seeking injunctive relief). And the evidence of economic harm—possibly lost clients—didn’t support a claim for restitution. Such damages were “exactly the sort of damages that cannot be achieved via a UCL claim.”

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