Christopher H. Bartle & Others 1 v. Others2

• Decision Date: 14 September 2011
• Docket Number: No. 10–P–1235.,10–P–1235.
• Citation: 80 Mass.App.Ct. 372,953 N.E.2d 243
• Court: Appeals Court of Massachusetts
• Parties: Christopher H. BARTLE & others 1v.Kevin BERRY & others.2

80 Mass.App.Ct. 372
953 N.E.2d 243

Christopher H. BARTLE & others 1
v.
Kevin BERRY & others.2

No. 10–P–1235.

Appeals Court of Massachusetts, Suffolk.

Argued April 7, 2011.Decided Sept. 14, 2011.

[953 N.E.2d 246]

Dana Alan Curhan, Boston, (John R. Shek with him) for Christopher H. Bartle.Jan R. Schlichtmann for Jan R. Schlichtmann, Attorney at Law, PC, & others.Steven W. Kasten, Boston, for Kevin Berry & another.Michael E. Mone, Boston, for Hagens Berman Sobol Shapiro, LLP, & others.Present: MEADE, SMITH, & FECTEAU, JJ.SMITH, J.

[80 Mass.App.Ct. 373] The plaintiffs, two attorneys (and one of their law firms) and a former class representative, filed multiple complaints in the Superior Court following the withdrawal of a potential class action settlement with Nestle Waters North America, Inc. (Nestle). The defendants are several attorneys [80 Mass.App.Ct. 374] (and their respective law firms; collectively, defendant attorneys) who filed a separate class action against Nestle, thereby eliminating the plaintiffs' opportunity to settle with Nestle, and thus depriving the plaintiffs of fees and other benefits they would have received. On the defendant attorneys' motions for summary judgment, two judges ruled that the duty of undivided loyalty owed by the defendant attorneys to their clients in pursuing class action claims against Nestle trumped any potentially conflicting duty that the defendant attorneys might have owed to the plaintiffs. The plaintiffs now appeal. We affirm.

Facts. Much of the relevant background is set out in Ehrlich v. Stern, 74 Mass.App.Ct. 531, 532–535, 908 N.E.2d 797 (2009) (affirming denial of defendants' special motions to dismiss pursuant to G.L. c. 231, § 59H). We provide additional undisputed facts bearing on the issues on appeal, taken from the first judge's December 26, 2008, “consolidated memorandum of decision and order on motions for summary judgment.”

The plaintiff attorneys are Christopher H. Bartle and Jan R. Schlichtmann. Defendants Thomas Sobol, Garve W. Ivey, Jr., and their respective law firms were originally Schlichtmann's cocounsel in representing the class. The litigation against Nestle had its origin in 2002, when Schlichtmann, Sobol, and Ivey (collectively, lead counsel) approached a number of bottled water companies (collectively, the competitors) with information that Nestle had misrepresented the source and quality of its Poland Springs brand of bottled water. Four of the competitors ³ hired lead counsel and their respective law firms to pursue a lawsuit against Nestle for the alleged misrepresentations. The competitors

[953 N.E.2d 247]

and lead counsel entered into contingent fee agreements, whereby lead counsel were to receive a contingent fee in the event the case settled or a judgment was issued in the competitors' favor. An additional defendant, Kevin Berry, an attorney for Vermont Pure Holdings, Ltd. (Vermont Pure), also joined in the representation, as did Bartle, an attorney who served as the chief executive officer of Tear of the Clouds, LLC.⁴

[80 Mass.App.Ct. 375] Lead counsel also decided to bring a class action against Nestle on behalf of consumers who had been adversely affected by the representations, and plaintiff Lori Ehrlich, an acquaintance of Schlichtmann, agreed to serve as a class representative. Potential conflicts of interest were addressed in a joint litigation agreement signed by Ehrlich, the competitors, and lead counsel. For relevant provisions, see id. at 538–539 & n. 11, 908 N.E.2d 797.⁵ The competitors also executed attorney representation agreements containing the contingency fee terms and addressing potential conflicts of interest between lead counsel's representation of the competitors and the putative class.

Lead counsel notified Nestle of the claims, and settlement discussions ensued. As of May 29, 2003, Nestle indicated that it would pay no more than $20 million to resolve all claims against it. Sobol and Ivey concluded that Nestle's settlement offer was insufficient and wanted to proceed to litigation. Schlichtmann and Ehrlich disagreed, and continued to negotiate with Nestle. As a result of the disagreement, Ehrlich terminated Sobol and Ivey as her attorneys on May 30, 2003. On the evening of June 4, 2003, Schlichtmann reported on behalf of the competitors and the consumer class that he and Nestle had reached a proposed settlement.⁶ Schlichtmann and Ehrlich wanted to accept the offer, while Sobol and Ivey were strongly opposed. On June 10, 2003, Sobol and Ivey, having been fired by Ehrlich, were retained by Deborah Kuhn and Lisa McGonagle to represent them individually and as class representatives in litigation against Nestle.

On June 16, 2003, Nestle reported that it had accepted the terms of the settlement offer made on June 4. This apparently surprised Berry, who already had presented the June 4 offer as a [80 Mass.App.Ct. 376] firm deal to Vermont Pure's board of directors. In an electronic mail (e-mail) message terminating Schlichtmann's representation of Vermont Pure, Berry claimed that Schlichtmann had misrepresented the offer as already having been agreed to by Nestle. Berry further indicated that Vermont Pure would proceed to litigation if it deemed it appropriate.

On June 18, 2003, Berry informed Sobol and Ivey that Vermont Pure had no objection to their filing of class actions against Nestle. While there was no dispute that Berry was authorized to do so, it was disputed whether Berry fully informed Vermont Pure of the potential impact of

[953 N.E.2d 248]

litigation on the settlement negotiations. Later the same day, Sobol and Ivey filed class actions against Nestle in a number of jurisdictions, with Kuhn and McGonagle as class representatives. Sobol and Ivey also disseminated information regarding the class claims against Nestle on a Web site and through other media. As a result, Nestle withdrew the settlement offer it had negotiated with Schlichtmann, causing Schlichtmann to lose millions of dollars in contemplated legal fees and Ehrlich to lose her anticipated right to direct monies to her favorite environmental causes.

Bartle and Schlichtmann each filed a complaint in Superior Court against the defendant attorneys for the attorney's fees Bartle and Schlichtmann would have received under the contingent fee agreements had the settlement with Nestle gone forward. Both alleged tortious interference with economic relations, civil conspiracy, breach of contract, and breach of the implied covenant of good faith and fair dealing, stemming from the defendant attorneys' filing of the class actions and the lost settlement opportunity. Schlichtmann raised additional claims for negligence and breach of fiduciary duty. Ehrlich joined in Schlichtmann's suit, her claims mirroring Schlichtmann's, but alleging as damages the benefits she would have derived from the settlement. Two related actions were filed, one by Vermont Pure against Sobol and Berry (and their respective law firms), and a second by Sobol and Ivey (and their respective law firms) against Glenwood Farms, Inc.; Carrabassett Spring Water Company; and Schlichtmann. The four suits were consolidated for purposes of pretrial proceedings.

In a decision dated December 26, 2008, the first judge decided eight motions for summary judgment in the consolidated cases. [80 Mass.App.Ct. 377] The judge granted summary judgment in favor of the defendant attorneys on the claims brought against them by Bartle, Schlichtmann, and Ehrlich, and denied summary judgment as to the claims brought by Vermont Pure. The judge essentially ruled, as a matter of public policy, that the defendant attorneys' duty to their clients, on whose behalf they filed the class actions, was superior to any obligations they might owe to the other attorneys involved in the case against Nestle. For that reason, the judge ruled that Bartle and Schlichtmann had failed to demonstrate that by commencing the class actions against Nestle, the defendant attorneys caused Bartle and Schlichtmann to lose the opportunity to settle with Nestle first, and thereby recover attorney's fees under the contingent fee agreements. For Ehrlich's part, the judge ruled that the defendant attorneys' primary duty was to the consumer class, and not to her as a former class representative. Thereafter, a second judge granted Ivey, Barry Ragsdale, and their law firm leave to file a motion for summary judgment late, and granted summary judgment in their favor on the same grounds as those stated by the first judge.

A hearing later was held on Vermont Pure's professional misconduct and breach of conduct claims against the defendant attorneys, and the second judge found that Nestle's June 4, 2003, settlement offer would have been approved by a reasonable judge. On the basis of that finding, Schlichtmann and Ehrlich moved under Mass.R.Civ.P. 60(b)(6), 365 Mass. 828 (1974), to vacate the dismissal of their claims. Their motion was denied by the second judge. This appeal followed.

Discussion. “The standard of review of a grant of summary judgment is whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment

[953 N.E.2d 249]

as a matter of law.” Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120, 571 N.E.2d 357 (1991), citing Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). The nonmoving party's failure to prove an essential element of his case “renders all other facts immaterial” and mandates summary judgment in favor of the moving party. Kourouvacilis v. General Motors Corp., 410 Mass. 706, 711, 575 N.E.2d 734 (1991), citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

1. Bartle's and Schlichtmann's appeals. A principal issue on [80 Mass.App.Ct. 378] appeal is whether the judges correctly relied on principles of public policy in reaching their decisions. There is no question that an attorney...