Malek Media Group v. AXQG Corporation, Second App. Dist., Div. 3, case no. B299743, filed 12/16/20.
Plaintiff and defendant formed Foxtail LLC to produce a film. The relationship dissolved in acrimony, including allegations that MMG's principal Malek had sent sexually explicit messages to a prospective Foxtail employee. AXQG filed a petition with JAMS alleging for breach of fiduciary duty, fraud, and breach of the Foxtail agreement. MMG and its principal Malek counterclaimed for breach of contract, breach of fiduciary duty, conversion, fraudulent concealment, and declaratory relief. The arbitrator found for AXQG and denied all of MMG/Malek's claims. Predictably, AXQG petitioned to confirm the award and MMG petitioned to vacate it. At that point, as the Court of Appeal relates the tale:
Malek “commenced a deep-dive, internet search into [the arbitrator's] background.” He found the GLAAD [Gay and Lesbian Alliance Against Defamation] organization website which stated that the arbitrator had been a founding board member of GLAAD and its chief counsel decades ago. MMG argued that the arbitrator failed to disclose his background and “his self-proclaimed status as a gender, social, female and LBGTQ activist and icon, while facing a matter grounded in gender and social issues, particularly sexual harassment.” Specifically, MMG asserted that the arbitrator was obligated to disclose his prior affiliation with GLAAD once made aware of Malek's Catholic background. MMG claimed that GLAAD was at odds with the Catholic Church after the passage of Proposition 8, which banned same-sex marriage in California. Thus, MMG asserted that GLAAD and the Catholic Church were antagonistic to each other and, by extension, the arbitrator against Malek, casting doubt on the arbitrator's impartiality.
The trial court confirmed the award and the appeal followed. In support of the appeal, appellant MMG filed two requests for judicial notice with the Court of Appeal. Among other things, the appellant asked for judicial notice of “the #MeToo movement and the phrase a woman alleging sexual harassment must be believed” that was denied, the Court finding that “MMG failed to provide sufficient evidence or explanation that the #MeToo movement and the phrase a woman alleging sexual harassment must be believed are facts of such generalized knowledge that they cannot reasonably be the subject of dispute.” The Court also declined to take judicial notice of press clippings from the GLAAD website a twitter posts from the arbitrator's purporting to show a connection between the #MeToo movement and GLAAD, and a connection between GLAAD and the arbitrator demonstrating that the arbitrator's perspective on “white privilege, men, religion, abuse of women and anything that does not comport with [the arbitrator's]social justice view of the world…..and the arbitrator's inability to act impartially in a case involving a Catholic white male accused of sending sexually explicit texts to a prospective employee.”
The Court of Appeal found that the arbitrator was not required to disclose his relationship with GLAAD. Arbitrators must make disclosure of “all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial.” Code Civ. Proc. section 1281.9, including grounds specified for disqualification of judges under section 170.2 and matters subject to the ethical standards for contractual arbitrators adopted in the California Rules of Court. The test is on objective one; the “reasonable person under this objective test “‘is not someone who is “hypersensitive or unduly suspicious,” but rather is a “well-informed, thoughtful observer.”'[Citations.]‘[T]he partisan litigant emotionally involved in the controversy underlying the lawsuit is not the disinterested objective observer whose doubts concerning the judge's impartiality provide the governing standard.'”
There were many issues in arbitration besides the alleged sexual harassment. The Court of Appeal characterized MMG arguments as “ridiculous” because “MMG cannot show that the arbitration had anything to do with LGBTQ issues, GLAAD, religion, or the Catholic Church.”
AXQG moved to sanction MMG and its counsel in the amount of $56,0005 for filing a frivolous appeal. Sanctions may be imposed for frivolous appeals where the appeal was prosecuted for an improper motive or the appeal indisputably has no merit.(Code Civ. Pro. section 907; Cal. Rule of Court 8.276(a)(1).) To determine whether an appeal is frivolous, “we apply both a subjective standard, examining the motives of appellant and its counsel, and an objective standard, analyzing the merits of the appeal. In re Marriage of Flaherty (1982) 31 Cal.3d 637, 649–650.” The Court of Appeal readily concluded that MMG's appeal was both subjectively and objectively frivolous, lacking legal merit and “prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment.” The lack of merit is evidence that it was appealed for an improper motive. “MMG adopted a war-like mentality toward AXQG, its counsel, and anyone else involved with this case. The record is replete with personal attacks on Gou and AXQG's counsel, as well as numerous unsubstantiated claims that everyone who was purportedly against Malek and MMG was engaged in an elaborate conspiracy to destroy him.”
Moreover, the Court found both MMG and its counsel “equally culpable for pursuing this frivolous and bigotry-infused appeal.” It ordered MMG and it's counsel to pay AXQG $46,000, sanctioned MMG and its counsel $10,000 payable to the Court, ordered counsel to report the sanction (independently reportable under Bus. & Prof. Code section 6068(o)(4) and itself reported counsel to the State Bar under Bus. & Prof. section 6086.7.
California Rule of Professional Conduct 3.1 is the obvious point of departure. It's requirements parallel the inquiry described in Flaherty: “(a) A lawyer shall not: (1) bring or continue an action, conduct a defense, assert a position in litigation, or take an appeal, without probable cause and for the purpose of harassing or maliciously injuring any person…” But discipline prosecutors are looking for cases to apply some of the “new” Rules, for instance new Rule of Professional Conduct 8.4.1, titled Prohibited Discrimination and Harrassment. Given the Court of Appeal's description of a “bigotry laden appeal” can Rule 8.4.1(a) gain any traction?
Probably not. The first part of the rule offers a glimmer of possibility:
(a) In representing a client, or in terminating or refusing to accept the representation
of any client, a lawyer shall not: (1) unlawfully harass or unlawfully discriminate against persons on the basis of any protected characteristic; or (2) unlawfully retaliate against persons.
But even if the lawyer's conduct in pursuing this appeal is characterized as harassment or retaliation, it's basis must be a protected characteristic, defined in the Rule itself in subsection (c), a very specific type of harassment or retaliation. AXQG, the target of the frivolous appeal, does not fall into the category.
(c) For purposes of this rule: (1) “protected characteristic” means race, religious creed, color, national
origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, age, military and veteran status, or other category of discrimination prohibited by applicable law, whether the category is actual or perceived
To cap it off, section (f) of the Rule says it is not a violation of the Rule to represent someone accused of such conduct, and that providing advice or advocacy “as otherwise permitted under these Rules [e.g. Rule 3.1] does not violate the Rule.”
California's Rule is not as broad as the Pennsylvania rule, based on Model Rule 8.4(g), whose enforcement was recently enjoined by a Federal judge. The Pennsylvania rule provided that it “is professional misconduct for a lawyer to: in the practice of law, by words or conduct, knowingly manifest bias or prejudice, or engage in harassment or discrimination, as those terms are defined in applicable federal, state or local statutes or ordinances, including but not limited to bias, prejudice, harassment or discrimination based upon race, sex, gender identity or expression, religion, national origin, ethnicity, disability, age, sexual orientation, marital status, or socioeconomic status.”
Counsel's conduct in Malek is might be within the reach of the ABA Model Rule 8.4(g), which may or may not be comforting to California lawyers contemplating the efficacy of our Rule 1.8.1.