2-year-old Santa Monica firm wins $17.8M in first jury trial

Two-year-old business litigation boutique Rushing McCarl LLP won its first jury verdict, $17.8 million for cosmetic company Virgin Scent in a case involving unpaid contracts for hand sanitizer and masks during the COVID pandemic.

"This case, like our firm, was really started in the middle of the pandemic," said firm partner John M. Rushing.

Rushing and his partner, Ryan P. McCarl, based in Santa Monica, saw their first client in June 2020.

"Over that first year we were very lucky to get involved in a number of different transactions," Rushing said in a phone call on Friday, two days after the $17.8 million win in the Central District of California.

These included an amicus curiae brief in the case of Department of Fair Employment and Housing v. Cisco Systems, Inc., Case No. 20CV372366 (S.C. Sup. Ct., filed Oct. 16, 2020), which won the firm publicity and cache within the legal community.

Building on this momentum, in November 2021 the firm went to the 9th U.S. Circuit Court of Appeal on behalf of a woman who said she was assaulted during a flight from Los Angeles to Panama.

"We took that case to the 9th Circuit, argued it, won reversal ... and from that ended up getting this particular case that we just tried," Rushing said.

The recent case concerned contracts between Virgin Scent, which does business as Art Naturals to buy 5 million bottles of hand sanitizer and 10 million masks from defendant BT Supplies West, a supplier of cleaning materials, during the early days of the pandemic. Virgin Scent, Inc. v. BT Supplies West, Inc., CV-21-184-DMG (ASx) (C.D. Cal., filed Jan. 8, 2021).

"The business of masks and hand sanitizer was just insane in the spring or late winter of 2020," Rushing said.

"You had serious businessmen in large companies trying to do large deals and do them quickly, but the market was moving so quickly that at any given time there might be three or four people buying the product," Rushing explained.

As a result, he said, goods that were invoiced to certain parties were occasionally sold before those parties could properly claim them.

"This created a complexity in the litigation, because you can look at that evidence and marshal it to say there was something nefarious going on here; there are a lot of invoices that don't make sense," Rushing said.

The resulting complaint filed in Los Angeles County Superior Court accused BT Supplies West of failing to pay for the large orders of sanitizer and masks.

Rushing said the challenge of the case was "structuring and explaining human behavior in an unusual historical context, and making sure that the jury understood there was nothing nefarious going on in this invoicing."

What the invoices actually reflected, he said, "is a very heated market where market signals are not being received quickly enough, and so there is sort of a disconnect between what is available at a given time and how quickly it's being sold."

Fortunately for Rushing McCarl, the firm's founding duo were well-equipped for effective narrative building: McCarl is the author of Elegant Legal Writing, while Rushing has a background as a film producer and actor.

"We try to structure the legal playing field in a way that helps us, and we make sure that we have a full and complete understanding of the story and the evidence and promote that case theme from moment one," McCarl said.

The team's narrative approach was a success; Rushing said the $17.8 million verdict is the largest he's ever received in a case. "I was happy for the clients, but I had this sort of deep feeling of satisfaction that I had done my job either way, and now I'm looking forward to the next challenge."

McCarl called the outcome of the trial "an exhilarating experience."

"It was actually the outgrowth of several months of intense work and practice, so it was really a cathartic relief in some ways and it was this great relief of tension," he said.

"The thing about Ryan and myself is there has to be a certain intellectual satisfaction that goes with a case if we're going to take it," Rushing said. "We're in business to help people and litigate, but we also have been lucky enough to be able to choose our clients carefully, and as a result we've been able to get complex cases that we enjoy working on, and I'm looking forward to the next thing."

The partners said they are looking toward expanding their team of three full-time attorneys, one administrator and one of counsel to 25-40 attorneys while still maintaining its effectiveness as a "lean machine," as Rushing described it.

"I'd like it to be all Top 10, Top 15 law school graduates. We're creating a firm that can do big firm level work but do it at a boutique scale, but we will never allow our culture to become weighed down to the point that it affects the bottom line for the client," he said.