Amount, manner of O'Melveny's billing not protected conduct

O'Melveny & Myers LLP failed its attempt to have allegations of bill padding and conflict of interest stricken in a case where it claimed that a cooperative housing corporation owed more than $1 million dollars in attorney fees.

However, the firm also managed to win from the 2nd District Court of Appeal a reversal of much of the lower court ruling that struck down an anti-SLAPP motion.

"We affirm the denial of the anti-SLAPP motion with respect to all allegations except those targeting the validity of O'Melveny's client, as those allegations both arise from protected petitioning activity and lack the minimal merit required to survive an anti-SLAPP motion," read the unpublished opinion filed on Tuesday. O'Melveny & Myers LLP v. Ocean Towers Housing Corporation, B322792 (2nd App. Dist., Jan. 30, 2024).

The opinion was written by Justice Judith Ashmann-Gerst, with Division 2 Administrative Presiding Justice Elwood Lui and Justice Victoria M. Chavez concurring.

Defendant, cross-complainant and respondent Ocean Towers Housing Corporation was represented by James L. Goldman of Miller Barondess LLP in Los Angeles and Jeffrey M. Wittenberg of Wittenberg Law in Santa Monica.

"We are pleased that the appellate court affirmed the bulk of the trial court's order denying O'Melveny's anti-SLAPP motion," Wittenberg said in an email on Wednesday. "With respect to the remaining portion that was reversed, we believe it was in error and are evaluating our options. The record on this case is publicly available and we encourage anyone interested in this case to see the entire record rather than rely on a single opinion. We will continue to vigorously protect the rights of Ocean Towers."

O'Melveny was represented by Marc F. Feinstein, Sherin Parikh and Abigail J. Formella in the firm's Los Angeles office. They could not be reached for comment Wednesday.

The ruling arises from a cross-complaint filed by Ocean Towers against O'Melveny in 2021 after the latter sued the former client for unpaid fees in a separate case totaling $1 million, according to Tuesday's opinion.

The fees were incurred when O'Melveny headed up a litigation committee to investigate allegations of malfeasance against Ocean Towers' CEO and a member of its board of directors.

"Notwithstanding the high-quality work O'Melveny performed under challenging circumstances, Ocean Towers has refused to pay over $1 million in legal services provided by O'Melveny and costs incurred," O'Melveny's complaint read. "O'Melveny has no alternative but to resort to legal process to compel Ocean Towers to fulfill its obligation to O'Melveny."

In its cross-complaint, Ocean Towers called invoices provided by O'Melveny "excessive."

"They included charges at exceptionally high hourly rates for tasks that were unnecessarily performed by far more lawyers than were needed to reach a conclusion on whether it was in the HOA's interests to pursue the claims alleged by plaintiff in the underlying action," the cross-complaint filed in January 2022 read.

O'Melveny responded with an anti-SLAPP motion contending that "the adequacy, purpose, and scope of an investigation performed by an attorney while representing a client is protected activity.

"As for OT's allegations that O'Melveny's fees were inappropriate, the expenditure of funds to prosecute an action is protected activity," the motion continued.
In June 2022, Los Angeles County Judge Steven J. Kleifield denied the anti-SLAPP motion, holding that the case did not address protected activity by the O'Melveny partners so much as a simple fee dispute.

"The fact that an attorney performing legal services is on the receiving end of the cross-complaint does not make the cross-complaint a SLAPP," Kleifield said. "Were that the case, a client could never sue an attorney for legal malpractice, for example, because the activities sued upon were performed in the course of legal proceedings."

Tuesday's ruling similarly found that the amount and manner of O'Melveny's billing did not constitute protected conduct. The appeal court also found that claims of conflict of interest against O'Melveny didn't address conduct protected under the anti-SLAPP statute.

The conflict of interest claims stemmed from the decision by counsel for Ocean Towers' leadership to solicit O'Melveny to represent the committee, which was investigating claims of wrongdoing against them.

"These allegations are not based on protected activity for similar reasons as the allegations about O'Melveny's fees and billing practices," the opinion read. "Like allegations in a fee dispute, the gravamen of a conflict of interest allegation is the law firm's violation of its professional duties. Thus, despite O'Melveny's assertions to the contrary, an attorney's representation of a client while laboring under a conflict of interest in violation of his or her ethical duties does not, in itself, involve protected activity."

The court held that claims related to the validity of the committee -- based on the appointment of retired judges Michael Latin and James Steele, who were not shareholders -- did arise from protected activity.

"O'Melveny successfully demonstrated that these claims arise from protected activity. It attached to its anti-SLAPP motion a court order in which the trial judge presiding over the 2015 lawsuit selected Judge Steele and Judge Latin to serve on the Committee and ordered Ocean Towers to 'hold a [B]oard meeting to ... pass a resolution appointing the[m] ... to the [Committee],'" the ruling read.