Hauler Battles in Court After Allegedly Disposing Recyclables at Landfills

When you hire an attorney, you should be able to do so with confidence.  Clients expect their lawyers to be attentive, knowledgeable, skillful and honorable. Beware of first impressions, however, which can be deceiving.  From decades ago, the film “My Cousin Vinny” comes to mind.

Sometimes, however, things go wrong. When lawyers are faulted based on what they did or didn’t do, the complaints ordinarily come from former clients.  A quirky case from California, however, illustrates a situation where an attorney was hauled into court, not by the party he represented in a legal proceeding but by the other side.      

In 2016, Clean Up America, Inc., a construction and demolition debris hauler based in Los Angeles, sued one of its competitors, Arrow Disposal Services, Inc., for engaging in anticompetitive conduct – namely, illegally disposing of recyclables at landfills and covering its tracks by falsifying the weight tickets to disguise where the recyclables had actually been dumped.  Clean Up was represented by Elbie J. Hickambottom, Jr. who was at the time working at a law firm called Gronemeier and Associates.  Arrow then countersued alleging other anticompetitive conduct by Clean Up.

While the case was pending, Hickambottom sent Arrow a settlement demand letter that (a) outlined evidence Clean Up had acquired to prove Arrow's fraudulent scheme, (b) indicated his intention to obtain documents from Skanska, one of the businesses for whom Arrow hauled away debris "to authenticate that the [falsified] weight certificates came from Arrow," and (c) offered to resolve the entire case, including dismissal of the countersuit, for $2.5 million. The letter gave Arrow one week to respond.  Arrow ignored it.

Hickambottom issued a subpoena duces tecum to Skanska seeking production of the weight tickets that Arrow had provided to Skanska. (That kind of subpoena orders the recipient – not necessarily a party to the case – to locate and furnish documents, material or other tangible evidence relevant to the issues a lawsuit. The literal translation of the Latin phrase subpoena duces tecum means “you must bring with you under pain”.) 

When the lawyer for Skanska called the next day asking how the requested documents were relevant to the lawsuit, Hickambottom explained that Arrow had falsified the weight tickets and then used them to obtain reimbursement from the government entity that hired Skanska as a contractor. 

As a follow-up to the call, Hickambottom sent a letter to Skanska's lawyer, reiterating Clean Up's theory as to how Arrow had been illegally dumping recyclable debris, and explaining why Skanska's documentation would help confirm Arrow's scheme.  Skanska responded to the subpoena with its copy of the weight tickets.  Hickambottom now had what he needed, and, shortly thereafter, Skanska terminated its hauling contract with Arrow.

In late 2018, Arrow sued Hickambottom and the Gronemeier firm in Los Angeles County Superior Court for inducing a breach of contract, intentionally interfering with contractual relations, and intentionally and negligently interfering with prospective economic relations. In support of each claim, Arrow alleged that the defendants subpoenaed documents from Skanska and answered Skanska's questions about the subpoena "in order to extract a favorable settlement" from Arrow; that they made "derogatory" and "disparaging" comments about Arrow in the course of doing so; and that those comments prompted Skanska to cancel its contract.

The defendants moved for summary judgment in their favor based on, among other things, a unique privilege that certain individuals enjoy for what they write or say in a judicial proceeding.  After reviewing the legal arguments made by both sides and conducting a hearing, Judge Gloria L. White-Brown granted the motion.  Arrow appealed.

Under California law and commonly throughout the country, courts recognize an absolute privilege that gives immunity to litigants and other participants in a lawsuit for their allegedly defamatory communications. The maligning statements must be made during or prior to a judicial proceeding and must have some connection or relationship to the matters before the court.  The privilege extends to out-of-court communications between opposing counsel, between attorneys and their clients, and between attorneys representing different plaintiffs in lawsuits against the same defendant.  (Incidentally, in most states legislators who say or write things that would otherwise be defamatory are equally protected for these statements if they are made during legislative proceedings.)

“The litigation privilege applies to the conduct by defendants that underlies each of Arrow's claims,” said the appellate panel.  “Defendants' issuance of the subpoena, Hickambottom's explanation to Skanska about why the subpoena was necessary, and Hickambottom's follow-up letter elaborating on his explanation all fall within the privilege. Each of these is a communication made in the midst of an ongoing judicial proceeding – namely, the dueling lawsuits between Clean Up and Arrow. Further, the communications are made by authorized participants (because defendants are Clean Up's counsel); the subpoena and subsequent explication are meant to achieve the objects of that ongoing litigation (because they are aimed at obtaining evidence for use at trial); and the information sought by the subpoena has a logical connection to the litigation (because it would confirm Arrow as the source of the fraudulent weight tickets).  *  *  *  And to the extent Arrow is urging that defendants' presubpoena settlement letter is an independent basis for liability, that letter is also privileged because it is communication between counsel aimed at resolving an ongoing lawsuit.”         

 Arrow claimed unsuccessfully that the defendants' letters constituted a "shakedown" rather than litigating in good faith.  “We reject this argument,” the appeals court said.  “The litigation privilege applies to any covered communications . . . .  *  *  * Arrow's allegation that defendants acted with an extortionist motive and acted with ill will because they subpoenaed Skanska without providing contemporaneous notice to Arrow is irrelevant . . . where, as here, the litigation was ongoing for over a year before defendants sent the demand letter, served the subpoena on Skanska, and communicated with Skanska's lawyer.”

Arrow Disposal Services, Inc. v. Gronemeier & Associates, PC, Inc., No. B308001, Cal. Ct. App. Second Dist., Dec. 21, 2021.