You think judges are immune to lawsuits? Think again, especially if you are a retired judge seeking to resolve disputes in the private alternative dispute resolution (ADR) business.
A San Diego jury is being asked to decide whether former California Court of Appeal Justice Sheila Sonenshine and ADR powerhouse JAMS, Inc. are liable for false advertising based on representations touting Sonenshine’s experience on JAMS’s website.
Kevin Kinsella, the plaintiff in the case, hired JAMS and Sonenshine to serve as a privately compensated temporary judge in his divorce dispute. Kinsella is a venture capitalist who had a number of profitable business ventures prior to his marriage and claims that he agreed to his now ex-wife’s request to hire Sonenshine because he wanted a judge with expertise in dissolution actions and business matters. Kinsella says that he reviewed JAMS’s website to evaluate Sonenshine’s experience in business, including investment banking, financial markets, business ventures, and private equity funding, but learned too late that Sonenshine’s biography was misleading.
Although JAMS and Sonenshine advertised that she “founded and served as an executive with an investment bank” that “specialized in mergers and acquisitions, divestitures, capital raising, and fairness opinions for privately held, middle-market companies,” the website failed to mention that the company she founded was sued in the largest class action in Orange County, California history, resulting in a settlement of $41.5 million. Documents in that case revealed that despite representations to the contrary, the company did not have any offices in Europe, nor did it even have a license in Europe. Kinsella also alleges that Sonenshine’s claims that she was the founder of an equity fund were also misleading because the fund existed in name only, never raised any equitable capital, and never operated as a functioning investment entity. Kinsella argues that Sonenshine and JAMS proclaimed Sonenshine’s business success while deliberately concealing negative facts about that experience: “Together, by the stroke of a pen, JAMS and Sonenshine invented three years of Sonenshine’s life that never existed, an investment fund that never launched, and a story of success that was completely fabricated, all in the name of getting business.”
Justice Sonenshine and JAMS initially sought to dismiss the advertising claims under California’s Anti-SLAPP statute, which prohibits litigants from bringing certain categories of lawsuits that the legislation has deemed are intended to chill the exercise of free speech. The issue went up to the California Court of Appeal, which held that the anti-SLAPP statute’s “commercial speech” exemption—which receives less First Amendment protection than other forms of expression—allowed the claim to go forward. Even though the claims were based on “omissions” or “half-truths”, the Court held that the anti-SLAPP statute is not limited to positive assertions of facts. Now, a jury will decide if the omissions in Sonenshine’s qualifications result in a successful claim for false advertising.
Regardless of the jury’s decision, the case will likely impact how ADR service providers market their neutrals. Litigants pursue ADR to resolve disputes relating to nearly all practice areas of law, so it is not surprising that neutrals will tailor their biographies to reflect diverse experience in many different areas. But neutrals must also tread carefully to avoid overstating their qualifications and experience. Attorneys are subject to strict ethics rules prohibiting false or misleading communications about a lawyer or the services provided by the lawyer. This case demonstrates that such false or misleading communications may also lead to civil liability for false advertising, even for judges.