Viner v. Sweet

Rule of Law:

In a legal malpractice action arising from transactional work, the plaintiff must prove causation using the 'but for' test, meaning the plaintiff must show that the harm or loss would not have occurred but for the attorney's negligence.

Facts:

• In 1984, Michael and Deborah Raffin Viner founded Dove Audio, Inc., an audiobook and media production company.
• In 1995, the Viners entered into favorable long-term employment contracts with Dove, which included significant indemnification provisions.
• In 1996, seeking to sell their interest in Dove, the Viners engaged attorney Charles A. Sweet, a partner at Williams & Connolly who was not a member of the California Bar and was not familiar with California law.
• After initial negotiations with another party failed, the Viners began discussions with Media Equities International (MEI).
• In May 1997, Michael Viner and MEI agreed in principle for MEI to purchase the Viners' stock and for the Viners to terminate their employment with Dove.
• Attorney Sweet negotiated the final agreements, which were signed in June 1997, consisting of a securities purchase agreement and an employment termination agreement.
• The Viners believed the agreements negotiated by Sweet secured certain protections, such as guaranteed payments, broad indemnity, and the right to compete outside the audiobook business, which were not actually included in the final documents.
• The employment termination agreement contained broad noncompetition and nonsolicitation clauses that restricted the Viners' future business activities more than they had understood.

Procedural Posture:

• Michael and Deborah Raffin Viner sued attorney Charles A. Sweet and his law firm, Williams & Connolly, in California superior court (trial court) for legal malpractice.
• A jury found the defendants liable on seven claims and awarded the Viners $13,291,532 in damages.
• The defendants' motion for judgment notwithstanding the verdict, which argued the trial court erred by not instructing the jury on 'but for' causation, was denied.
• The defendants, as appellants, appealed the judgment to the California Court of Appeal.
• The Court of Appeal, with the Viners as appellees, affirmed the judgment in part but reduced the damages, holding that the 'but for' test of causation did not apply to transactional legal malpractice.
• The defendants, as petitioners, sought review from the Supreme Court of California, which granted the petition on the limited issue of the applicable causation standard.