Court Rules 5-Hour Energy Distributor Can Continue Lawsuit Against Plaintiffs' Lawyers

CALIFORNIA Innovation Ventures LLC, the 5-hour Energy shot distributor doing business as Living Essentials, scored a legal victory last month in an appeal that turned the tables on lawyers who had sued the company in a previous case that was dismissed.

A California appeals courts upheld a decision that allows Innovation Ventures to continue pursuing a complaint against several lawyers for a "malicious prosecution".

A few years ago, California resident Vi Nguyen, through attorney Howard W. Rubinstein and other lawyers, sued Innovation Ventures in federal court for false advertising and other violations of the law. The lawsuit was eventually dismissed with prejudice at Nguyen's request, and Innovation Ventures returned the favor by filing suit against Nguyen and her lawyers for malicious prosecution.

The lawsuit may continue against Nguyen's lawyers, the appellate court ruled.  But in the Nov. 29 opinion, the three-judge panel held Innovation Ventures failed to meet its burden of proof in establishing that Nguyen acted maliciously in bringing and pursuing the complaint.

"While an attorney may be subject to liability for continuing to pursue an action after discovery of information showing the case lacks merit, it does not automatically subject clients who are unaware of those facts to liability. In such a case, counsel must inform the client of the unfavorable information and recommend dismissal," wrote Associate Justice William F. Rylaarsdam of the California Court of Appeal, Fourth Appellate Division. "Innovation presented no evidence attorneys gave such advice to Nguyen prior to the time the dismissal was sought."

Lawyers who had represented Nguyen weren't so fortunate. The appellate court affirmed a decision by the trial court to deny their request to strike the malicious prosecution claims filed against them.

Nguyen revealed in her deposition she had purchased 5-hour Energy for the express purpose of the litigation and acknowledged previously buying the product on several other occasions. In her deposition, Nguyen further disclosed she wasn't seeking damages for personal injuries and wasn't concerned about suffering "'some adverse physical or psychological effect'" from 5-hour Energy, the appellate court observed. Rather, Nguyen stated "she was seeking only to recover the purchase price because she did not think the product was worth the money she spent on it."

Nguyen moved to dismiss her complaint after Innovation Ventures served her employer with a subpoena and sought to schedule another deposition for her and depose her brother.

Rylaarsdam said Innovation Ventures had met its "prima facie" case of establishing the elements of a malicious prosecution. Those elements include, among other things, a showing that the lawyers had no "probable cause" to bring the complaint against Innovation Ventures and acted with "malice".

The opinion also detailed some unsavory lawyer practices, namely an alleged offer (unrelated to the litigation) that Rubinstein made to Innovation Ventures, agreeing to "desist from filing lawsuits" against the company in exchange for money.

The other lawyers named as defendants in the malicious prosecution complaint are Harold M. Hewell, Richard A. Proaps, David Salazar and Salazar & Tellawi, PLLC.