California Supreme Court: CEO's Malicious Prosecution Action OK

Sometimes plaintiffs and their lawyers like to sue the CEO or another high level executive for what they call "in terrorem" effect. You know, it's an attention getter. Other times individual defendants are added to defeat the possibility of federal court jurisdiction.

They say, though, if you go for the king, make sure you kill him. Because if you don't, he has the resources to sue you all the way to the Supreme Court.

Thomas Siebel is one such CEO. Debra Christoffers sued him and Siebel Systems for a variety of claims, many of which may not be asserted against individual managers as a matter of settled law. After Mr. Siebel won on the claims asserted against him as an individual, he sued Christoffers' attorneys, E. Rick Buell II and Carol L. Mittlesteadt for malicious prosecution. The trial court threw the case out. The court of appeal reinstated Siebel's case.

The complication here was that all parties settled Christoffers' underlying lawsuit and the cross-actions while that suit was on appeal. Mittlesteadt therefore argued that Mr. Siebel could not sue for malicious prosecution because he did not receive a "favorable" judgment in the underlying case.

The Supreme Court, 7-0, decided Mr. Siebel was free to proceed on his malicious prosecution claim even though the parties settled the underlying lawsuit. The opinion is here. The case is Siebel v. Mittlesteadt.

Those plaintiff attorneys who sue individual defendants based on frivolous legal theories may take away something from this decision. To be honest, in my experience, most plaintiffs' lawyers are more professional than that.