Antitrust Law Daily Wrap Up, ANTITRUST—D. Ore.: Fraud claims against lawyer over refusal to file complaint fail, (May 29, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by an affiliated group of producers of talk radio programming against its former counsel over the lawyer’s tactics in a potential antitrust action, the federal district court in Medford, Oregon, has rejected dueling fraud claims (The Original Talk Radio Network, Inc. v. Alioto, May 27, 2014, Panner, O.).

The Original Talk Radio Network, Inc., Talk Radio Network Enterprises, LLC, Talk Radio Network Entertainment, Inc., Talk Radio Network-FM, Inc., and America’s Radio News Network (collectively “TRN”) are affiliated companies that produce nationally syndicated news and talk radio programs. In 2011, TRN became concerned that a pending merger by a competing mass media company, Dial Global, violated antitrust laws and retained Joseph M. Alioto d/b/a Alioto Law Firm to represent it in an antitrust action against Dial. TRN and Alioto entered into a fee agreement, which provided that a non-deductible retainer would be paid to Alioto in installments. While TRN and Alioto engaged in settlement negotiations with Dial, TRN demanded that Alioto file its complaint, which he refused to do. TRN withheld further payments until Alioto filed its complaint against Dial. After Alioto declined to file the complaint, he withdrew his representation of TRN. TRN obtained other counsel to pursue its action against Dial and requested a refund of the amount it paid to Alioto. Alioto refused to provide a refund and TRN filed suit against Alioto, alleging fraud, among other claims. Alioto filed a counterclaim for fraud, alleging that TRN failed to pay the retainer installment payment pursuant to the fee agreement. TRN and Alioto moved for partial summary judgment on their respective fraud claim and counterclaim.

The court found that TRN’s allegations were not sufficient to create a genuine issue of material fact that Alioto never intended to perform what he promised. To establish fraud under Oregon state law, a plaintiff must show (1) a representation; (2) its falsity; (3) its materiality; (4) the defendant’s knowledge of its falsity; (5) an intent that the falsity be acted upon; (6) the plaintiff’s ignorance of the falsity and reliance on its truth; (7) the plaintiff rightfully relied upon the falsity; and (8) the plaintiff’s consequent and proximate injury. TRN alleged that Alioto fraudulently represented that he would diligently file an antitrust complaint against Dial and vigorously prosecute TRN’s claims in order to induce TRM to sign the fee agreement and he never intended to perform as promised. The court noted that the only evidence Alioto never intended to file the complaint and vigorously prosecute TRN’s claims was his subsequent non-performance which was insufficient to support an inference of wrongful intent.

The court also determined that there was no genuine issue of material fact with respect to Alioto’s fraud counterclaim. Alioto produced no evidence that TRN did not intend to honor the fee agreement at the time it was executed and TRN’s subsequent non-performance under the fee agreement to pay the retainer installments was insufficient to support an inference of fraud, the court concluded.

The plaintiffs had withdrawn their claim for legal malpractice and that claim was dismissed.

The case is No. 1:13-cv-00759-PA.

Attorneys: David R. Griffith (Stewart, Humpherys, Molin & Griffith, LLP) for The Original Talk Radio Network, Inc., Talk Radio Network Enterprises, LLC, Talk Radio Network Entertainment, Inc., Talk Radio Network-FM, Inc., and America's Radio News Network, Inc. Joseph M. Alioto (Alioto Law Firm), pro se.

Companies: The Original Talk Radio Network, Inc.; Talk Radio Network Enterprises, LLC; Talk Radio Network Entertainment, Inc.; Talk Radio Network-FM, Inc.; America’s Radio News Network

Cases: Antitrust OregonNews