California Legal Brief

The Rule of Citizens of Humanity, LLC v. Donboli is that a family relationship between class counsel and the representative plaintiff does not necessarily preclude probable cause to bring a class action claim, under circumstances where the underlying statutory violation existed at the time of filing and no clear authority prohibits such representation.

Appeal from judgment after bench trial in Superior Court, San Diego County.

Defendant Appellant was Citizens of Humanity, LLC — the clothing manufacturer who sued for malicious prosecution after successfully defending a federal class action alleging false "Made in U.S.A." labeling.

Plaintiff Respondents were John Donboli, JL Sean Slattery, Del Mar Law Group LLP, Louise Clark, and Coni Hass — the attorneys, law firm, and named plaintiffs who brought the underlying federal class action claiming Citizens' jeans were mislabeled as "Made in U.S.A." when they contained foreign components.

The suit sounded in malicious prosecution. No cross-claims were described.

The key substantive facts leading to the suit were that Donboli and Slattery filed a federal class action against Citizens alleging violation of Business and Professions Code section 17533.7 for labeling jeans "Made in U.S.A." when they contained foreign components. Clark was initially the named plaintiff but withdrew when Citizens discovered she was Slattery's sister-in-law. Hass substituted as plaintiff. While the case was pending, the Legislature amended section 17533.7 to permit "Made in America" labels for products with minimal foreign components. Citizens successfully moved to dismiss based on this amendment.

The procedural result leading to the Appeal: The trial court entered judgment in favor of defendants after finding Citizens failed to establish that defendants lacked probable cause for the underlying action, ruling that defendants had probable cause to believe Citizens was violating California law at the time the lawsuit was filed.

The key question(s) on Appeal: 1) Whether, as a matter of law, Clark was an inadequate class representative because she was related to class counsel, thereby negating probable cause; 2) Whether the trial court erroneously excluded various pieces of evidence regarding defendants' conduct and other lawsuits.

The Appellate Court held that Apple Computer, Inc. v. Superior Court does not establish a per se rule barring relatives of class counsel from serving as representative plaintiffs, and even if such a conflict existed, it would not necessarily defeat probable cause since the underlying claim could proceed with different counsel or a different representative plaintiff. The court also held that the trial court did not abuse its discretion in excluding various evidence under Evidence Code section 352 to avoid mini-trials on collateral issues.

The case is inapplicable when there is clear and uncontested authority prohibiting the specific attorney-client relationship at issue, or when the representative plaintiff's claim lacks any factual or legal basis independent of the relationship issue.

The case leaves open the precise boundaries of when family relationships between class counsel and representative plaintiffs might be disqualifying, and whether such disqualification would affect the probable cause analysis in malicious prosecution cases under different factual circumstances.