Ferguson v. Lieff, Cabraser, Heimann & Bernstein, LLP

A processing tower at a refinery owned by Union Oil Company of California (Unocal) (defendant) released toxic chemicals into the atmosphere. Law firm Lieff, Cabraser, Heimann & Bernstein, LLP (Lieff) (defendant) filed a class-action lawsuit against Unocal. Other firms also sued Unocal. Casper, Meadows & Schwartz (Casper) sued on behalf of Brent Ferguson and Florencia Prieto (plaintiffs). The actions were consolidated. Lieff was designated co-lead class counsel. Lieff identified four potential classes, including a non-opt-out class for punitive damages. The parties agreed to, and the settlement master recommended, an $80 million settlement that required dismissal of the punitive-damages claims. Ferguson and Prieto objected to the settlement. The court approved the settlement and dismissed the punitive-damages claims, concluding that the public’s interest in punishing Unocal and deterring future misconduct had been achieved. Ferguson and Prieto received awards from the $80 million settlement. Ferguson and Prieto sued Lieff for malpractice. As compensatory damages, Ferguson and Prieto alleged the loss of a potential punitive-damages award. The court granted summary judgment to Lieff. The appellate court affirmed. The California Supreme Court granted review to determine whether lost punitive damages are recoverable in a legal-malpractice action.