Radio Station Avoids Fees Tied to Fatal Contest

SACRAMENTO, Calif. (CN) - A man who helped stage a radio station's water-drinking contest that turned fatal cannot recover his legal fees, a California appeals court ruled.

Jennifer Strange died of water intoxication hours after participating in a "Hold Your Wee for a Wii" contest sponsored by Entercom-owned radio station KDND-FM in January 2007. The woman consumed over 1.5 gallons of water during the morning-show stunt, an investigation found.

Strange's family sued Entercom Sacramento and several of its employees - including part-time morning show assistant Matthew Carter, who handed the contestants water bottles - after the incident. A jury awarded the family more than $16.5 million in damages in 2009.

Although Strange's family eventually dismissed Carter from the suit, he had initially tendered his defense - as was his right under California labor law - to Entercom's insurer, Vigilant Insurance Co.

Carter had rejected the attorney Vigilant hired to defend him, however, preferring the lawyer he had retained shortly after Entercom fired the entire KDND morning show over the tragedy.

In 2010, Carter's attorney submitted a 108-page, $807,421 bill to Vigilant and sued Entercom for indemnity. For its part, the company agreed it owed Carter no more than $1,690 for expenses incurred between the time he tendered his defense and Vigilant accepted the tender.

A Sacramento County judge found that Carter's rejection of Vigilant's attorney "was not reasonable and therefore costs and fees incurred by Carter to defend himself were not 'necessary expenditures'" under labor code. Although the superior court agreed that although Carter was entitled to indemnity for the period between tender and acceptance, it reduced the hourly rate to $150 - less than half of the $325 per hour Carter demanded.

A panel for the Third Appellate District on Tuesday rejected Carter's contention that he had an "absolute right to counsel of his own choosing" under California labor law.

"Case law recognizes that the indemnity requirement in [labor code] is not contractual," Judge Ronald Robie wrote for the panel. "While it is true that a contract of employment must exist for indemnity to apply - inasmuch as that statute applies only to an employer and an employee - that does not mean that the obligation of indemnity imposed arises from 'a contract of indemnity' subject to the rules of interpretation in civil code. For there to be a contractual obligation of indemnity, the parties would have had to consent to that obligation. There is no evidence they did so."

The appellate court also rejected Carter's argument that Vigilant's conflict of interest - the possibility of having to defend him against both homicide charges and punitive damages - necessitated his own attorney.

"Carter points to no reason why it would have been in Vigilant's interest to pursue a theory that would have subjected Carter to an award of punitive damages, and because Vigilant was liable for any compensatory damages award against Carter it was in Vigilant's interest just as much (if not more than) it was in Carter's interest to vigorously defend against the Strange action," Judge Robie wrote (parentheses in original). "Under these circumstances, Carter has failed to show that the mere prospect of punitive damages prevented the attorney retained by Vigilant from providing Carter with a complete defense or created a conflict of interest that made it necessary for him to retain independent counsel."

As to the possibility of criminal charges - which the Sacramento district attorney declined to pursue after an investigation - the court found that Carter failed to offer any proof that he needed representation at all during the investigation.

"He points to no evidence of what that investigation entailed, no evidence that he was ever contacted or interviewed in the course of that investigation, and no evidence that the attorney he hired ever did a single thing connected to the criminal investigation," Robie wrote. "In fact, we have reviewed the time entries on the billing statement from the attorney's initial meeting with Carter on Jan. 19, 2007, through April 2, 2007, when the district attorney announced that no criminal charges would be filed, and we find not a single mention of the criminal investigation."

The court continued: "On the record here, then, there was substantial evidence to support the trial court's determination that Carter did not need to incur fees or costs for independent counsel after Feb. 22, 2007, when Vigilant informed him that it had retained an attorney to represent him in the Strange action, notwithstanding the fact that Carter faced a potential claim for punitive damages and that a criminal investigation continued for a little over a month thereafter. Accordingly, Carter has shown no error in the trial court's ruling on his claim for indemnity under [California labor law]."

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