Law firm can’t arbitrate dispute with former name partner, judge says

Carothers DiSante & Freudenberger LLP cannot remove a dispute with a former name partner to arbitration, a Los Angeles County judge ruled Monday.

Dave Carothers, now of Tremblay Beck Law in San Diego, sued his old firm last October. He said he was driven out by the other partners because of his age, race and medical condition. He also alleged retaliation because he tried to get the firm to issue a statement condemning racial discrimination and particularly George Floyd's death at the hands of police.

The firm said he resigned after a client sued him to collect a substantial debt.

Carothers DiSante & Freudenberger tried to move the dispute to arbitration, citing an arbitration provision in the firm's partnership agreement. But Carothers argued that his partnership agreement was superseded by his employment agreement, which contained no arbitration provision. Dave Carothers v. Carothers DiSante & Freudenberger LLP, 20STCV39320, (L.A. Sup. Ct., filed Oct. 10, 2020).

According to the complaint, Carothers ended his partnership after cashing out his equity to pay for medical treatment of a heart condition. He returned to the firm under an employment agreement that designated him as a nonequity partner.

Superior Court Judge John P. Doyle on Monday wrote that the court disagreed with the claim that the employment agreement extinguishes the partnership agreement. But since Carothers' claims occurred after his surgery when he came back as an employee, Doyle said the arbitration provisions in the partnership agreement do not apply.

"The court believes it would be unreasonable to interpret the partnership agreement as applying to tort claims arising when Carothers was an employee," Doyle wrote. "Ultimately, if CDF wanted to arbitrate, it should have negotiated such a component of Carothers' employment agreement."

Mira Hashmall of Miller Barondess LLP represents Carothers. The law firm is represented by Damien P. DeLaney of Akerman LLP.

The firm, which kept Carothers' name in its title, specializes in employment matters. Carothers became a name partner in 2011. According to his complaint, the firm's executives began pushing him out by reducing his pay and role after he began suffering from the heart condition in 2017.

A jury trial is scheduled for May 2022.