Cassady v. Morgan, Lewis & Bockius LLP, 145 Cal. App. 4th 220 (2006)

Ralph Cassady was employed as “of counsel” to Morgan Lewis for a 13-month period, during which time he performed legal services for a longtime client of his, Rallie P. Rallis. Years later, Rallis sued Cassady, Morgan Lewis, and other firms and attorneys with whom Cassady had been affiliated for a variety of claims, including professional negligence. After Morgan Lewis provided a defense to several other attorneys, Cassady sought indemnity pursuant to Labor Code § 2802. Although Morgan Lewis initially prevailed on a motion for summary judgment, the trial court reversed itself and granted Cassady a new trial. The Court of Appeal affirmed the trial court’s grant of a new trial on the ground that an employer must indemnify an employee for the attorney’s fees and costs incurred in defending against a third-party lawsuit where such expenses are necessary and the lawsuit is based on the employee’s conduct within the course and scope of his or her job duties. The Court further held that Cassady would bear the burden of proving which defense costs were attributable to his representation of Rallis while he was employed by Morgan Lewis.