Playboy suit says law firm tried $6M case instead of seeking settlement within insurance limits
Playboy has filed a malpractice suit against its former counsel in an employee whistleblower suit. The lawsuit contends that Sheppard, Mullin, Richter & Hampton exposed the magazine company to additional liability by taking the case to trial.
Filed in Los Angeles Superior Court on Friday, the suit says the California-based international firm encouraged Playboy to try the case with estimates of a 75-percent chance of a defense verdict and, at worst, damages of less than $3.5 million, reports Courthouse News. Instead, a federal court jury last year awarded $6 million to former controller Catherine Zulfer, which was $1 million above the $5 million policy limits on Playboy’s insurance.
Sheppard Mullin failed to take into account Playboy’s potential uncovered exposure for compensatory and punitive damages and should have pushed the company’s insurer to settle with Zulfer within policy limits, the suit contends. It seeks $7.6 million in claimed damages.
The law firm did not immediately respond to a request for comment by the news agency.
Zulfer said in the underlying suit that she was wrongfully fired, in retaliation for resisting an improper executive bonus program, the Wrap reported at the time of the verdict. She alleged violations of the Sarbanes-Oxley Act and legal protections against age discrimination.