Law firms frequently insert arbitration clauses into their retainer agreements, and require arbitration of all claims concerning potential malpractice. In an unusual setting, the clients sue their attorneys for failing to tell them to basically do the same thing,

Signature Cleaning Servs., Inc. v Grimaldi 2024 NY Slip Op 32966(U) August 23, 2024 Supreme Court, New York County Docket Number: Index No. 157238/2021 Judge: Judy H. Kim is a case in which “Plaintiff Signature Cleaning Services, Inc. (“Signature”) alleges that defendants—plaintiff’s former law firm and its lawyers—engaged in malpractice by failing to advise plaintiff to require its employees to sign arbitration agreements and class action waivers as a condition of their employment (NYSCEF Doc No. 6 [Compl. at ¶8]). Plaintiff asserts that, as a result, its employees were able to file a class action lawsuit against plaintiff in New York State Supreme Court asserting violations of New York State’s Labor Law and the Fair Labor Standards Act (“FLSA”) (the “Class Action”), which plaintiff ultimately settled for over one million dollars (Id. at ¶¶9-12).”

“Defendants now move for summary judgment dismissing this action, submitting affirmations from members of the defendant law firm, Carmelo Grimaldi, and Thomas J. McGowan, attesting that “it was strategically determined that [p]laintiff would not provide rbitration and class action waiver agreements to [plaintiff’s employees because, inter alia, the expense of addressing potentially a thousand or more individual arbitration demands by current and former employees would greatly exceed the likely cost of settling a class action lawsuit involving those same former and current employees” (NYSCEF Doc. Nos. 13 [Grimaldi Affirm. at ¶7] and 14 [McGowan Affirm. at ¶21]). Defendants also submit an affirmation by Raymond Nardo, Esq., an expert in Employment Law, attesting that defendants did not fail to exercise the ordinary reasonable skill and knowledge in employing this strategy and notes that if the Class Action plaintiffs had proceeded through arbitration, the costs to Signature from filing fees alone would have been substantially greater than the settlement of the Class Action (NYSCEF Doc. No. 32 [Nardo Affirm. at ¶¶9-11, 18]). Defendants argue that the foregoing establishes that plaintiff will not be able to prove its prima facie case and seek the dismissal of this action and sanctions pursuant to 22 NYCRR §130-1.1.1”

“In this case, defendants have established that they were not negligent in advising plaintiff not to mandate that its employees execute arbitration agreements and class action waivers and, in any event, this advice was not the proximate cause of plaintiff’s losses.
To wit, the affirmations of Grimaldi, McGowan, and Nardo establish that defendants’ advice was reasonable (See Yang v Pagan Law Firm, P.C., 228 AD3d 547, 547-48 [1st Dept 2024] [“Defendants met their prima facie burden on a motion for summary judgment by submitting the affidavit of their legal expert, who averred that defendants did not depart from the applicable standard of care”]; see also Orchard Motorcycle Distributors, Inc. v Morrison Cohen Singer & Weinstein, LLP, 49 AD3d 292, 292-93 [1st Dept 2008]), and it is well-settled that an attorney’s “selection of one among several reasonable courses of action does not constitute malpractice” (Rosner v Paley, 65 NY2d 736, 738 [1985]).
Defendants have also established that plaintiff cannot prove that their advice was not the proximate cause of the harm alleged by plaintiff. “To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer’s negligence” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007] [internal citations omitted]). However, “[c]ontentions underlying a claim for legal malpractice which are couched in terms of gross speculations on future events … are insufficient as a matter of law to establish that defendants’ negligence, if any, was the proximate cause of [plaintiff’s] injuries” (Phillips-Smith Specialty Retail Group II, L.P. v Parker Chapin Flattau & Klimpl, LLP, 265 AD2d 208, 210 [1st Dept 1999]”

“This speculation on a hypothetical sequence of events is insufficient to establish causation on a malpractice claim (See Brooks v Lewin, 21 AD3d 731, 734-35 [1st Dept 2005] [plaintiff’s assertion “that a number of events which occurred after she severed her relationship with MSI could have been prevented if the law firm made the motion for the injunction” was “speculation on future events” and therefore insufficient to establish that the defendant lawyer’s malpractice, if any, was a proximate cause of any such loss”]; see also Kaplan v Conway and Conway, 173 AD3d 452, 452-53 [1st Dept 2019] [allegations that plaintiffs were subject to a FINRA investigation because defendants failed to timely advocate for a “formal closure” of an internal investigation by plaintiffs’ employer or secure “more favorable language” in FINRA U-5 Forms filed upon plaintiffs’ resignation were vague, speculative, conclusory and failed to “fit [into] any cognizable legal theory”]).”