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"Necessary" Expenditures & Indemnity Under the California Labor Code


Carter v. Entercom Sacramento, LLC - Third District Court of Appeal, CA


Facts:  As a result of drinking too much water during a radio contest, a woman died.  Her family sued the company that owned the radio station, Entercom, and Matt Carter, an Entercom employee who helped conduct the contest.  Entercom offered to provide legal counsel to Carter, but Carter chose to hire his own attorney and refused the attorney offered by the company's insurance carrier.  When the insurer refused to pay for the attorney Carter had selected, Carter cross-complained against Entercom, seeking indemnity under California Labor Code § 2802 for the fees and costs he incurred by paying the attorney he had selected. 

The trial court held that none of the fees and costs that Carter had incurred after the insurer appointed an attorney to represent him in the suit were necessary expenditures.  The Third District Court of Appeal affirmed.

Holding:  The Court held that Carter did not have an absolute right to choose his own attorney at the expense of his employer or its insurer under Section 2802.  As well, the fact that Carter faced possible punitive damages and criminal charges did not give him the ability to insist that his employer or the insurer pay for whichever attorney he chose to represent him.  Whether certain legal expenditures are "necessary" under Section 2802 is a factual question, and the Court held that Carter had failed to demonstrate that the trial court's determination of that question lacked substantial evidentiary support.

Judgment:  The Third District Court of Appeal affirmed the lower court's ruling.

Majority Opinion Judge:  Judge Robie

Date:  September 3, 2013

Opinion:  http://www.courts.ca.gov/opinions/documents/C066751.PDF

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