Relatively UNKNOWN LAWYER TAKES ON HIGH-PROFILE TESLA LITIGATION (August 3, 2009)
Yosef Peretz, dressed in a dark suit too large for his small frame, lowered himself into the passenger seat of a sleek gray Tesla Roadster with thick orange racing stripes. His client, Tesla Motors co-founder Martin Eberhard, pulled the electric, envy-of-all-Silicon-Valley-riche sports car silently out of the San Mateo County Courthouse parking garage. The two were off to breakfast to chew over a favorable ruling on July 29 that allowed Eberhard's inflammatory defamation suit to go ahead against Tesla.
Peretz isn't a Silicon Valley insider. He came from Israel nine years ago, where suicide bombers on one occasion shattered the windows of his Jerusalem law office, and set up a plaintiff-side employment practice in San Francisco in 2003. Now the relatively unknown lawyer is firmly at the center of one of the Valley's nastiest legal dustups, involving the most-talked-about clean tech startup. Riding with Eberhard against Tesla isn't an easy win, making it a risky high-profile case for an attorney still establishing himself.
The suit, filed in January, accuses the company and CEO Elon Musk of libel, slander and not paying severance after Eberhard was ousted as CEO two years ago. It slams Musk, who made his millions by selling PayPal, for anointing himself the Tesla founder and for publicly blaming Eberhard for the car company's infamous production delays. And that's the big stuff. Eberhard also complains that he wasn't given the second Roadster off the production line, as promised -- he got the third, and it had been rebuilt after being crashed in safety tests.
Tesla calls the suit an "unfair personal attack and PR stunt that should not burden the court system." Legal observers say defamation suits can be difficult to prove. Even if you overcome the First Amendment arguments and the blurry line between fact and opinion, big damages aren't a slam-dunk. Peretz concedes that he's taken on a challenge, but on July 29 he made it past the first big hurdle. He fended off Tesla's anti-SLAPP motion, which can be used to throw out lawsuits deemed to be attacks on free speech. "The outcome speaks for itself," Peretz said happily after the hearing.
The company told the San Jose Mercury News they were fired for being "bottom-performers." That case hasn't gone as well. Tesla's lawyers from Wilson Sonsini Goodrich & Rosati knocked out the defamation claims and won a motion for $5,800 in sanctions against Peretz for incomplete responses in discovery.
He won't comment on the possibility of a settlement in that case, but he still sounds confident of success. He's a guy who's used to conflict.
War and Litigation
Peretz did his mandatory military service during one of the most violent times in recent Israeli history: the first Intifada, from 1987 to 1991. During a Palestinian uprising that left hundreds of Israelis and Palestinians dead, the 18-year-old Peretz was tasked with "strategic planning," though he declines to elaborate.
Though he went on to study law, working as an employment lawyer in Jerusalem, Peretz remained close to the conflict. Returning from a court hearing in 1999, he found his building had been damaged by a suicide bombing. The window of his fourth floor office had been shattered. His desk and floor were covered in glass -- and chunks of human flesh.
"We talked about it, but we pretty much moved on the following day," Peretz recalls. "I showed up and did my work without a window until the repairman came."
Peretz comes across as friendly and energetic, but the years in combat show when he's in litigation, his colleagues say.
"He's completely fearless. He is undaunted by the challenges that a big piece of litigation brings," said Sharon Vinick, of San Francisco's Vinick Law Firm, who handled a wage-and-hour class action against White Cap Construction with Peretz. "He's really not intimidated in going toe to toe with the big firms."
In the Tesla cases, Peretz is facing a pack of Wilson Sonsini lawyers led by well-known labor and employment partner Fred Alvarez. Like big firms will do, Wilson has been papering the case with numerous, lengthy motions. And Peretz, with his two associates and one contract lawyer, has been papering right back. At the July 29 morning hearing in the Eberhard case, Judge John Grandsaert told the lawyers in a calm, ironic tone that "this was the most thoroughly briefed motion that I've had in my law and motion assignment."
Wilson Sonsini lawyers declined to comment on the cases or Peretz.
But being bold and taking risks has its downsides, too. Peretz was sued for malicious prosecution in 2006, a case that quickly settled with each side paying its own costs. While he won't discuss that suit, he's sanguine about having lost a whistleblower case against Alameda County a few years back after a long jury trial.
"It was a huge learning experience, and one of the things it reaffirmed to me is that I am not afraid to lose," he said. "It definitely felt horrible, and I was down, but it's part of [being a litigator]."
Peretz came to San Francisco in 2000, 30 years old and without any real plans. He studied for the California bar exam, but didn't plot out his legal career -- he worked as a waiter in a Mission diner, and was principal of a synagogue's Jewish school. As remains the case, he made the most of opportunities and connections. He met his first law partner, Cary Kletter, in the Talmud class he was teaching at a local synagogue. The two opened Kletter & Peretz in 2003. Social networking also brought clients.
David Vespremi, a former Tesla executive who is a plaintiff in the defamation and breach of contract case against the car company, is a former lawyer. He asked around for recommendations when he was thinking of filing a lawsuit, and the name that came up was Peretz.
"This is just one of those things where, among other attorneys, you get a feel for who knows their stuff," Vespremi said.
Peretz & Kletter started off representing tenants against landlords and getting clients from the Bar Association of San Francisco's referral program. Labor and employment cases also started coming in. There were failures, like the Alameda whistleblower suit, but there were also successes. They shared a 30 percent cut of the $5.5 million settlement in the wage-and-hour class action against White Cap Construction, and Peretz and his wife bought a $1.5 million home in Noe Valley in 2007.
(His wife, Mardah Chami, is a Syrian whose native country Peretz and all other Israelis are forbidden from entering. They met in San Francisco, where Chami was a real estate associate at Orrick, Herrington & Sutcliffe before being laid off when the economy tanked.)
Kletter and Peretz decided to dissolve their partnership in March. "We had differences of opinion of how to run the business of the law firm, and we parted ways as amicably as we could," said Kletter, who now runs the Kletter Law Firm. "I have the utmost respect for him."
Standing around Eberhard's Tesla after the July 29 hearing, Eberhard -- a bearded engineer -- said he likes his lawyer's energy. Before the two headed off, Peretz joked that it was part of his retainer agreement that all meetings between attorney and client take place in the Roadster. Peretz said he likes the car, but accepts that a Tesla may not be in his future "I think this is one of the downsides of taking these cases -- I now realize it'll be challenging to get on the list."