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The Law Offices of Mark R. Leeds entered into a contract with the Law Offices of Donald J. Reino, whereby Leeds agreed to refer workers’ compensation cases to Reino in consideration for payment of 25 percent of the attorney fees earned on those cases, 100 percent of all deposition fees (Lab. Code, § 5710) if “handled” by Leeds, and 25 percent of the vocational rehabilitation attorney fees.

Three years later, in 1997, Reino and Iida, a Professional Corporation, and Law Offices of Myles Iida were formed as successors of Reino. By this time, plaintiff had referred over 1,000 cases to Reino pursuant to the agreement. Leeds entered into a new agreement to the successor firm that is substantially similar to the original agreement with Reino

Reino and the successor firms paid plaintiff in accordance with the terms of the agreements for about 16 years.

On October 1, 2010, Leeds separated from the successor firms and formed his own firm in Long Beach California. at separation, many of the referred clients manifested their intent to substitute Leeds as counsel of record while others elected to remain with Reino; and some of the previously referred clients had substituted other firms to handle their claims. Reino then refused to pay any attorney fees to Leeds, and Leeds filed a civil action in Superior Court to collect the fees he claims to have earned.

Reino demurred to the complaint on three grounds: (1) the trial court lacked subject matter jurisdiction over the subject of the cause of action, because WCAB has exclusive jurisdiction over disputes regarding attorney fees in workers’ compensation matters; (2) another action is pending before the WCAB entitled Lovato v. The Kroger Co. dba Ralph’s Grocery, case No. ADJ7354967 (Lovato) between the same parties on the same issues, i.e., “the alleged failure of Defendants to pay Plaintiff[’s] referral fees allegedly earned under the alleged contract . . . including California Labor Code section 5710 deposition fees;” and (3) no cause of action for declaratory relief is stated. The trial court sustained the demurrer without leave to amend on all grounds asserted in the demurrer and entered its order (judgment) dismissing the complaint with prejudice.

Leeds appealed the dismissal, and the Court of Appeal reversed in the unpublished case of Leeds v. Reino and Iida.

The Court of Appeal concluded that the distribution of attorney fees in a final award pursuant to a fee splitting agreement is not subject to the exclusive jurisdiction of the WCAB. “Once the WCAB has resolved the ‘reasonable amount’ of the attorney fees and makes a final award in this amount, the WCAB has no further interest in, or obligation to determine, how the fees are to be disbursed or otherwise disposed of by the lien claimant. We therefore conclude that a dispute between the lien claimant and a third party regarding allocation or division of the attorney fees in a final award issued by the WCAB is outside the jurisdiction of the WCAB. ”