Judge Lee S. Arian, Case Number: 22STCV19485, Date: 2024-01-03 Tentative Ruling

On June 15, 2022, plaintiff Vannessa Ramos (“Plaintiff”) filed this premises liability action against defendants Costco Wholesale Corporation (“Costco”) and Susan Doe. Plaintiff claims that on February 6, 2022, she was cut by an “unmarked and/or unsecured broken jar and/or similar item” while she was attempting to grab an item from a shelf or display. (Complaint, ¶8.) Plaintiff contends Costco “knew, or should have known . . . that the structures and/or components and/or other parts of” the Los Feliz Costco was “in a dangerous and defective and unsafe condition, and a menace to Plaintiff.” (Id. at ¶9.) Plaintiff claims she suffered “severe injury and pain” as a result of the cut. (Id. at ¶8.)

On December 7, 2023, Defendant Costco filed this motion to disqualify counsel. Plaintiff opposes.

After the initial hearing on the motion, the Court continued the matter for additional briefing.

“‘A trial court’s authority to disqualify an attorney derives from the power inherent in every court ‘[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.’’” (Ontiveros v. Constable (2016) 245 Cal.App.4th 686, 694 (quoting People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145 (quoting Code Civ. Proc., § 128(a)(5))).) “‘[D]isqualification motions involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility.’” (Id. at 694-95.) “‘The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar.’” (Id. at 695.) “‘The important right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.’” (Id.) In exercising its discretion to disqualify an attorney, the Court is required to make a reasoned judgment which complies with the legal principles and policies applicable to the issue at hand. ¿(Henriksen v. Great Am. Sav. & Loan (1992) 11 Cal.App.4th 109, 113.) ¿

In ruling on a motion to disqualify, the court should weigh: (1) the party's right to counsel of choice; (2) the attorney's interest in representing a client; (3) the financial burden on a client of change of counsel; (4) any tactical abuse underlying a disqualification motion; and (5) the principal that the fair resolution of disputes requires vigorous representation of parties by independent counsel. (Mills Land & Water Co. v. Golden West Refining Co. (1986) 186 Cal.App.3d 116, 126.) Whether an attorney should be disqualified is a matter addressed to the sound discretion of the trial court. (Henriksen v. Great American Savings & Loan (1992) 11 Cal.App.4th 109, 113.)

Costco’s request that the Court take judicial notice of various Court records is GRANTED. (Evid. Code § 452(d).)

Defendant Costco moves for a court order disqualifying Plaintiff’s counsel, Downtown L.A. Law Group (“DTLA Law Group”), from representing Plaintiff in this case. Defendant Costco argues DTLA Law Group attorney Anthony Werbin (“Werbin”) was counsel for Costco prior to joining DTLA Law Group and possesses confidential and proprietary information regarding Costco that constitute a conflict, which is imputed on DTLA Law Group.

In opposition, Plaintiff argues disqualification is not warranted because Werbin is not assigned counsel on this case, Werbin does not have any confidential or protected information directly related to this matter, and a substantial relationship does not exist.

“A former client may seek to disqualify a former attorney from representing an adverse party by showing the former attorney actually possesses confidential information adverse to the former client.” (H.F. Ahmanson & Co. v. Salomon Brothers, Inc. (1991) 229 Cal.App.3d 1445, 1452.) Additionally, a former client need not establish that the attorney actually possesses confidential information to disqualify the former attorney. (H.F. Ahmanson & Co., supra, 229 Cal.App.3d at 1452.) “It is enough to show a ‘substantial relationship’ between the former and current representation.” (Id.) “It is the possibility of the breach of confidence, not the fact of an actual breach that triggers disqualification.” (In re Marriage of Zimmerman (1993) 16 Cal.App.4th 556, 563; H.F. Ahmanson & Co., supra, 229 Cal.App.3d at 1452.)

“[T]he attorney’s possession of confidential information will be presumed only when ‘a substantial relationship has been shown to exist between the former representation and the current representation, and when it appears by virtue of the nature of the former representation or the relationship of the attorney to his former client confidential information material to the current dispute would normally have been imparted to the attorney . . . .’” (H.F. Ahmanson & Co., supra, 229 Cal.App.3d at 1454.) Disqualification of the attorney from representing the second client is mandatory where the substantial relationship test is met and access to confidential information is presumed. (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283.)

“[A] ‘substantial relationship’ exists whenever the ‘subjects’ of the prior and the current representations are linked in some rational manner.” (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 711 (citing Flatt, supra, 9 Cal.4th at 283).) The “subject” of a representation includes “information material to the evaluation, prosecution, settlement or accomplishment of the litigation or transaction given its specific legal and factual issues.” (Id. at 712-13.) “[S]uccessive representations will be ‘substantially related’ when the evidence before the trial court supports a rational conclusion that information material to the evaluation, prosecution, settlement or accomplishment of the former representation given its factual and legal issues is also material to the evaluation, prosecution, settlement or accomplishment of the current representation given its factual and legal issues.” (Id. at 713.)

The substantial relationship test requires comparison not only of the legal issues involved in successive representations, but also of evidence bearing on the materiality of the information the attorney received during the earlier representation. (Khani v. Ford Motor Co. (2013) 215 Cal.App.4th 916, 921-22.) The evidence must show that the attorney acquired confidential information and not merely general information about the former client. (Id.)

The Court finds Defendant Costco has demonstrated the existence of a substantial relationship between representation of Plaintiff in this action and Werbin’s representation of Costco in prior actions. Werbin’s representation of Costco involved matters relating to personal injuries substantially similar to the claims made by the Plaintiff in the instant case. (Sefton Decl., ¶3.) Werbin represented Costco in 21 cases between July 5, 2017 and January 16, 2020. (Id. at ¶2.) He also served as one of Costco’s trial counsel in the case of Guo Jun Chen v. Costco Wholesale Corporation (Case No. BC654699), which went to trial on May 29, 2019, and in which a verdict was rendered on June 4, 2019. (Id. at ¶4.) Most notably, Werbin was counsel for Costco on at least two cases involving the Los Feliz, California Costco warehouse in negligence and premises liability claims. (Ibid; Compendium of Exhibits, Exhs. 9-12.) While serving as Costco’s attorney, Werbin was lead counsel and handled virtually every aspect of Costco’s file, which included, but was but not limited to, developing strategy, communicating with Costco employees as well as its claims administrator Gallagher Bassett, reviewing confidential and privileged documents, preparing responses to discovery, preparing witnesses to testify at depositions, defending numerous depositions of Costco employees, and developing litigation strategy. (Sefton Decl., ¶5.) In connection with his work for Costco, Mr. Werbin was privy to Costco’s prelitigation strategies, case handling procedures, attorney-client communications, confidential and proprietary information concerning Costco’s operations, confidential client documentation, policies and procedures, and trade secrets. (Id. at ¶6.) Moreover, on March 19, 2019, Werbin was an active participant in a day-long California Defense Counsel Conference that Costco held for its panel of defense attorneys in California in order to discuss California litigation, convey information, and share defense tools and strategies among its defense counsel. After the conference, Werbin even sent an email to other attendees sharing his thoughts on defense strategy. (Id. at ¶7, Exh. 1.)

From this evidence, especially that Werbin has handled two negligence/premises liability cases involving the same Los Feliz store location, it can be presumed that Werbin gained confidential information involving the Los Feliz location from his prior representations that would be material to litigating the current matter and would provide an unfair advantage to Plaintiff. Werbin’s declaration indicates he has no recollection of ever working on a Costco matter involving the “Lake Elsinore warehouse” or anything about that warehouse, but that warehouse is irrelevant. Werbin would thus be disqualified from representing Plaintiff had he been involved in this matter.

Given Werbin would be disqualified from representing Plaintiff in this matter had he been involved, the issue is thus whether DTLA Law Group should be disqualified from representing Plaintiff in this matter.

“[W]hether disqualification of the entire firm is automatic is an open question.” (California Self-Insurers’ Security Fund v. Superior Court (2018) 19 Cal.App.5th 1065, 1077.) As was noted by the Court of Appeal in Kirk v. First American Title Ins. Co. (2010) 183 Cal.App.4th 776 and discussed in California Self-Insurers’ Security Fund, the case law regarding whether vicarious disqualification is automatic and absolute is mixed. (California Self-Insurers’ Security Fund, supra, 19 Cal.App.5th at 1075; Kirk, supra, 183 Cal.App.4th at 799.) The Kirk Court summarized the history of the law of vicarious disqualification and found that Flatt did not create an absolute rule of vicarious disqualification and that “the state of the law is as initially expressed by the appellate courts: (1) a case-by-case analysis based on the circumstances present in, and the policy interests implicated by, the case; (2) tempered by the Henriksen [v. Great American Savings & Loan (1992) 11 Cal.App.4th 109] rule that vicarious disqualification should be automatic in cases of a tainted attorney possessing actual confidential information from a representation, who switches sides in the same case.” (Kirk, supra, 183 Cal.App.4th at 800; California Self-Insurers’ Security Fund, supra, 19 Cal.App.5th at 1076 (quoting Kirk).) The Kirk Court further indicated that vicarious disqualification is the general rule and that courts should presume knowledge is imputed to all members of a tainted attorney’s law firm, but that, “in the proper circumstances, the presumption is a rebuttable one, which can be refuted by evidence that ethical screening will effectively prevent the sharing of confidences in a particular case.’” (Kirk, supra, 183 Cal.App.4th at 801; California Self-Insurers’ Security Fund, supra, 19 Cal.App.5th at 1076 (quoting Kirk).)

As such, the presumption that Werbin’s knowledge is imputed to all members of his firm and the general rule of vicarious disqualification of the firm would generally apply.

Plaintiff argues that vicarious disqualification is rebuttable by evidence of ethical screening and that DTLA Law Group has a firm policy where Werbin’s team is not assigned any cases involving Costco. According to Plaintiff’s counsel, Jacob Brown, DTLA Law Group attorneys are divided into teams, which consist of their own set of attorneys, paralegals, and office staff. (Brown Decl., ¶7.) Further, Brown states that teams do not generally share case files. (Ibid.) Brown states that the firm stores all case information, documents, and files electronically and that Werbin does not access any case files or information involving Costco cases. (Id. at ¶10.) Brown declares that Werbin has never been consulted by any member of DTLA Law Group as to how to handle a Costco case. (Id. at ¶14.) Further, in December of 2021, DTLA Law Group made a software switch from Abacuslaw and introduced a new software system named FileVine. Prior to using FileVine software, all client files were viewable by all DTLA Law employees. Upon shifting to the use of FileVine, only those with administrative roles at the firm and those who have been assigned to a case will be able to view files associated with a case. (Id. at ¶10; Rezkallah Decl., ¶¶ 3-4.)

“The typical elements of an ethical wall are: (1) physical, geographic, and departmental separation of attorneys; (2) prohibitions against and sanctions for discussing confidential matters; (3) established rules and procedures preventing access to confidential information and files; (4) procedures preventing a disqualified attorney from sharing in the profits from the representation; and (5) continuing education in professional responsibility.” (Henriksen, supra, 11 Cal. App. 4th 109, 116 n.6.) While the firm’s Human Resources Manager and Administrative Director does attest to these things, it is stated in a conclusory manner and is insufficient to overcome the presumption, especially in light of the size of the firm. “[A]n effective wall involves the imposition of preventive measures to guarantee that information will not be conveyed.” (Nat'l Grange of Order of Patrons of Husbandry v. Cal. Guild (2019) 38 Cal. App. 5th 706, 715.) Plaintiff argues in supplemental briefing that the firm consists of 40 attorneys and over 200 individual staff members, however Plaintiff provides no evidence of this. The Court notes that a simple search of Plaintiff’s counsel website indicates 15 attorneys as the team.

The Court is particularly concerned in this case that DTLA Law Group failed to provide written notice to Costco of their representation in compliance with Rule 1.10. It is unclear to the Court, especially in light of the fact that these issues have arisen before specifically in relation to Werbin and Costco, how and why if a policy has been implemented by DTLA Law, such a notice was not immediately sent in this case. Plaintiff provides a Letter of Representation that was sent on February 16, 2022, but this letter is not in compliance with Rule 1.10 and does not reference Werbin or the former representation issue at hand at all. As such, the Court is unable to find that DTLA Law has taken sufficient measures to guarantee that an effective ethical wall, including all appropriate policies, has been “built” by DTLA Law. The “paramount concern” in evaluating a motion to disqualify counsel “must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar.” (Jarvis v. Jarvis (2019) 33 Cal.App.5th 113, 139.) Thus, under these circumstances and in light of the paramount concern to preserve public trust in the scrupulous administration of justice and integrity of the bar, the Court finds DTLA Law Group should be disqualified from representing Plaintiff in this action.

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

Hon. Lee S. Arian

Judge of the Superior Court