Judge: Margaret L. Oldendorf, Case: 22BBCV00516, Date: 2024-04-11 Tentative Ruling

Case Number: 22BBCV00516    Hearing Date: April 11, 2024    Dept: P

I.        INTRODUCTION

          These cases involve the triangular relationship between Plaintiff HCMC Legal, Inc., (Hire Counsel) their former employee, Defendant Brian Hartstein (Hartstein), and their competitor and Mr. Hartstein’s current employer, Defendant Epiq Systems, Inc (Epiq).  In 22BBCV00516, HCMC Legal Inc. v. Hartstein, Plaintiff alleges that Hartstein was employed by Hire Counsel for over 21 years. In June 2022, Hartstein abruptly quit and went to work for Plaintiff’s competitor, Epiq.  The overall thrust of Plaintiff’s complaint is that after joining Epiq, Hartstein accessed Plaintiff’s confidential, proprietary data, used that data to solicit Plaintiff’s customers to his new company and enticed former co-workers to join him at Epiq.  The allegations against Hartstein include:

1. He violated the terms of a promissory note with Plaintiff and still owes Plaintiff approximately $350,000;

2. He violated his employment agreement with Plaintiff by

          a. Failing to give the required 30-day notice prior to quitting;

b. Retaining access to Plaintiff’s computer systems and databases with confidential and proprietary information, including client and recruitment data;

c. Using this proprietary data to benefit himself and his new employer by soliciting Plaintiff’s clients to move their business from Plaintiff to Epiq; and

d. Using this same data to solicit Plaintiff’s employees to leave Hire Counsel and join him at Epiq.

          In the second case, 23BBCV00215, HCMC Legal Inc. v. Epiq Systems, Inc., et al, Plaintiff alleges that Epiq encouraged or facilitated Hartstein’s taking of Hire Counsel’s proprietary and confidential data. Hire Counsel alleges that this was done to gain an unfair business advantage over it, as the two companies are both in the legal staffing and litigation management industry.  The allegations against Epiq include:

1. Epiq recruited Hartstein with the intent to gain access to Plaintiff’s confidential data;

2. Epiq’s employment contract with Hartstein intentionally created incentives for Hartstein to violate the terms of his employment contract with Plaintiff by reaching out to Plaintiff’s clients and attempting to win their business for Epiq; and

3. Epiq encouraged Hartstein to violate his fiduciary duties to Plaintiff.

Before the Court is Epiq’s motion to consolidate these cases.[1] Epiq urges there are common questions of fact and law under CCP § 1048(a). Plaintiff filed an opposition on March 28, 2024. Defendant Epiq filed a reply on April 4, 2024.

II.      LEGAL STANDARD

          Code Civ. Proc. §1048(a) states:  

“When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.”

III.     ANALYSIS

          Epiq argues that these cases should be consolidated because they are “inextricably intertwined,” i.e. that there are common questions of law or fact as to whether Hartstein violated his employment agreement with Hire Counsel and whether Epiq solicited him to do so. Hire Counsel opposes, arguing that these cases involve wholly distinct questions of law and fact, consolidation would delay trial and the cases involve distinct witnesses.

          The Court first notes that the bases for consolidation set forth in CCP § 1048(a) are stated in the disjunctive, i.e. “actions involving a common question of law or fact.” A court may order consolidation based upon either. The Court finds that there are common questions of both fact and law in these cases.  As pointed out by Epiq in its moving papers, there is a significant connection between the causes of action in the two cases.  For example, the first cause of action in the Epiq Case, aiding and abetting breach of fiduciary duty, relates to the fourth cause of action in the Hartstein Case, breach of fiduciary duty.  In both causes of action, it is the same fiduciary duty, that of Hartstein to Hire Counsel, which is at issue. The second and fifth cause of actions in the Epiq Case, intentional interference with contractual relations and inducing breach of contract, relate to the second cause of action in the Hartstein Case, breach of Hartstein’s employment agreement.  It is the same employment contract that is at issue in these causes of action.

Given the connections between the causes of action, there are many common questions of fact in these cases: Did Hartstein and Epiq conspire together to steal Plaintiff’s clients or employees? Did Hartstein access Plaintiff’s confidential data while employed by Epiq?  Did Hartstein use that data to benefit himself and his new employer? Did Hartstein breach his employment agreement with Plaintiff? Did Epiq induce Hartstein to breach that agreement? Did Hartstein breach his fiduciary duty to Plaintiff?  Did Epiq induce that Breach?  

The Court agrees that these cases are “inextricably intertwined.” One of the more compelling facts this Court notes is the appearance of Hartstein’s name in the Epiq complaint.  His name appears 123 times in a 20 page document.  Further, one would expect Hartstein to testify at length in both matters, as well as current or former Hire Counsel and Epiq employees, and, possibly, employees of clients who were allegedly solicited.

This Court finds that it is in the interests of justice to consolidate these matters.  Doing so will conserve precious judicial resources by reducing the number of overall appearances and having one trial instead of two. These cases constitute one overarching narrative involving the triangular relationship between these parties. A jury evaluating possible liability must be allowed to hear the entire story and not just dislocated segments.

IV.     CONCLUSION AND ORDER

          The Epiq action and the Hartstein actions contain common questions of fact and law. Pursuant to Code Civ. Proc. § 1048(a), the two actions are consolidated.

Dated: April 10, 2024                                                             JARED D. MOSES, JUDGE