Judge: Serena R. Murillo, Case: 20STCV03503, Date: 2023-02-08 Tentative Ruling

Case Number: 20STCV03503    Hearing Date: February 8, 2023    Dept: 29

TENTATIVE

Defendant Costco’s motion to disqualify Downtown L.A. Law Group is GRANTED. 

Downtown L.A. Law Group is disqualified from representing Plaintiff Maria Velasco Rodas in this action. 

Evidentiary Objections

Plaintiff’s Objections to Defendant’s Evidence

·         The following objections are overruled: 1-11.

·         The following objections are sustained: n/a

Request for Judicial Notice

Evidence Code section 452 provides: “[j]udicial notice may be taken of the following matters: (d) Record of (1) any court of this state…” (Evidence Code section 452(d)(1).)

In its reply to Plaintiff’s opposition, Defendant asks the Court to take judicial notice of this Court’s ruling granting a motion to disqualify involving the same parties, in its 10/25/2021 minute order, in the following case: Alba Cocrhan v. Costco, BC708124.

The request is GRANTED. The Court notes that Plaintiff’s opposition has also addressed this case, and thus, although the evidence is presented in the reply, there is no prejudice because this evidence is not new.

Legal Standard 

“‘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.) 

Discussion 

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. Defendant has presented the following evidence. Werbin’s representation of Costco involved matters relating to personal injuries substantially similar to the claims made by the Plaintiff in the instant case. (Ruijters Decl. ¶ 3.) Werbin 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., ¶ 4.) Most notably, Werbin was counsel for Costco on at least six cases involving the Inglewood, California Costco warehouse. (Id., ¶ 2.) These six cases are all based on similar slip and fall/premises liability claims as the subject slip and fall in this matter.

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. (Id. at ¶5-7.) Moreover, in March 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. The group in attendance at the Conference was not every attorney who represents Costco on California cases but was, instead, a select group – a subset of attorneys - who worked on California cases for Costco. (Id. at ¶ 7.) Lastly, it is Costco’s usual practice to seek protective orders relative to documents it produces in discovery. If Werbin produced documents that he represented were subject to a protective order, it shows that Werbin was aware of confidential and proprietary information and he would have seen this information -- and more -- during his client representation.

From this evidence, especially that Werbin has handled six slip and fall cases involving the same Inglewood store location, it can be presumed that Werbin gained confidential information involving the Inglewood location from his prior representations that would be material to litigating the current matter and would provide an unfair advantage to Plaintiff, despite Werbin’s declaration indicating he has no recollection of ever working on a Costco matter involving the Inglewood warehouse or anything about the Inglewood warehouse.  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, Nina Sargsyan, DTLA Law Group attorneys are divided into teams, which consist of their own set of attorneys, paralegals, and office staff.  (Sargsyan Decl., ¶ 7.)  Further, Sargsyan states do not share team members or case files.  (Id.)  Sargsyan attests that it is firm policy that all Costco cases are assigned to one of the other litigation teams and that Werbin’s team is not assigned any cases involving Costco.  (Id., ¶¶ 8-9.)  Sargsyan 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., ¶ 10.)  Both Sargsyan and Werbin declare that Werbin has never been consulted by any member of DTLA Law Group as to how to handle a Costco case.  (Id., ¶ 14; Werbin Decl., ¶ 21.) Further, in December of 202l, 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. (Sargsyan Decl., ¶ 12; Rezkallah Decl., ¶¶ 3-4.)

The Court finds DTLA Law Group’s evidence of their policy concerning Werbin and Costco cases is insufficient to rebut the presumption.  “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 DTLA Law Group may have made an effort to keep cases involving Costco away from Werbin by implementing a policy not to assign such cases to Werbin’s team, there is no evidence of physical or geographical separation of attorneys, or evidence of sanctions or continuing education in professional responsibly, to name a few. “[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.) Moreover, although DTLA Law Group has indicated the electronic files are now protected, DTLA’s new software system was only implemented in December of 2021. “[T]he screen must be timely imposed; a firm must impose screening measures when the conflict first arises....” (Id., at 715.) Plaintiff admits she has been conscious of Werbin’s former representation of Costco from the beginning of his employment (Opposition, 13:18-19), however, this new policy was implemented in December of 2021, meaning the screening measure was not imposed when the conflict first arose. The Court notes that in Plaintiff’s list of cases wherein Defendant Costco has filed these motions to disqualify due to Werbin’s employment, the hearing dates on those matters were as early as February of 2021. (Sargsyan Decl., ¶ 16.) This shows that Werbin was employed by DTLA Law before February of 2021, DTLA knew of the conflict of interest since before that time, and thus, this new measure, which was implemented in December of 2021, was not timely.

As such, the Court finds the measure taken in this case is not sufficient to guarantee that information will not be conveyed and therefore, insufficient to show there was an effective ethical wall. 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. 

Conclusion 

Based on the foregoing, Defendant Costco’s motion to disqualify Downtown L.A. Law Group is GRANTED. 

Downtown L.A. Law Group is disqualified from representing Plaintiff Maria Velasco Rodas in this action. 

Moving party is ordered to give notice.