Judge: Virginia Keeny, Case: 23STCV21994, Date: 2025-04-21 Tentative Ruling

Case Number: 23STCV21994    Hearing Date: April 21, 2025    Dept: 45

REALTEK SEMICONDUCTOR CORP., ET AL.
v. WINSTON & STRAWN, LLP, ET AL.

special Motion to strike under CCP § 425.16

AND CONCURRENT MOTION TO SEAL EXHIBITS

Date of Hearing:        April 21, 2025                                     Trial Date:       None set.

Department:              45                                                        Case No.:        23STCV21994

Moving Party:            Defendants Winston & Strawn, LLP and David P. Enzminger

Responding Party:     Plaintiffs Realtek Semiconductor Corp. and Steven Baik

BACKGROUND

Plaintiffs Realtek Semiconductor Corp. (“Realtek”) and Steven Baik (“Baik”) (together “Plaintiffs”) filed this action against defendants Winston & Strawn, LLP (“Winston”) and David Paul Enzminger (“Enzminger”) (together “Defendants”) on September 12, 2023. The operative second amended complaint (“SAC”) was filed on March 11, 2024. The SAC asserts two claims for breach of fiduciary duty, one for legal malpractice, and one for breach of contract, all arising from Winston’s alleged representation of Realtek and/or Baik while concurrently representing a party adverse to them in a proceeding before the International Trade Commission (“ITC”).

Plaintiffs allege as follows in their SAC:

Realtek is a Taiwan-based company that designs and sells integrated circuits for various uses. (SAC, ¶ 12.) Baik represents Realtek as outside counsel. (Id., ¶ 15.)

Defendants Winston and Enzminger are a law firm and firm partner, respectively, who represented Realtek in several matters between 2014 and 2023. (Id., ¶¶ 3, 19-23.) As alleged, Defendants then began representing a different client, nonparty Advanced Micro Devices (“AMD”), adverse to Realtek in proceedings before the ITC (“AMD Investigation”). (Id., ¶ 24.)

Plaintiffs allege Defendants breached various professional duties owed to them when it undertook to represent AMD.

Plaintiffs’ claims arise from the intersection of three disputes: first, an ITC Investigation involving Realtek and nonparty LSI Corporation/Avago Technologies, Ltd. (“LSI/Avago” and “the LSI/Avago Investigation”), in which Defendants represented Realtek (SAC, ¶ 13); second, litigation between nonparty corporations Krafton, Inc. (“Krafton”) and NetEase (“the Krafton Litigation”), while Baik was serving as Krafton’s general counsel and Defendants represented Krafton as litigation counsel (id., ¶ 30); and third, crucially, the AMD Investigation, wherein Realtek was the complainant and Defendants represented AMD (id., ¶ 14).

The LSI/Avago Investigation began when Realtek filed a complaint with the ITC regarding LSI/Avago’s alleged infringement of certain of Realtek’s patents. (See SAC, ¶ 18 [“claims on Realtek’s behalf against LSI”].) Baik was Realtek’s outside litigation counsel at that time. (Id.) Defendants counseled Realtek throughout the LSI/Avago Investigation, partly at Baik’s recommendation. (Id.) Baik was the primary negotiator for Realtek throughout the LSI/Avago Investigation. (Id., ¶ 21) Realtek, Baik, and Realtek’s General Counsel, Gina Hung, consulted with . . . Defendants [during the LSI/Avago negotiations] and kept them abreast concerning the progress of mediation and settlement discussions. . . . Amongst other things, Baik spoke with Defendant Enzminger and other Winston attorneys about whether to settle with LSI or increase leverage by pursuing further litigation with LSI. In addition, Gina Hung traveled to New York in November 2014 and met with Defendant Enzminger at which they discussed the LSI/Avago Investigation[ ] and negotiations relating to a global settlement between Realtek and LSI/Avago.” (Id., ¶ 21.)

The LSI/Avago Investigation settled in 2015. (Id., ¶ 15.)

After the LSI/Avago settlement, “Winston attorneys and Realtek representatives continued communicating between 2015 and 2022, including consulting with Realtek concerning at least one of the patents at issue in the LSI/ Avago Investigations . . . .” (Id., ¶ 23.) Defendants also “represented Realtek and a subsidiary in patent litigation in 2019.” (Id., ¶ 13.) Defendants undertook that representation pursuant to an engagement agreement, which the parties expressly framed in broad terms to “provide for a ‘long term relationship’ . . . and address future conflicts of interest[.]” (Id., ¶¶ 23, 30, and Exh. A [engagement agreement].)

Defendants also represented Krafton in its litigation with NetEase. (Id., ¶ 30.) Baik had represented Krafton as its general counsel during relevant settlement negotiations, and it was expected he would be called as a witness at trial. (Ibid.) Defendants also represented Baik as a witness in connection with their representation of Krafton. (Ibid.)

On August 19, 2022, Realtek filed a patent infringement complaint against AMD in federal court (“AMD Lawsuit”). (Id., ¶ 24.) On September 14, 2022, Defendants appeared for AMD in the AMD Lawsuit. (Ibid.) Plaintiffs objected. (Ibid.)

On December 12, 2022, Realtek filed a complaint against AMD with the ITC (“AMD Investigation”). (Id., ¶ 26.) Realtek asserted substantially the same infringement claims in the AMD Lawsuit and AMD Investigation. (Id., ¶ 27.) On December 27, 2022, Defendants appeared for AMD in the AMD Investigation. (Ibid.) Plaintiffs objected. (Ibid.)

The Krafton Litigation was still pending in 2022 and 2023. (See id., ¶¶ 30-31.) NetEase took Baik’s deposition in February 2023. (Id., ¶ 31.) Defendant Enzminger prepared Baik for and represented him during the deposition “as both the designated witness and as an individual.” (Ibid.)

On April 24, 2023, the federal district court stayed the AMD Lawsuit pending resolution of the AMD Investigation. (Id., ¶ 29.)

On April 27, 2023, Enzminger represented Baik at a second deposition session in the Krafton Litigation. (Id., ¶ 31.)

Defendants did not disclose any actual or potential conflict of interest to Baik arising from their concurrent representation of Baik, Krafton, and AMD, nor did they seek Baik’s informed consent to any possible conflict. (Id., ¶ 32.) Defendants never disengaged as Baik’s counsel. (Id., ¶ 33.) Trial in the Krafton Litigation took place in 2023; Baik was not ultimately called as a witness. (Ibid.) The Krafton Litigation settled in November 2023. (Ibid.)

On May 22, 2023, Realtek designated Baik in the AMD Investigation as the person most knowledgeable regarding the LSI/Avago Settlement. (Id., ¶ 34.) Realtek notified Defendants that their concurrent representation of Baik in the Krafton Litigation and AMD in the AMD Investigation posed an actual conflict of interest, particularly because Defendants’ attorneys were expected to question Baik, their client, at deposition. (Id., ¶ 34.) In response, Defendants denied they had ever represented Baik. (Id., ¶ 35.)

Defendants then moved to strike Baik from testifying in the AMD Investigation, thereby “[seeking] judicial assistance to prejudice their own client Baik and prevent Baik from fulfilling his obligations to Realtek. . . . Defendants further, on behalf of AMD, attacked the credibility of Baik as a witness [in the AMD Investigation] in direct conflict with their identification and proffer of Baik as a witness in the Krafton Litigation.” (Ibid.)[1]

Finally, Plaintiffs allege defendant Winston hired one of Realtek’s prior attorneys, Ryuk Park, in 2022, and Park possesses confidential and privileged information relevant to the AMD investigation that poses a separate actionable conflict of interest for Winston. (Id., ¶¶ 42-45.)

Plaintiffs sued on September 12, 2023 and filed their operative SAC on March 11, 2024.

Defendants now specially move to strike the bulk of Plaintiffs’ SAC pursuant to Code of Civil Procedure section 425.16, California’s “anti-SLAPP” statute. The parties stipulated that Plaintiffs could file the SAC and that Defendants could challenge it via special motion to strike.

Defendants filed their motion on March 25, 2024. After several continuances, during which the Court granted leave for Plaintiffs to conduct discovery, Plaintiffs filed their opposition on April 9, 2025.

Concurrently with their opposition, Plaintiffs have moved to seal certain exhibits. The Court discusses that motion among the evidentiary matters below.

[Tentative] Ruling

Plaintiffs’ Motion to Seal Exhibits is GRANTED.

Defendants Winston & Strawn, LLP and David P. Enzminger’s Special Motion to Strike Plaintiffs’ Second Amended Complaint Pursuant to CCP § 425.16 is DENIED.

MOTION TO SEAL

“Unless confidentiality is required by law, court records are presumed to be open.” (Cal. Rules of Court, rule 2.550(c).) “Once parties file documents in court for adjudication in ordinary civil cases, the records become public.” (McNair v. National Collegiate Athletic Assn. (2015) 234 Cal.App.4th 25, 35.)

Notwithstanding the presumption in favor of open records, the court may order a record be filed under seal if – and only if – the court expressly finds the following facts have been established:

(1)       There exists an overriding interest that overcomes the right of public access to the record;

(2)        The overriding interest supports sealing the record;

(3)        A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;

(4)        The proposed sealing is narrowly tailored; and

(5)        No less restrictive means exist to achieve the overriding interest.

(Cal. Rules of Court, rule 2.550(d).)

Plaintiffs have filed four exhibits under seal. Plaintiffs’ unopposed motion establishes that the exhibits proposed for sealing contain confidential business information (“CBI”) including the trade secrets and proprietary information of plaintiff Realtek and other third parties. In fact, certain of these documents have been subject to protective orders in other litigation at the request of nonparties to this one.

The rights of third parties and the protection of CBI overcome the right of public access; there is no apparent prejudice to the public interest wrought by sealing the records, and prejudice to Realtek and nonparties would be substantial were the exhibits revealed to public view. The proposed sealing is limited to four exhibits, and it is not clear that any more narrowly-tailored sealing could accomplish the interest in protecting Realtek and nonparties’ intellectual property.

Plaintiffs’ Motion for an Order Sealing Records is GRANTED.

REQUEST FOR JUDICIAL NOTICE

Plaintiffs request the court take judicial notice of ten (10) documents from the various legal proceedings at issue in the SAC. The request is granted. The Court takes notice only of the documents’ filing and existence, not the truth of their contents. (Garcia v. Sterling (1985) 176 Cal.App.3d 17, 22.)

EVIDENTIARY OBJECTIONS

Neither party objected to the other’s evidence.

DISCUSSION

Code of Civil Procedure section 425.16 provides that “[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or California Constitution in connection with a public issue shall be subject to a special motion to strike unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (CCP § 425.16(b).) Such a motion involves a two-step analysis, in which the court must first determine whether a movant “has made a threshold showing that the challenged cause of action is one arising from protected activity ...” (Taus v. Loftus (2007) 40 Cal.4th 683, 712, quoting Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) If the court so finds, it must then examine whether the respondent has demonstrated a probability of prevailing on the claim. (Taus, supra, 40 Cal.4th at p. 712.) In determining whether the plaintiff has carried this burden, the trial court considers “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (CCP § 425.16(b)(2); see Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291.)

Protected Conduct

An act in furtherance of a person's right to petition or free speech under the United States Constitution or California Constitution includes “(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.”  (CCP § 425.16(e).)

Defendants argue, as an initial matter, that Plaintiffs’ claims arise from Defendants’ conduct while representing another client – ADM. Relying on this premise, Defendants assert Plaintiffs’ claims arise from protected activity as a matter of settled law.

The law is not so clear; the Court disagrees with Defendants’ premise.

Defendants rely on PrediWave v. Simpson Thacher & Bartlett LLP (2009) 179 Cal.App.4th 1204 (PrediWave) and Thayer v. Kabateck Brown Kellner LLP (2012) 207 Cal.App.4th 141, 158. Both are distinguishable.

Thayer was not a malpractice suit. The case was not brought by the law firm defendants’ former client. Rather, the plaintiff’s relationship to those defendants relied on her husband’s alleged prior relationship with the defendants, and the court found she was not a third-party beneficiary of that agreement. (Thayer, supra, 207 Cal.App.4th, at pp. 154-155 [first prong], 159-160 [second prong].) Thayer was not a suit brought by a current or prior client relying on breaches of professional duties, like the one here.

In PrediWave, the Court declined to apply anti-SLAPP protections in the context of a plaintiff’s suit against its own attorney for alleged misconduct perpetrated while the attorney still represented the plaintiff. (PrediWave, supra, 179 Cal.App.4th, at p. 1228.) The PrediWave court described three hypothetical categories of claims: (1) claims by clients against their attorneys for misconduct while representing the clients themselves; (2) claims brought by clients for misconduct while representing other clients; and (3) claims by third parties. (Id., at p. 1227.) But PrediWave found the plaintiff’s claims there fell into its “category (1)”; to the extent the court discussed the other two categories, its observations are dicta.

Thayer then restated (perhaps overstated) PrediWave’s rule in absolute terms to mean that PrediWave’s category (1), (2), and (3) claims (1) are, (2) are not, and (3) are not subject to anti-SLAPP protection, respectively. (Thayer, supra, 207 Cal.App.4th, at p. 158.) But in Thayer, the plaintiff was not the defendants’ client, so her claim fell into category (3).

Plaintiffs allege they were Defendants’ clients, or at least their recent prior clients, at relevant times. They sue in part based on misconduct committed while representing other clients. Neither PrediWave nor Thayer provides binding authority on how the Court should treat such claims.

In contrast, cases decided shortly before and since PrediWave and Thayer require the Court to reach the opposite result where, as here, a client sues its attorney for conflicts of interest that manifest while the attorney is representing a different client – either before or after the representation has ended.

In Benasra v. Mitchell Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179, the Court of Appeal found a suit based on breach of the duty of loyalty did not implicate the anti-SLAPP statute because “once the attorney accepts a representation in which confidences disclosed by a former client may benefit the new client due to the relationship between the new matter and the old, he or she has breached a duty of loyalty. The breach of fiduciary duty lawsuit may follow litigation pursued against the former client, but does not arise from it.” (Benasra, supra, at p. 1189.)

Benasra cuts off the anti-SLAPP analysis before it reaches the nature of a defendant’s conduct  as described in section 425.16(e).) Instead, Benasra focuses on the conditional language in section 425.16(b)(1): before any definition in subdivision (e) applies, the moving defendant must establish a plaintiff asserts “[a] cause of action against a person arising from” acts in furtherance of free speech (emphasis added). Claims for breach of an attorney’s duties do not, held Benasra, generally “arise from” free speech activities. Whether subsequent conduct on behalf of other clients falls within subdivision (e) is irrelevant.

Drawing on Benasra, courts reached similar results in Sprengel v. Zbylut (2015) 241 Cal.App.4th 140, 155 [collecting precedents, including Benasra]; Freeman v. Schack (2007) 154 Cal.App.4th 719, 733 (Freeman) [citing Benasra]; Castleman v. Sagaser, (2013) 216 Cal.App.4th 481, 491-492 [citing Benasra and Freeman]; Loanvest I, LLC v. Utrecht (2015) 235 Cal.App.4th 496, 504-505 [suits against attorneys for breach of professional duties do not implicate anti-SLAPP policies]; Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1272-1274 [citing Freeman]; and Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1537-1539 [citing Benasra].

The vast weight of precedent is against Defendants on the facts before the Court. Their reliance on PrediWave and Thayer is unpersuasive in the face of numerous other (mostly later) courts’ reasoning. Where, as here, a plaintiff’s claims arise from breach of duties of confidentiality and loyalty, the fact that the vehicle for that breach includes litigation activity on behalf of another client does not render an attorney’s alleged misconduct subject to anti-SLAPP protection per se, as it might for an entirely unrelated third party suing under the same circumstances (see Thayer).

It is Defendants’ burden, at the first stage, to show Plaintiffs claims arise from protected activity. They have not.

Defendants’ papers pivot straight from PrediWave and Thayer, with little discussion, to the question of Plaintiffs’ probability of prevailing. They spend little, if any, time directly applying the “arising from” question to the facts in the record.  Nonetheless, some inquiry into the facts remains necessary.

“In deciding whether the ‘arising from’ requirement is met, a court considers ‘the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’ ([Code Civ. Proc., § 425.16, subd. (b).)” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.)

Plaintiffs’ exhibits demonstrate defendant Enzminger stated at a deposition in the Krafton Litigation as recently as April 2023 that he represented Baik. (See P.Exh. 41, at p. EA360.) In the moving papers, Enzminger states he “appeared on behalf of Krafton Inc . . . not . . . for Mr. Baik personally.” (Enzminger Decl., ¶ 4.) The deposition transcript states differently. As to Realtek, Gina Hung (general counsel) attests credibly, with supporting documents, to Realtek’s attorney-client relationship with Defendants from 2014 through at least 2019, possibly 2022. (Hung Decl., ¶¶ 5-48 and Exhs. 7-17.) This is sufficient to show that Plaintiffs’ claims arise from bona fide allegations that Defendants breached their duties, not simply from Defendants’ conduct undertaken on behalf of AMD.

The Court does not proceed to Plaintiffs’ probability of prevailing, because Defendants have not carried their burden to show they are protected by the anti-SLAPP statute in the first instance.

Based on the foregoing, the court DENIES Defendants Winston & Strawn, LLP and David P. Enzminger’s Special Motion to Strike Plaintiffs’ Second Amended Complaint Pursuant to CCP § 425.16.