Judge William A. Crowfoot, Case Number: 24NNCV05142, Date: 2025-01-28 Tentative Ruling

Judge: William A. Crowfoot, Case: 24NNCV05142, Date: 2025-01-28 Tentative Ruling

On October 17, 2024, plaintiffs Howard Jarvis Taxpayers Association and John Gregory Haines (“Plaintiffs”) filed this “reverse validation action” to invalidate defendant City of Pasadena’s (“Defendant”) water rates adopted on June 3, 2024 (“New Water Rates”). (Compl., ¶ 5.) Plaintiffs allege that the New Water Rates “force[] residential customers to subsidize the cost of service provided to commercial customers”, thereby violating Article XIII D, § 6(b)(3) of the California Constitution (“the Proportionality Requirement”), which was added to the Constitution via Proposition 218 in 1996 (Compl., ¶¶ 1-2, 6.)

On December 23, 2024, Defendant filed this motion to disqualify Plaintiffs’ counsel, Jonathan M. Coupal, Timothy A. Bittle, Laura E. Doughtery, Amy C. Sparrow (“Ms. Sparrow”), and “any other attorney associated with the Howard Jarvis Taxpayer Association ‘firm’.” (Motion, p. 2.) Defendant argues that Ms. Sparrow has a disqualifying conflict of interest because she previously represented Defendant in a substantially related matter and that this conflict is imputed onto her co-counsel.

Code of Civil Procedure section 128 (a)(5) authorizes the 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.”¿ This authority necessarily includes disqualifying an attorney. (Metro-Goldwyn Mayer, Inc. v. Tracinda Corp. (1995) 36 Cal.App.4th 1832, 1837–1838.) Disqualification “involves a conflict between the clients' right to counsel of their choice and the need to maintain ethical standards of professional responsibility.” (Id., p. 1838.) “The paramount concern, though, must be the preservation of public trust in the scrupulous administration of justice and the integrity of the bar. The recognized and important right to counsel of one's choosing must yield to considerations of ethics that run to the very integrity of our judicial process.” (Ibid.) “Whether an attorney should be disqualified is a matter addressed to the sound discretion of the trial court.” (Henriksen v. Great Am. Sav. & Loan (1992) 11 Cal.App.4th 109, 113.) “In exercising that discretion, the trial court is required to make a reasoned judgment which complies with the legal principles and policies applicable to the issue at hand.” (Ibid.)

“[W]here a former client seeks to have a previous attorney disqualified from serving as counsel to a successive client in litigation adverse to the interests of the first client, the governing test requires that the client demonstrate a ‘substantial relationship’ between the subjects of the antecedent and current representations.” (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283 [emphasis in original].) “Where the requisite substantial relationship between the subjects of the prior and the current representations can be demonstrated, access to confidential information by the attorney in the course of the first representation (relevant, by definition, to the second representation) is presumed and disqualification of the attorney’s representation of the second client is mandatory; indeed, the disqualification extends vicariously to the entire firm.” (Id. [emphasis in original].) The Court considers three (3) factors in applying the substantial relationship test: “(1) factual similarities between the two representations, (2) similarities in legal issues, and (3) the nature and extent of the attorney’s involvement with the case and whether he was in a position to learn of the client’s policy and strategy.” (Adams v. Aerojet-General Corp. (2001) 86 Cal.App.4thh 1324, 1332.) The subject of a current representation is substantially related to the subject of a prior representation only if the issues are sufficiently similar to support a reasonable inference that the attorney in the course of the prior representation was likely to have obtained confidential information material to the current representation. (Fremont Indemnity Co. v. Fremont General Corp. (2006) 143 Cal. App. 4th 50, 67.)

While the party seeking disqualification need not disclose the actual confidential information, conclusory statements are insufficient to support disqualification. (Elliott v. McFarland Unified School Dist. (1985) 165 Cal.App.3d 562, 572.) Mere knowledge of a former client's general business practices or litigation philosophy is insufficient to require disqualification. (Banning Ranch Conservancy v. Sup.Ct. (City of Newport Beach) (2011) 193 Cal.App.4th 903, 918.) “The presumption that former counsel possesses confidential information is triggered only if there is a substantial risk that confidential information would be used in the current representation.” [Victaulic Co. v. American Home Assur. Co. (2022) 80 Cal.App.5th 485, 511-512 [law firm that represented insured in coverage dispute not required to be disqualified after hiring attorney who was previously employed by firm that represented entity related to insurers].)

“Once the moving party in a motion for disqualification has established that an attorney is tainted with confidential information, a rebuttable presumption arises that the attorney shared that information with the attorney's law firm. The burden then shifts to the challenged law firm to establish ‘that the practical effect of formal screening has been achieved. The showing must satisfy the trial court that the [tainted attorney] has not had and will not have any involvement with the litigation, or any communication with attorneys or…employees concerning the litigation, that would support a reasonable inference that the information has been used or disclosed.’ ” (Kirk v. First American Title Ins. Co. (2010) 183 Cal.App.4th 776, 809-10.)¿

Defendant contends that disqualification is necessary because between May 19, 2021, to January 31, 2022, Plaintiffs’ counsel, Ms. Sparrow, was previously employed as senior counsel to Colantuono, Highsmith and Whatley, PC (“CHW”) and billed 45 hours over 8 months to a matter involving Defendant’s water rate restructuring. (Motion, p. 6.) Defendant claims, without evidence, that Ms. Sparrow’s “advice on water rate restructuring is closely related to the update to those restructured rates she challenges here.” (Motion, p. 14.) Defendant states that Ms. Sparrow’s timesheets from CHW show that she “communicated directly with [Defendant’s] staff and its rate making consultant regarding the restructuring of [Defendant]’s water rates in phone calls and emails, reviewed and analyzed [Defendant]’s then-existing COSA [Cost-of-Service Analysis], and ultimately contributed to a letter regarding the restructuring’s compliance with Proposition 218.” (Motion, p. 14; McAleer Decl., Ex. 2.) Defendant contends that Ms. Sparrow’s direct involvement necessitates a presumption that confidential information was received.

In opposition, Plaintiffs argue that disqualification is unnecessary because Ms. Sparrow’s work for the 2022 COSA merely involved reviewing spreadsheets reflecting updated costs. Plaintiffs argue that Ms. Sparrow’s earlier work is irrelevant to the current action seeking to invalidate the New Water Rates because the New Water Rates were developed based on a report prepared by consulting firm Raftelis (“Raftelis Report”), a public document that was drafted after Ms. Sparrow left CHW’s employ. (Opp., p. 8.)

To justify disqualification, the evidence must show that the attorney acquired confidential information and not merely general information about the former client. (Khani v. Ford Motor Co. (2013) 215 Cal.App.4th 916, 921-922.) 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. (Id.)

Here, Defendant attached a copy of the Raftelis Report as Exhibit A to the McKleer Declaration. The Court notes that pages 10 through 13 extensively detail the prior methodology used to calculate water rates. Defendant’s unsupported assertion that each ratemaking cycle builds on earlier ratemaking is too conclusory and further undercut by the Raftelis report’s acknowledgement that the “last structural adjustment to rates was in 2009” and that only “[c]ost of service compliance studies were completed in 2015, 2018, and 2022.” (Ex. A, p. 9; see also Turrieta v. Lyft, Inc. (2024) 16 Cal.5th 664 [“‘[I]t is axiomatic that statements made in briefs are not evidence’ [Citation.]”].) Given that it does not appear that Ms. Sparrow’s previous work for Defendant is confidential or substantially related to the New Water Rates which are structurally different, it does not appear that disqualification is required. (McKleer Decl., Ex. A, pp. 9-14.)

Moreover, the Court rejects Defendant’s attempts to insinuate that Ms. Sparrow is still in possession of Defendant’s confidential materials or that any confidential materials were surreptitiously retained. Ms. Sparrow declares that any files located at her house were due to the fact that in 2015, CHW asked her to work from home so that a junior attorney could use her office. (Sparrow Decl., ¶ 2.) Ms. Sparrow also declares that she offered to give CHW notebooks that she later found, which contained solutions to calculus exercises, shopping lists, holiday recipes, and other irrelevant information. (Sparrow Decl., ¶¶ 5-7.) Additionally, Ms. Sparrow stated in an email that these notebooks had “handwritten notes from the 2017-2020 time period”, predating the timesheet entries identified by Defendant and submitted in support of its motion.

In light of the foregoing, the motion to disqualify Plaintiffs’ counsel is DENIED.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@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.