Rent-a-Cop

People ex rel City of San Diego v. Experian Data Corp., No. G060360 (D4d3 Apr. 26, 2022)

Some Plaintiff lawyers sued a credit rating agency and some related companies in federal court under the Fair Credit Reporting Act for selling the private data of 400,000 Californians to an outfit that turned out to be a front for a Vietnamese hacker. The case was dismissed on standing grounds. So the lawyers recruited the City Attorney of San Diego to bring a UCL litigation alleging basically the same facts. The City hired the Firms (three of them) under a 25% contingency fee deal. The terms of the retainer say that the City keeps ultimate control over the litigation, any settlement, etc. The Court goes out of its way to explain that the City Attorney took an active role in the litigation, e.g., it wrote key briefs and took depositions.

Upon learning of the contingency setup, Defendants moved to DQ the Firms, arguing that the contingency violated a prosecutor’s duty of neutrality. The trial court denied the motion and Defendants took a writ.

The Court of Appeal denies relief. The rules on contingencies and prosecutors are pretty settled. In a criminal case, they are per se barred. In a civil case, they are permitted, provided that (1) the case isn’t too criminal-ish so that the per se rule applies; (2) the actual government lawyers maintain full control over the litigation. 

On the first point, there are a pair of Supreme Court cases, twenty-five years apart, that explain the distinction. See County of Santa Clara v. Superior Court, 50 Cal.4th 35, 49 (2010); People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985). Clancy said a contingency was improper when the prosecution was a nuisance abatement action designed to shut down adult bookstores. Because the goal was to put people out of business, it was too much like a criminal action to permit a contingency. On the other hand, in Santa Clara, a nuisance case against the manufacturers of lead paint, the remedy was penalties and potential cleanup costs, but an injunction shutting down the businesses was not on the table. There, the Court found that, so long as the government lawyers maintained ultimate and operation control, a contingency is ok.

As the Court of Appeal sees it, this case is more like Santa Clara than Clancy. So a contingency fee is just fine.

The arrangement also doesn’t violate Business and Professions Code § 17206, which requires civil penalties to be used exclusively “for the enforcement of consumer protection laws.” As the Court sees it, paying lawyers a contingency fee to prosecute UCL civil penalty cases is for the enforcement of consumer protection laws.

Writ denied.

I don’t have any truck with the Court of Appeal’s legal analysis here. The case is more like Santa Clara. 

The issue I have, however, is that this kind of arrangement stinks of corruption. If the government lawyers are actually in control of the litigation, why are they giving a quarter of the recovery away to private lawyers? And why do they need three law firms?

My hunch here (and it is merely my surmise) is that there are a couple of things are going on at once: 

(1) Plaintiff lawyers are serving up prepackaged litigation to certain public prosecutoral agencies headed by elected officials—generally DAs and City Attorneys—holding it out as an easy buck. The agencies get most of the penalties. The plaintiff attorneys avoid the kind of standing rules that apply in regular civil litigation. (Aided by the Supreme Court’s 2020 decision in the Abbott Labs case, which says that any prosecutor who can enforce the UCL can sue and obtain penalties for violations statewide.) Plus they can obtain penalties that are only available in government-brought cases and take a contingency on them.

(2) The contingency fee avoids any out-of-pocket expenditure of public money, which gets around procurement rules that generally apply to government agencies. I would venture that there is zero chance that these legal arrangements are competitively bid.

(3) Some elected prosecutors’ campaign chests benefit from the benevolent largesse of said members the plaintiff bar. 

I don’t, as a matter of principle, take issue with the government occasionally hiring private lawyers to handle litigation. But there is a lot of money sloshing around in these private lawyer UCL penalty cases, and a lot of opportunity for graft. There’s certainly an appearance of it, at least. 

Plus, UCL civil penalty actions are rife with the potential for abuse. The penalty they afford is up to $2,500 per violation. But the courts steadfastly refuse to come to any fixed definition of what a “violation” is. It is ultimately in the eye of the trial judge. So plaintiffs have every reason to define violation broadly, such that they can claim that thousands or even hundreds of thousands of “violations” happen in any case. See this recent opinion for how it works.  

Even if the court doesn’t eventually buy it, being subject to a potential penalty in the billions of dollars that won’t get resolved until the court issues a post-trial statement of decision is a lot of pressure to bear. Delegating that kind of thing to contingency fee Plaintiff lawyers (even if the prosecutor needs to approve) is a lot of coercive power to put in the hands of a private actor with strong financial incentives. 

A legislative fix is needed. Don’t hold your breath.

Not that Special

Moreci v. Scaffold Solutions, Inc., No. A161193 (D1d2 Oct. 18, 2021)

A Plumber was injured when he fell from a construction scaffold. He sued ScaffCo. They settled. Under the terms of the settlement Plumber agreed to assume ScaffCo's defenses for any claims arising from the accident. Plumber’s employer Workers’ Comp Carrier—which had paid Plumber about $240k in benefits—intervened and crossclaimed against ScaffCo and one of the other contractors on the job site. The underlying case between Plumber and ScaffCo was dismissed. Subsequently, Plumber’s Lawyers associate in to defend ScaffCo in its litigation against WCC. 

WCC moves to disqualify Plumber’s Lawyers from repping ScaffCo. It argues that Plumber’s Lawyers can’t be allowed to switch sides like that. Substantively, that might be correct. But the problem with the argument is that to have standing to DQ a lawyer, you generally need to be a current or former client of that lawyer. Which WCC was not. So the trial court denied the motion. WCC appealed.

The Court of Appeal notes a split of authority regarding standing to bring a DQ. Under the so-called “majority rule,” only a client has standing. But under a “minority rule”—which appears to have developed largely in cases with very messy fact patterns—a non-client can have standing, but only if the attorney owed the non-client some kind of duty of confidentiality.

WCC tried to glom onto some of the language in a federal minority rule case that suggested that having a “personal stake” in a conflicted representation is enough to afford standing. According to WCC, it had such a stake because Plumber’s Lawyers have an advantage given all they know from representing Plumber. But the language from that case was discussing Article III notions. And it ultimately held that the movant lacked standing because the lawyer it sought to DQ didn’t owe the movant any duties and that neither a “broad interest in the administration of justice” nor a “tactical interest” that a failure to DQ will “increase [the opposing party’s] chances of losing this lawsuit” were adequate to convey standing. 

WCC also tried to argue that its relationship as Plumber’s Employer’s Workers Comp Insurer created some kind of special relationship that would give rise to standing. The discussion involves a bunch of substantive issues regarding workers’ comp law that are way out of my lane as a civ pro blogger. But at the end of the day, the Court of Appeal finds that the substantive law does not so closely align the interests of employer, employee, and insurer to create some kind of special or privy relationship that would permit them to raise each others’ rights. 

Affirmed.

Too Close for Combat

Doe v. Yim, No. B299856 (D2d4 Oct. 5, 2020) 

Eight months after her divorce became final, Mother, an attorney, represents her adult Daughter in an action alleging that her Ex-Husband sexually abused Daughter during the marriage while Daughter was a minor. Ex moves to DQ Mother, both under the attorney-witness rule and because Mother was privy to various marital confidences during her 17-year marriage to Ex. The trial court granted the motion.

The advocate-witness rule, currently codified as Rule of Professional Conduct 3.7, says an attorney cannot be an advocate in a trial where she is likely to be a witness unless the issue is minor or related to her fees. There’s an informed consent of the client exception, but the commentary explains that client consent isn’t enough of the representation will potentially mislead the jury or prejudice the opposing party. This can occur when, for instance, there can be confusion over when the attorney is testifying as to personal knowledge versus making arguments as an advocate. Further, although the rule is facially limited to trial representations, it has also been expanded to cover pre-trial testimony, as well as situations where it would reveal to the jury that a trial witness was, at one point, an advocate for one of the parties, such as taking and defending depositions. 

Here, there was no doubt that Mother would be a key trial witness on any number of highly contested topics. Given that, it was reasonable for the trial court to find that permitting her to participate as an advocate would be confusing to the jury or prejudicial, notwithstanding that Daughter might have given informed written consent. It was thus appropriate to DQ Mother from representing Daughter at trial, as well as in any pre-trial evidentiary hearings or depositions in the case.

Further, disqualification can also be ordered to protect against a lawyer’s running afoul of non-lawyer confidential or fiduciary relationships. Here, there is little doubt that much of what Mother knows and could testify to was obtained through communications over which Ex could invoke the martial communications privilege. See Evidence Code § 980. As an advocate, she further could use that knowledge to a strategic advantage in the litigation. Under the circumstances, disqualifying Mother as an attorney for Daughter was an appropriate prophylactic measure to prevent the potential misuse of confidential marital information.

Affirmed.

No Soul to Damn, No Body to Kick, and No Authority to Hire

Jarvis v. Jarvis, No. H044930 (D6 Mar. 19, 2019)

Interesting DQ question. It’s unusual in that it is about a conflict of authority, not a conflict of interest. 

No Bar Doesn't Bar DQ

O’gara Coach Co. v. Ra, No. B268730 (D2d7 Jan. 7, 2018)

This is kind of a tricky one. Attorney went to law school but didn’t take the bar. He eventually became the CEO of a Company that is the defendant in this case. Company doesn’t have a GC, but because of his law training, one of (then unlicensed) Attorney’s responsibilities is in interacting with Company various outside counsel. 

DQ Is an Equitable, Not Per Se, Standard

Antelope Valley Groundwater Cases, No. F078517 (D5 Dec. 20, 2018)

Firm represents two water districts. District 1 has been embroiled in a litigation for almost two decades. District 2—for which a Firm partner acted as outside general counsel—was originally not in that litigation. But it was eventually brought in, although it retained different counsel. For twelve years, Firm represented District 1 in the litigation and District 2 as its general counsel. The litigation resolved through a settlement that resulted in entry of judgment. A month later, District 2 terminated the GC relationship. And then six months after that, District moved to DQ Firm from representing District 1 in the litigation due to conflicts.  

Prophylaxis, Not Punishment

City of San Diego v. Superior Court, No. D073961 (D4d1 Dec. 19, 2018) 

Plaintiff is a detective, bringing some employment-related litigation with city’s police Department. Plaintiff’s lawyer also represents someone claiming that the Department fouled up a child sex assault investigation. As part of the leak investigation, Department's internal affairs interviewed Plaintiff, suspecting that she might be the leaker. The IAB folks ask about Plaintiff's conversations with her lawyer. Over her objections, they tell her―on insinuated threat of discipline―that she needs to answer. And she does. Some of these interviews were attended by a Deputy City Attorney. Plaintiff was repped in the interviews by a union lawyer, but her employment litigator was not present.

Plaintiff then moves to DQ the City Attorney’s office in the employment case, for invading her privilege. It not particularly debatable that City improperly violated Plaintiff’s attorney-client privilege. Moreover, because Deputy City Attorney participated in questioning Plaintiff about matters related to litigation when Plaintiff's lawyer wasn’t there, the Deputy violated Rule of Professional Conduct 2-100, which prohibits an attorney from communicating with a represented party.

That all said, a transcript of the interview was filed with the Court in camera. Whatever was elicited had nothing whatsoever to do with Plaintiff's employment case. Because DQ is premised on an opponent’s obtaining an unfair advantage, getting privileged, but irrelevant, info shouldn’t merit disqualifying the City Attorney's office. If there’s no prejudice to the ligation, whether the City Attorney should be subject to some sanction for violating the rules is not the Court’s role. That’s for the State Bar.

Affirmed.

State Farm/Rico DQ Order Automatically Stayed Pending Appeal

URS Corp. v. Atkinson/Walsh Joint Venture, No. G055271 (D4d3 Sept. 26, 2017)

Plaintiffs’ attorneys got disqualified under the State Farm/Rico doctrine for improperly using documents that had been provided to them in connection with a mediation. They have appealed that order and seek, by writ of supersedeas, to stay any proceedings in the trial court pending the appeal. Which raises some interesting questions: 

1. Does an appeal of a DQ order give rise to automatic stay under Code of Civil Procedure § 916? 

2. And if so, does it just stay the DQ order, or the whole case?

Conflicts and the Pretend Partnership

Lynn v. George, No. G053563 (D4d3 Sept. 21, 2017)

This case presents an interesting quandary about how to deal with a scenario where the facts relevant to a motion to disqualify a lawyer substantially overlap with the merits of the case where the DQ motion is brought.

State Fund Strikes Again

McDermott Will & Emery LLP v. Superior Court, No. G053623 (Apr. 18, 2017)

The underlying litigation in this writ is a malpractice case arising from messy probate fight over the control of a family office. It involves way too many names and a whole lot of factual detail, but I’ll try to simplify as best as I can, without losing the key flavor as relevant to the procedural issues, which deal with the disqualification of one party’s lawyers for failing to return privileged materials.

Client Conflicts Confound Counsel on Class Claims

Walker vs. _________, No. D069713 (D4d1 Oct. 28, 2016)

Counsel represents plaintiffs in two wage-and-hour class actions against the same Employer. The class in the first case is certified. A non-exempt Employee who is a member of the class in Case #1 subsequently got promoted to an exempt position as a low-level manager. She’s now a potential Employer witness in this second—yet-to-be-certified—class case. Indeed, she fired some of the employees in Class #2. So Employer moves to DQ Counsel in Case #2 on the grounds that he might have to cross examine his own client. The trial court agreed.

Undisclosed Conflicts Prevent Law Firm from Getting Paid

Sheppard, Mullin, Richter & Hampton LLP v. J-M Mfg. Co., Inc., No. B256314 (D2d4, as modified, Feb. 26, 2016)

Law Firm represented Client 1 in as a defendant in a qui tam litigation where the plaintiff/government agency intervenor was also arguably current client, albeit in totally unrelated labor and employment matters. There’s no specific waiver in Client 1’s retainer letter permitting Law Firm to represent the agency in unrelated cases. And given the current representation of an adverse party at the time the letter was signed, the general advance waiver that was in the letter was potentially inadequate to give the requisite informed consent. 

Conflicts and the Dissolving Partnership

Coldren v. Hart, King & Coldren, Inc., No. G050202 (D4d3 Aug. 5, 2015)

Departing Partner in a 50/50 two-partner law firm sued his Firm and his Remaining Partner over the terms of his retirement. Firm and Remaining Partner sued back. Remaining Partner and Firm were represented in the litigation by the same Attorney, who had never previously represented Firm or Departing Attorney. Departing Partner brought a DQ motion, claiming that Attorney couldn’t represent both Remaining Partner and the Firm—in which Departing Partner continued to claim his 50 percent stake. After waffling on the tentative, the trial court granted the motion. 

But the court of appeal reverses. The decision rests on two grounds.

Laches Applied to Evidentiary Exclusion Arising from 2003 Disqualification Order

City & County of San Francisco v. Cobra Solutions, No. A136679 (D1d5 Dec. 15, 2014)

In an earlier appeal—decided eight years ago!—the California Supreme Court held that the San Francisco City Attorney’s office was disqualified from representing the city and county in this case because City Attorney Dennis Herrera represented the defendant while in private practice. On remand, Cobra moved in limine to preclude the city from using any evidence obtained by the City Attorney’s Office during the three-year window between when it was DQed by the trial court and when the order was affirmed on appeal. The trial court denied the motion as untimely. The city proceeded to win a $24,000 verdict on its claims and a defense victory on Cobra’s cross-claims. Cobra appealed.

After noting an absence of California authority on the issue, and canvassing the law of other states, the court of appeal holds that “motions seeking to restrict the use of evidence, work product, or pleadings developed by disqualified counsel must be timely filed.” Here, Cobra could have sought restrictions back in 2006, right after the Supreme Court affirmed the disqualification. Based on the record evidence, Cobra knew that the City Attorney continued to participate in the case, albeit somewhat peripherally, from 2003 to 2006. Cobra’s delay raising the issue until the eve of trial six years later was unreasonable and to the prejudice of the city, which would have been deprived of alternative avenues of obtaining virtually all the evidence it needed to prove its case.

Affirmed.