Opinion
B300411
10-02-2020
KATIE O'CONNELL MARSH, Plaintiff, Cross-defendant and Respondent, v. GAUMONT TELEVISION USA, LLC, Defendant, Cross-complainant and Appellant.
Plonsker Law, Michael Plonsker, Rex D. Glensy; Sheppard, Mullin, Richter & Hampton, James E. Curry, Emerson B. Luke; Kendall Brill & Kelly, Laura W. Brill, Amanda D. Barrow; Loeb & Loeb, James E. Curry and Camron Dowlatshahi for Defendant, Cross-complainant, and Appellant. Kasowitz Benson Torres, John V. Berlinski, Daniel A. Saunders, Alexandra E. Siegel and Amy M. Stern for Plaintiff, Cross-defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC691790) APPEAL from an order of the Superior Court of Los Angeles County, Holly J. Fujie, Judge. Affirmed. Plonsker Law, Michael Plonsker, Rex D. Glensy; Sheppard, Mullin, Richter & Hampton, James E. Curry, Emerson B. Luke; Kendall Brill & Kelly, Laura W. Brill, Amanda D. Barrow; Loeb & Loeb, James E. Curry and Camron Dowlatshahi for Defendant, Cross-complainant, and Appellant. Kasowitz Benson Torres, John V. Berlinski, Daniel A. Saunders, Alexandra E. Siegel and Amy M. Stern for Plaintiff, Cross-defendant and Respondent.
Defendant and cross-complainant Gaumont Television USA LLC (Gaumont) appeals from an order denying its motion to disqualify John Berlinski and the law firm of Kasowitz Benson Torres LLP (the Kasowitz firm) from representing plaintiff and cross-defendant Katie O'Connell Marsh (Marsh) in this action. We affirm.
FACTUAL SUMMARY AND PROCEDURAL HISTORY
Marsh was Gaumont's Chief Executive Officer (CEO) from September 2010 to September 2015. Richard Frankie was Gaumont's Chief Operating Officer ("COO") for some time prior to September 2013. Frankie, who is not an attorney, was responsible for overseeing Gaumont's business and legal affairs.
In September 2015, Marsh and Gaumont entered into an agreement terminating their employment relationship (the separation agreement).
In January 2018, Marsh sued Gaumont. At all relevant times, Berlinski and the Kasowitz firm represented Marsh, and Michael Plonsker and Plonsker Law LLP represented Gaumont.
Marsh's original complaint is not part of our record on appeal.
On April 17, 2019, Plonsker informed Berlinski by email that he intended to take depositions of certain nonparties, including Frankie. In that email, Plonsker asked Berlinski to let him know if Berlinski will be representing any of the listed nonparties. The next day, Berlinski told Plonsker that the Kasowitz firm intended "to represent everyone" on the list, with the exception of one business entity.
On May 23, 2019, Berlinski confirmed to Plonsker that the Kasowitz firm is representing Frankie and will accept service of his deposition subpoena. Berlinski further requested that, because Frankie "is represented," Plonsker "stop trying to contact him."
On July 15, 2019, the parties stipulated to Marsh's filing of a first amended complaint and to Gaumont's filing of a cross-complaint. In the amended complaint, Marsh alleged, among other causes of action, that Gaumont had breached the separation agreement by failing to pay her what Gaumont owes her. In its cross-complaint, Gaumont alleged, among other causes of action, that Marsh had breached the confidentiality provision in the separation agreement.
Plonsker took Frankie's deposition on July 17, 2019. Frankie stated that Berlinski had contacted him in mid-2018 to consult with Frankie on a matter unrelated to Gaumont. About eight weeks prior to his deposition—around mid-May 2019—Plonsker attempted to contact Frankie and left a voicemail message for him regarding a deposition for Gaumont. Frankie then contacted Berlinski because, Frankie said, he is "usually . . . represented when it comes to a deposition." At that time, Frankie retained Berlinski as his counsel. Berlinski was not representing Frankie for any purpose other than the deposition.
Frankie had not spoken with Marsh about the lawsuits and, when he was deposed, could not recall whether he knew at the time he retained Berlinski that the Kasowitz firm represented Marsh.
Frankie had two telephone conversations with Berlinski and one in-person meeting prior to the deposition. He did not speak with any other attorney at the Kasowitz firm. Each of the telephone calls lasted "just minutes." The in-person meeting took place five days before the deposition. During the meeting, Berlinski showed Frankie documents, which he reviewed. During his deposition, Frankie could not recall which documents he reviewed other than his employment and separation agreements.
Frankie testified that he considered that, during his employment with Gaumont, his communications with Gaumont's in-house and outside counsel were privileged and confidential. He also considered that the work he did for Gaumont was confidential unless it had been previously disclosed to the public. Frankie understood that he has an obligation not to disclose any privileged or confidential information to anyone outside of Gaumont. When asked if he had "disclosed any of that privileged or confidential information to anybody [¶] . . . [¶] . . . [o]utside of Gaumont," Frankie responded, "The answer is no." Frankie also acknowledged that Gaumont had not given him approval to disclose such privileged or confidential information.
When asked if he had disclosed any privileged or confidential information to Berlinski, Berlinski instructed Frankie not to answer based on the attorney-client privilege. Frankie did not answer. Questions as to particular subjects about which Berlinski may have asked Frankie were also met with similar instructions from Berlinski and nonanswers from Frankie.
Frankie testified that he did not believe he was cooperating with either Marsh or Gaumont in connection with this case.
The deposition, which began at 10:02 a.m., was suspended at 1:04 p.m. by Berlinski and Frankie without concluding.
During oral argument, counsel informed this court that Frankie's deposition has not reconvened and that neither Berlinski nor the Kasowitz firm presently represents Frankie, who has obtained other counsel.
On July 22, 2019, five days after the deposition, Plonsker informed Berlinski that he intended to move to disqualify the Kasowitz firm from representing Marsh in this case based on the firm's representation of Frankie at the deposition.
On August 1, 2019, Gaumont filed its motion to disqualify Berlinski and the Kasowitz firm. Gaumont argued that, under the circumstances in this case, the law presumes that Frankie had disclosed to Berlinski confidential, privileged, and material information Frankie acquired during his employment with Gaumont. Gaumont asserted that because Marsh cannot rebut the presumption, Berlinski and the Kasowitz firm must be disqualified.
Marsh opposed the motion on the grounds that Frankie did not disclose any confidential or privileged information to Berlinski and, even if he did, the presumption Gaumont relied on does not apply when, as here, the disclosure was made by a former employee of a party who becomes a client of the lawyer whose disqualification is sought. Marsh further argued that Gaumont had waived its right to disqualify Marsh's counsel by its delay in bringing the motion.
The court denied the motion on August 23, 2019. Gaumont timely appealed.
DISCUSSION
Trial courts have the power to disqualify counsel under their inherent power "[t]o control in furtherance of justice, the conduct of its ministerial officers." (Code Civ. Proc., § 128, subd. (a)(5); see People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145 (SpeeDee Oil).) The decision whether to disqualify a lawyer or law firm ordinarily involves consideration of "several important interests," including "the clients' right to counsel of their choice, an attorney's interest in representing a client, the financial burden on the client of replacing a disqualified counsel, and any tactical abuse underlying the disqualification proceeding." (In re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, 585-586 (Complex Asbestos).)
Here, the effect of disqualification in this case would necessarily deprive Marsh of her right to counsel of her choice and of the Kasowitz firm's interest in representing her. It would also impose some measure of financial burden on Marsh in replacing the Kasowitz firm. Regardless of whether Gaumont filed its motion as a means of "tactical abuse," consideration of these interests weigh in favor of the court's exercise of discretion in denying the motion.
As Gaumont asserts, however, in deciding whether to disqualify a party's lawyer, the court must consider the "paramount concern" of preserving "public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one's choice must yield to ethical considerations that affect the fundamental principles of our judicial process." (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.)
According to Gaumont, the paramount ethical consideration in this case is protecting the confidentiality of communications between attorneys and clients; more particularly, the confidentiality of communications between Gaumont's attorneys and Gaumont (acting through Frankie as its COO). Gaumont contends that protecting such confidentiality by disqualifying Marsh's lawyers is supported by Complex Asbestos and Shadow Traffic Network v. Superior Court (1994) 24 Cal.App.4th 1067 (Shadow Traffic).
In Complex Asbestos, a paralegal worked for Brobeck, Phleger & Harrison (Brobeck), a law firm that represented defendants in asbestos litigation cases. (Complex Asbestos, supra, 232 Cal.App.3d at p. 580.) The plaintiffs in some of those cases were represented by "the Harrison firm." (Id. at pp. 582-583.) While working for Brobeck, the paralegal acquired "confidential attorney-client information, materially related to the cases" involving the Harrison firm's clients, then left Brobeck to work, eventually, for the Harrison firm. (Id. at pp. 597-598.) Certain defendants in the asbestos litigation filed a motion to disqualify the Harrison firm, which the court granted. (Id. at pp. 583-585.)
In affirming the order, the Court of Appeal established a methodology "for disqualification based on nonlawyer employee conflicts of interest." (Complex Asbestos, supra, 232 Cal.App.3d at p. 596.) "The party seeking disqualification must show that its present or past attorney's former employee possesses confidential attorney-client information materially related to the proceedings before the court. The party should not be required to disclose the actual information contended to be confidential. However, the court should be provided with the nature of the information and its material relationship to the proceeding. [Citation.] [¶] Once this showing has been made, a rebuttable presumption arises that the information has been used or disclosed in the current employment. The presumption is a rule by necessity because the party seeking disqualification will be at a loss to prove what is known by the adversary's attorneys and legal staff. [Citation.] To rebut the presumption, the challenged attorney has the burden of showing . . . that the employee has not had and will not have any involvement with the litigation, or any communication with attorneys or co[-]employees concerning the litigation, that would support a reasonable inference that the information has been used or disclosed. If the challenged attorney fails to make this showing, then the court may disqualify the attorney and law firm." (Ibid.)
This method was applied in Shadow Traffic. In that case, a law firm representing Metro Traffic Control, Inc. (Metro) met with Deloitte & Touche accountants to discuss the possibility of engaging the accountants as expert witnesses in connection with Metro's litigation against Shadow Traffic Network. (Shadow Traffic, supra, 24 Cal.App.4th at p. 1071.) Metro's attorneys decided not to retain the Deloitte & Touche accountants. The law firm representing Shadow Traffic thereafter retained one of the Deloitte & Touche accountants who had met with Metro's lawyers. Upon learning of this, Metro filed a motion to disqualify the law firm representing Shadow Traffic. The trial court granted the motion and the Court of Appeal rejected Shadow Traffic's petition for writ of mandate. The court determined that Metro's lawyers had communicated to the accountants confidential information, one of the accountants had disclosed such information to Shadow Traffic's lawyers, and Shadow Traffic failed to rebut the presumption that the accountant disclosed the information to Shadow Traffic's lawyers. (Shadow Traffic, supra, 24 Cal.App.4th at pp. 1078-1087.)
Marsh contends that Complex Asbestos and Shadow Traffic are inapplicable here because Complex Asbestos involved a law firm's hiring of an adversary firm's former paralegal and Shadow Traffic involved a law firm's hiring of an adversary's potential expert consultant. Here, by contrast, the Kasowitz firm never hired anyone from Gaumont's law firm or Gaumont's potential expert; rather, Frankie, a former employee of Gaumont, retained Berlinski as a client to represent him for purposes of his deposition.
According to Marsh, the present case is more analogous to Neal v. Health Net, Inc. (2002) 100 Cal.App.4th 831 (Neal). In Neal, a lawyer represented Khybrette Neal in her employment discrimination lawsuit against Health Net. (Id. at p. 834.) While that lawsuit was pending, Cynthia Brocket worked as a legal secretary in Health Net's legal department. In that position, she accessed a computer file concerning Neal's discrimination suit containing confidential attorney notes and memos. (Id. at pp. 834-835.) Health Net thereafter discharged Brocket, and Brocket retained Neal's attorney to represent her in an employment discrimination lawsuit against Health Net. (Id. at p. 834.) Health Net moved to disqualify the attorney in Neal's lawsuit based upon the attorney's representation of Brockett. The trial court granted the motion, and the Court of Appeal reversed. (Id. at pp. 834, 850.)
The Neal court explained that "Ms. Brockett is not an attorney. Ms. Brocket has not become affiliated with . . . [Neal's] attorney, as a legal secretary to a partner, an associate, in an of counsel capacity, a law clerk, or paralegal. Ms. Brocket is a client." (Neal, supra, 100 Cal.App.4th at p. 841.) Moreover, "mere exposure to confidential information of the opposing party does not require disqualification." (Ibid.) Thus, even if the court could infer that Brocket disclosed confidential information about Neal's lawsuit to Neal's attorney, "there is no applicable legal standard that supports disqualification of [Neal's] attorney as a sanction for Ms. Brockett's actions." (Id. at p. 843; see also Roush v. Seagate Technology, LLC (2007) 150 Cal.App.4th 210, 219 ["where the attorney's client is the attorney's source of privileged information relating to the litigation, courts typically refuse to allow the disqualification, concluding that clients do not act inappropriately in providing information to their own attorney"].)
Marsh further argues that, even if the holdings in Complex Asbestos and Shadow Traffic are expanded beyond their facts and applied in this case, and a rebuttable presumption arose that Frankie shared confidential and privileged information with Berlinski, the trial court nevertheless properly denied the motion because Marsh rebutted the presumption. She points to Frankie's uncontradicted testimony that he had not disclosed any privileged or confidential information to anybody outside of Gaumont.
We need not decide whether or how Complex Asbestos, Shadow Traffic, or Neal might apply in this case because Gaumont waived its right to seek disqualification by its delay in objecting to Berlinski's representation of Frankie.
"[A] party who seeks to challenge the qualification of counsel to represent the adversary party must . . . proceed at the first reasonable opportunity by proper motion to achieve that end." (White v. Superior Court (1979) 98 Cal.App.3d 51, 55-56; see also River West, Inc. v. Nickel (1987) 188 Cal.App.3d 1297, 1305 ["the motion for disqualification is equitable in nature and reasonable diligence is required"].) Failing to bring a motion to disqualify counsel "in a timely manner" constitutes an implied waiver of the right. (Liberty National Enterprises, L.P. v. Chicago Title Ins. Co. (2011) 194 Cal.App.4th 839, 844 (Liberty National).) Delay may also indicate that the moving party did not view "the alleged breach of confidentiality . . . as serious or substantial," and suggest "that the 'party brought the motion as a tactical device.' " (Id. at p. 847.)
Courts have stated that the moving party's delay and the resulting prejudice of disqualification to the other party must be "extreme." (See, e.g., Fiduciary Trust Internat. of California v. Superior Court (2013) 218 Cal.App.4th 465, 490; Liberty National, supra, 194 Cal.App.4th at p. 844.) The delay, however, "should not be measured by the number of months, but rather in terms of how those months were employed in preparing the case." (Openwave Systems Inc. v. Myriad France S.A.S. (N.D.Cal. Mar. 31, 2011, No. C 10-02805 WHA) [2011 WL 1225978 at *6]; see Flamm, Lawyer Disqualification (2014) § 17.4, p. 420 ["some courts have found that a party's failure to object to the conduct which gave rise to the motion within months or even weeks of discovering the relevant facts may constitute an implied waiver of its right to seek disqualification"].) "If the opposing party makes a prima facie showing of extreme delay and prejudice, the burden then shifts to the moving party to justify the delay." (Fiduciary Trust Internat. of California v. Superior Court, supra, 218 Cal.App.4th at p. 490; accord, Ontiveros v. Constable (2016) 245 Cal.App.4th 686, 701.)
Here, Gaumont was informed on April 18, 2019 that Berlinski would be representing Frankie at his deposition. Gaumont was aware, of course, of Frankie's former position at Gaumont and of his knowledge of confidential and privileged information at all relevant times. Gaumont's counsel, however, made no objection to Berlinski representing Frankie until 95 days later, after Frankie's deposition. In the meantime, Berlinski not only spoke and met with Frankie to prepare for the deposition and represented Frankie at the deposition, but the parties conducted 13 depositions, briefed five discovery motions, argued three discovery motions, produced more than 24,000 documents, and served and responded to numerous discovery demands. According to the declaration of a Kasowitz firm attorney, by the time Marsh filed its opposition to Gaumont's motion, the parties had conducted a total of 19 depositions, briefed and argued 17 discovery motions, and "exchanged, reviewed, and analyzed tens of thousands of documents, and [were] preparing cross-motions for summary judgment and/or summary adjudication."
As one court has stated in a similar context, "mastery over a complex case is best acquired as the case progresses through discovery. While it is of course possible to learn a case by reviewing the file, it is not quite the same as having done it as [counsel] did it in this case." (Liberty National, supra, 194 Cal.App.4th at p. 848.) Disqualifying Marsh's counsel, after representing her throughout the extensive discovery proceedings and as summary judgment motions were in the offing, would have been extremely prejudicial to her. (See id. at p. 847 [motion to disqualify was "made roughly midway through the case [at] a very bad time to have to change lawyers, especially in a case that involves the interplay of many documents and several witnesses"].)
Gaumont relies on Complex Asbestos, supra, 232 Cal.App.3d 572, and Ontiveros v. Constable, supra, 245 Cal.App.4th 686. In Complex Asbestos, discussed above, the court rejected the appellant's argument that the motion to disqualify should have been denied because it was filed five months after "Brobeck knew [its former paralegal] was working for [the] Harrison [firm] and that his work included asbestos litigation." (Complex Asbestos, supra, 232 Cal.App.3d at p. 599.) Although the Court of Appeal stated that it was "disturbed by [the] delay in bringing the motion," the Harrison firm failed to show that the delay caused any prejudice to its clients other than the loss of "the services of knowledgeable counsel of their choice" and being "forced to retain new counsel." (Ibid.) Significantly, it does not appear from the opinion that the parties were engaged in discovery during the relevant five-month period or that other important litigation events had taken place during that time. Although the disqualification motion was filed on "the eve of trial in a significant asbestos case," the evidence did "not show that resolution" of that case "was substantially delayed" by disqualification. (Ibid.) In short, the fact that the Complex Asbestos defendants brought their disqualification motion in August 1989 instead of March or April 1989 appears to have had little, if any, impact on the litigation or the Harrison firm's clients.
Here, by contrast, if Gaumont had objected to Berlinski's representation of Frankie soon after learning of the representation, the issue could have been resolved before the parties became engaged in the extensive discovery and motion practice undertaken during the period of delay. If it was appropriate for Berlinski and the Kasowitz firm to be disqualified and Gaumont had promptly raised the issue, then Marsh's new counsel could have been in place during that critical period and not be disadvantaged by his or her late arrival. Because Complex Asbestos did not involve comparable facts, it is not persuasive on this point.
In Ontiveros, the plaintiff waited 14 months after learning that defense counsel had a conflict of interest before filing his motion to disqualify. (Ontiveros, supra, 245 Cal.App.4th at p. 701, fn. 8.) The trial court rejected the defendants' argument that the plaintiff had waived the right to seek disqualification, and the Court of Appeal agreed. (Id. at p. 701.) The court explained: "Although defendants focus on the age of the litigation when [plaintiff] brought his motion, the proper focus is on the stage of the litigation. [Citation.] The pleadings were not yet final, as [plaintiff's] demurrer to the first amended cross-complaint was still pending; discovery was still in progress; and no trial date was set." (Id. at pp. 701-702.) At the relevant time in the instant case, by contrast, the pleading stage had apparently been completed, a trial date had been set, Marsh's counsel was preparing motions for summary judgment and summary adjudication, and the parties were engaged in extensive discovery and motion practice during which counsel's involvement was essential. Ontiveros is thus distinguishable and inapplicable here.
Marsh's prima facie showing of the requisite delay and prejudice does not end the waiver inquiry; rather, it shifts to Gaumont the burden of justifying its delay. (Ontiveros, supra, 245 Cal.App.4th at p. 701.) Gaumont, however, has failed to meet that burden.
Gaumont addressed Marsh's waiver argument in its reply memorandum of points and authorities filed in the trial court. In the copy of the reply included in our record, the response to the waiver argument is heavily redacted and, so far as we can tell, fails to offer any justification for the delay in objecting to Berlinski's representation of Frankie. In any case, Gaumont offers no justification in its briefs on appeal. Because Marsh made a prima facie showing of waiver and Gaumont has failed to justify its delay, we affirm the court's order denying Gaumont's motion to disqualify the Kasowitz firm and Berlinski.
Although Gaumont has augmented the record with a sealed and unredacted copy of certain documents, it did not include a copy of the unredacted reply it filed in the trial court.
Although the court denied the motion to disqualify on different grounds, we review the court's ruling, not its reasons, and affirm if it is correct on any ground. (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19; Davey v. Southern Pac. Co. (1897) 116 Cal. 325, 330.)
DISPOSITION
The order denying Gaumont's motion to disqualify is affirmed. The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J. We concur.
BENDIX, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.