Spotlight on Ethics: Recent Disqualification Cases

January 2021

By Alison Buchanan

Lawyers, and sometimes courts, struggle with complicated questions about conflicts of interest. What constitutes adversity? When are two representations “substantially related”? When is informed consent curative? When will the inappropriate receipt of confidential information (received from, for example, an inadvertent communication or by virtue of improper contact with a represented party) warrant disqualification of counsel?

Two recent California cases examine the different standards used to address conflicts of interest in the context of former clients and current clients. These cases underscore the detailed factual analysis required to decide these issues. In both instances, the courts concluded that a disqualifying conflict did not exist and denied disqualification. These decisions serve as a helpful reminder about how to evaluate and analyze conflicts and can help counsel and parties avoid wasting time and resources bringing a meritless disqualification motion.

Former Client Conflicts

In Kinchen v. Brennan, No. CV1810311PADFMX, 2020 WL 2374947 (C.D. Cal. Mar. 17, 2020), the Central District of California decided a motion to disqualify brought by the defendant based on two grounds: (1) a purported conflict based on plaintiff’s counsel’s prior employment by the defendant; and (2) plaintiff’s counsel’s improper receipt of information, procured by communicating with defendant’s managing agent in an alleged violation of the “no contact” rule.

In that matter, a former USPS employee sued the USPS for retaliation following the employee’s termination. The plaintiff was represented by counsel who had previously worked as an Assistant United States Attorney (“AUSA”). During his employment as an AUSA, the plaintiff’s counsel had represented the government in both criminal and civil matters, including defending employment law claims involving the USPS. 

The defendant moved to disqualify the plaintiff’s counsel, arguing that the plaintiff’s counsel used information he learned during his former employment as an AUSA to benefit the plaintiff in prosecuting her retaliation claim against the USPS. Specifically, the defendant argued that plaintiff’s counsel possessed confidential information by virtue of his prior representation of the USPS, including that, in the context of a discovery dispute, plaintiff’s counsel submitted a declaration citing his prior employment as an AUSA and noting his “surprise” at the defendant’s small production of documents. Defendant also argued that counsel violated California Rule of Professional Conduct 4.2 (the “no contact rule”) by contacting a “managing agent” of the USPS directly, further warranting disqualification. 

The court evaluated the motion using California Rules of Professional Conduct 1.9 (regarding conflicts with former clients) and 1.11 (regarding former government attorneys, and referring to Rule 1.9(c)). Rule 1.9(c) prohibits attorneys from using information protected by Business and Professions Code section 6068(e) with respect to former clients. The court noted that whether disqualification was warranted hinged on whether the two representations were “substantially related.” 

The court concluded that the pending action against the USPS was not sufficiently similar to the matters plaintiff’s counsel had previously handled on behalf of the USPS some eight years prior. The court also concluded that the information plaintiff’s counsel possessed by virtue of his prior representation of the USPS did not constitute confidential information for purposes of necessitating disqualification, as it was not the type of information contemplated by Business and Professions Code section 6068(e). 

Finally, while the court found that counsel had violated rule 4.2 by contacting a USPS “managing agent,” such violation did not warrant the harsh sanction of disqualification; the evidentiary sanction of precluding the plaintiff’s use of the managing agent’s declaration was sufficient to protect the integrity of the judicial process. 

Kinchen highlights California’s general rejection of disqualification based on the “playbook” theory. Access to a former client’s playbook (i.e., general litigation attitudes, policies, or practices) will not alone serve as the basis for disqualification. Instead, the “substantial relationship” test controls. The current representation must be substantially related to the former representation to constitute a disqualifying conflict. Kinchen further highlights that a rule violation by itself will not necessarily require the sanction of disqualification. A court in its discretion will determine the appropriate sanction necessary to preserve “the scrupulous administration of justice” and “the integrity of the bar.”

Current Client Conflicts

Second, in Fregoso v. Eat Club, Inc., No. H046505, 2020 WL 5513420 (Cal. Ct. App. Sept. 14, 2020), the court decided a motion to disqualify brought by the defendant in a wage and hour class action. There, the firm representing plaintiffs also represented the defendant’s former human resources employees as plaintiffs in a separate matter against the same employer defendant. 

In its motion to disqualify, the employer defendant argued that the firm representing the plaintiffs had a direct, actual conflict. The defendant argued that the firm could not “zealously and ethically develop evidence in [p]laintiffs’ class action reflecting dishonesty and fault by [the former HR employees] in [the] performance of their human resources job duties” and that the conflict of interest was “irreconcilable.” The defendant also argued that the plaintiffs’ counsel had received and misused property and privileged documents belonging to the defendant. 

The trial court denied disqualification, agreeing with plaintiffs’ counsel “that [plaintiffs’] interests in both actions [were] generally aligned because they all [sought] to hold Eat Club accountable for its unlawful employment practices.” 

The appellate court affirmed, relying on California Rule of Professional Conduct 1.7. Specifically, the court concluded that there was no “direct adversity” as between the two sets of plaintiffs and that, moreover, the “affected clients confirmed that they had in effect given their informed written consent to concurrent representation.”

Finally, the court rejected disqualification based on plaintiffs’ counsel’s receipt of privileged emails, noting that counsel “had not misused, and would not likely misuse, its knowledge of the privileged communications to gain an unfair advantage.”

The Importance of Getting it Right

In both Kinchen and Fregoso, the court denied disqualification. While bringing a losing motion to disqualify rarely has negative repercussions for the unsuccessful moving party (beyond the expenditure of fees), that is not always the case. In one recent out-of-state case, while denying a motion for disqualification in a patent infringement case, the court evaluated the opposing party’s motion for sanctions based on the plaintiff’s filing of a purportedly frivolous motion to disqualify. The court denied the motion for sanctions, noting, “Plaintiff’s Motion to Disqualify was supported by some, albeit scant, evidence. It appears that Plaintiff’s unsuccessful attempt to disqualify opposing counsel was the result of a lack of sufficient factual and legal research and analysis, apparently due in part to the difficulty of obtaining complete records about an alleged attorney-client relationship many years ago.” (See Enventure Global Technology Inc. v. Weatherford U.S. LP, U.S. District Court for the Southern District of Texas, Case Number 4:19-cv-02397, Order dated December 11, 2020). Although the court declined to sanction the moving party, the court noted that the opposing party’s request for sanctions was “not unfounded.”

While sanctions for an unsuccessful motion to disqualify are rare, clients (and their counsel) are best protected against the possibility of sanctions for bringing a frivolous motion to disqualify by thoughtfully and carefully researching and analyzing possible conflicts before moving to disqualify. When in doubt, consult with an expert who can help ascertain whether the salient facts and applicable authority support a motion for disqualification.

Alison Buchanan is a shareholder with Hoge, Fenton, Jones & Appel, in San Jose, California. She focuses her practice on business litigation and representing lawyers and law firms. She is a certified specialist in legal malpractice law as certified by the California State Bar’s Board of Specialization. She frequently lectures throughout the state on attorney ethics. She is a co-vice chair and founding member of the Ethics Committee of the California Lawyers Association. The views expressed herein are her own.