Opinion
C052314
12-15-2006
DEANNAH THOMAS et al., Plaintiffs and Appellants, v. DAVID HOWARD et al., Defendants and Respondents.
In this personal injury case, plaintiffs DeAnnah and Richard Thomas are represented by the Law Offices of Joseph Earley and defendants David Howard and Cheryl Laux are represented by Maire & Beasley. One of Earleys receptionists/legal assistants, who had passed the California State Bar examination but was not yet licensed to practice law, accepted a paralegal position with Maire & Beasley, prompting Earleys motion to disqualify the entire law firm. The trial court denied plaintiffs motion to disqualify, and plaintiffs appeal. We reverse the trial courts order.
FACTUAL AND PROCEDURAL BACKGROUND
While a receptionist/legal assistant for Earley, Jacqueline Devlin worked on this case. Devlins services included drafting discovery responses, drafting correspondence, and communicating directly with plaintiffs. On November 18, 2005, Devlin learned she had passed the California State Bar examination, but she was not licensed to practice law because of a delay in the paperwork related to the moral character portion of her application.
A few days later, Devlin learned Maire & Beasley was hiring new associates. She contacted the office and was granted an interview. That same day, she learned Maire & Beasley were opposing counsel on this case. She discussed the matter with Joseph Earley, and he assured her he was not concerned.
On November 29, 2005, Devlin accepted a position at Maire & Beasley as a paralegal, with the expectation of becoming an associate attorney once she was licensed. Devlin started her employment with Maire & Beasley on December 12, 2005. The staff at Maire & Bealsey was strictly instructed that Devlin was not to be apprised of any dealings involving this case when Devlin started working, and Devlin was told the same. Devlin was expected to take the oath to practice law in California on February 24, 2006.
Earley filed a motion to disqualify Maire & Beasley on February 17, 2006. The trial court denied the motion because "Maire & Beasley ha[d] satisfied the necessary ethical requirements by constructing an ethical screen as permitted by In re: Complex Asbestos Litigation (1991) 232 Cal.App.3d 572." Plaintiffs appeal. We issued a writ of supersedeas to stay the trial.
DISCUSSION
"Generally a trial courts decision on a disqualification motion is reviewed for abuse of discretion. [Citations.] If the trial court resolved disputed factual issues, the reviewing court should not substitute its judgment for the trial courts express or implied findings supported by substantial evidence. [Citations.] When substantial evidence supports the trial courts factual findings, the appellate court reviews the conclusions based on those findings for abuse of discretion. [Citation.] However, the trial courts discretion is limited by the applicable legal principles. [Citation.] Thus, where there are no material disputed factual issues, the appellate court reviews the trial courts determination as a question of law." (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143-1144.)
A member of the California State Bar shall not "[a]ccept or continue representation of more than one client in a matter in which the interests of the clients actually conflict." (Rules Prof. Conduct, rule 3-310(C)(2).) In deciding attorney disqualification cases, "courts have recognized that the chief fiduciary value jeopardized is that of client confidentiality." (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283.) A former client can seek to have an attorney disqualified if the attorney is now representing a party adverse to the former client where there is a substantial relationship between the subject of the former representation and the current representation. (Ibid.) "As a general rule in California, where an attorney is disqualified from representation, the entire law firm is vicariously disqualified as well. [Citations.] This is especially true where the attorneys disqualification is due to his prior representation of the opposing side during the same lawsuit." (Henriksen v. Great American Savings & Loan (1992) 11 Cal.App.4th 109, 114-115.) "`Such patently improper dual representation suggests to the clients — and to the public at large — that the attorney is completely indifferent to the duty of loyalty and the duty to preserve confidences. However, the attorneys actual intention and motives are immaterial, and the rule of automatic disqualification applies. "The rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct," but also to keep honest attorneys from having to choose between conflicting duties, or being tempted to reconcile conflicting interests, rather than fully pursuing their clients rights." (Fremont Indemnity Co. v. Fremont General Corp. (2006) 143 Cal.App.4th 50, 64.)
A client can also move to disqualify a law firm when a nonlawyer employee leaves and is hired by opposing counsel. In such a case, the test for disqualification is different. "Hiring a former employee of an opposing counsel is not, in and of itself, sufficient to warrant disqualification of an attorney or law firm." (In re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, 592.) Once the party seeking disqualification has shown its former employee has confidential information related to an ongoing proceeding, a rebuttable presumption arises that the employee has shared the confidential information with the new employer. To rebut the presumption, the new employer "has the burden of showing that the practical effect of formal screening has been achieved. The showing must satisfy the trial court that the employee has not had and will not have any involvement with the litigation, or any communication with attorneys or coemployees concerning the litigation, that would support a reasonable inference that the information has been used or disclosed." (Id. at p. 596.)
The test for nonlawyer disqualification is different from lawyer disqualification because of the "differences between lawyers and their nonlawyer employees in training, responsibilities, and acquisition and use of confidential information." (In re Complex Asbestos Litigation, supra, 232 Cal.App.3d at p. 593.) Courts have been unwilling to apply the stricter lawyer disqualification standard to nonlawyer employees because it would present unnecessary barriers to employment mobility and disserve both clients and lawyers alike. (Id. at p. 595.)
In In re Complex Asbestos Litigation, paralegal Vogel worked on asbestos cases for Brobeck and was later hired by opposing counsel Harrison as a paralegal. (In re Complex Asbestos Litigation, supra, 232 Cal.App.3d at pp. 580-582.) The trial court found Vogels work for both firms was substantially related, Brobecks clients did not consent to Vogels new position, and Vogel had disclosed information to members of the Harrison firm. The trial court disqualified the Harrison firm from cases in which Vogel was involved. (Id. at p. 584.) The Court of Appeal upheld the trial courts ruling based in part on the Harrison firms failure to properly erect an ethical screen. (Id. at p. 598.)
Here, plaintiffs argue Maire & Beasley are disqualified from working on this case because Devlin possesses confidential attorney-client information gained while working with Earley. We agree. As plaintiffs correctly reason, Devlin should be treated as a lawyer for the purpose of determining disqualification because she is now a lawyer and will be for the duration of the trial, even though she was not licensed to practice law when the trial court ruled on the motion to disqualify. Defendants argument to the contrary — that Devlin should be treated as a nonlawyer simply because she was working for Earley as a paralegal and was hired by Maire & Beasley as a paralegal — essentially elevates form over substance.
Defendants contend we should nonetheless affirm the trial courts ruling denying the motion to disqualify because plaintiffs "delay in bringing th[e] motion, and the financial detriment caused by the delay, operate as a waiver." We are not persuaded.
Some courts have held that a motion to disqualify may be denied "if the present client, by way of opposition, offers prima facie evidence of an unreasonable delay by the former client in making the motion and resulting prejudice to the current client." (River West, Inc. v. Nickel (1987) 188 Cal.App.3d 1297, 1309.) "With convincing evidence that the delay was inexcusable and the present client will suffer prejudice, the court may find the former client has waived any right to disqualify counsel . . . ." (Id. at p. 1310.) However, "Because of the laws concern for unhampered counsel on both sides of the litigation, `mere delay in making a disqualification motion is not dispositive. The delay must be extreme in terms of time and consequence." (Id. at p. 1311; but see Earl Scheib, Inc. v. Superior Court (1967) 253 Cal.App.2d 703, 707-709 [prejudicial delay is not a basis for denying a motion to disqualify].)
Here, plaintiffs attorney, Joseph Earley, became aware Devlin was seeking employment with Maire & Beasley in late November 2005. He initially professed no concern about the potential conflict, but a month and one-half later informed Devlin that it "was possible he would be making an issue of a possible breach of confidentiality." He exchanged correspondence with Patrick Beasley of Maire & Beasley on the issue around that same time, expressing the conclusion that "the law requires disqualification when [Devlin] becomes an attorney." Further correspondence followed from Maire & Beasley in late January, and in early February plaintiffs instructed Earley to pursue the disqualification of Maire & Beasley. Earley filed the motion on February 17.
Under these circumstances, no reasonable court could find plaintiffs "delay" in moving to disqualify Maire & Beasley was so "extreme in terms of time" as to justify denial of the motion. Accordingly, the trial courts ruling cannot be affirmed on the basis of laches or waiver.
DISPOSITION
The order denying the motion to disqualify is reversed. Plaintiffs shall recover their costs on appeal. (Cal. Rules of Court, rule 27(a).)
We concur:
DAVIS, Acting P.J.
MORRISON, J. --------------- Notes: As far as the "consequences" of the "delay," defendants contend that in the 87 days from the time Devlin first discussed the matter with Earley until Earley filed the motion to disqualify, "Maire & Beasley engaged in approximately 90 hours of legal work at a cost exceeding $12,700." However, there is no evidence in the record to support that assertion, only an unsworn statement in defendants opposition to the motion to disqualify.