Filed 6/17/20 Blake v. Southern Cal. Edison Co. CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

KRISTIN BLAKE et al.,

Plaintiffs and Appellants,

v.

SOUTHERN CALIFORNIA EDISON COMPANY,

Defendant and Respondent.

B298151 c/w B298210, B298189

(Los Angeles County

Super. Ct. No. JCCP 5000 /

19STCV11892)

APPEAL from an order of the Superior Court of Los Angeles County. William F. Highberger, Judge. Affirmed.

Quinn Emanuel Urquhart & Sullivan, Kenneth R. Chiate, Michael J. Madigan, and Sanford I. Weisburst for Plaintiffs and Appellants.

Hueston Hennigan, John C. Hueston, Douglas J. Dixon, and Andrew K. Walsh for Defendant and Respondent.

In this consolidated appeal, plaintiffs and appellants Kristin Blake, et al., (collectively, plaintiffs), challenge the order granting a motion by defendant and respondent Southern California Edison Company (SCE) to disqualify Quinn Emanuel Urquhart & Sullivan, LLP (QE) as plaintiffs’ counsel in their respective actions for damages arising out of the Woolsey fire in Malibu. We affirm the trial court’s order.

BACKGROUND

The parties

Plaintiffs are persons and entities who sued SCE for damages arising out of the Woolsey fire. SCE is an investor owned utility (IOU) and is a defendant in lawsuits related to the Woolsey fire. SCE is also a defendant in separate litigation concerning the Thomas fire in Santa Barbara and Ventura counties. QE was plaintiffs’ counsel in the Woolsey fire actions. QE has also represented San Diego Gas & Electric Co. (SDG&E) in litigation related to wildfires in San Diego County and Pacific Gas and Electric Company (PG&E) in litigation related to the Butte fire in Calaveras County.

Joint IOU meeting

SDG&E, PG&E, and SCE entered into a common interest agreement in which they agreed to joint regulatory, lobbying, and support efforts in wildfire-related litigation, and to share certain factual and legal research, documents, and information in that regard. They further agreed that disclosure of certain privileged information among them would be necessary.

On December 6, 2017, representatives from SDG&E, PG&E, and SCE met pursuant to their common interest agreement to discuss wildfire-related legal, regulatory, insurance, and legislative issues (the joint IOU meeting). QE was representing SDG&E and PG&E at that time, and QE partner Jeffrey Boozell attended the meeting and gave a presentation on inverse condemnation. At the outset of the meeting, an attorney reminded the attendees of the privileged and confidential nature of the communications and of their obligations under the common interest agreement. An SCE representative who was present at the meeting stated in a subsequently filed declaration that SCE shared confidential wildfire-related information with the attendees, including Boozell. Boozell, in his own declaration, stated that he did not recall receiving any confidential information from SCE during the meeting.

Thomas fire pitch meeting

On December 18, 2017, SCE invited QE to attend a meeting with SCE’s in-house lawyers about possibly representing SCE in the Thomas fire litigation (the pitch meeting). Four QE attorneys — Boozell, Kenneth Chiate, Christopher Tayback, and Sarah Cole, attended the meeting, which lasted approximately one hour. SCE’s general counsel, Russell Swartz, and SCE in-house attorneys Jennifer Hasbrouck, Jennifer Shigekawa, and Patricia Cirucci, also attended the meeting.

At the meeting, Swartz advised QE of the privileged nature of the discussions and said that SCE would be sharing confidential information relevant to QE’s potential representation of SCE in the Thomas fire litigation. SCE’s attorneys stated in subsequently filed declarations that SCE shared confidential information with QE about its strategic goals regarding inverse condemnation and other aspects of wildfire litigation, including class actions, settlement of subrogation claims, and insurance-related issues. SCE attorneys further attested to sharing confidential information with QE about SCE’s relationship with the Department of Forestry and Fire Protection Services, an agency responsible for investigating wildfires, and specific, non-public information regarding the Thomas fire. QE offered tailored advice in response and distributed slides titled “Potential Wildfire Litigation Strategies for Southern California Edison Company” and marked as “Privileged and Confidential” and “Attorney Work Product.”

QE’s attorneys uniformly declared that they did not receive any confidential information from SCE during the pitch meeting. QE’s attorneys also declared that they did not provide SCE with any legal advice in response to any disclosure of confidential information.

Communications between QE and SCE’s outside counsel

SCE did not retain QE for the Thomas fire representation. Instead, SCE retained Hueston Hennigan LLP as its counsel in the Thomas fire lawsuits.

Between July 2018 and November 2018, QE, as counsel to SDG&E and PG&E, had several communications with Hueston Hennigan about inverse condemnation strategy, how best to present legal arguments and to anticipate plaintiffs’ arguments, and litigation strategy for wildfire litigation cases. At least two of these communications concerned arguments about the applicability of inverse condemnation to IOUs in the demurrer SCE filed in the Thomas fire litigation. SCE revised inverse condemnation arguments raised in its demurrer as a result of the communications with QE.

QE’s representation of plaintiffs

On December 18, 2018, QE partner Chiate informed SCE general counsel Swartz that QE had been asked to represent a client whose Malibu home had been damaged by the Woolsey fire. QE had concluded there was no ethical reason precluding representation of the client in potential litigation against SCE. Chiate assured Swartz that QE would not counsel the client on inverse condemnation issues.

On December 19, 2018, Swartz responded to Chiate and objected to QE’s representation of Woolsey fire plaintiffs based on SCE’s sharing of confidential information at the Thomas fire pitch meeting and the joint IOU meeting. SCE invited QE, however, to offer any proposals for ensuring that SCE’s confidential information would not be used against it in the Woolsey fire litigation. In response, QE reiterated that it “‘has no intention of filing lawsuits against [SCE] alleging inverse condemnation, or advising its co-counsel or any plaintiff[]s that [QE] may represent, or the court about the viability vel non of inverse condemnation as a basis for liability in the Woolsey Fire litigation.’” QE claimed that no relevant SCE confidential information had ever been revealed to any QE attorneys, yet also assured SCE that any discussions that had occurred at the pitch meeting would “‘remain confidential and not be disclosed to third parties, including, of course any attorneys with whom we are co-counseling in the Woolsey Fire.’” QE also represented that it had implemented “appropriate ethical walls” between QE attorneys who had attended the pitch meeting and those who would represent plaintiffs in their Woolsey fire claims against SCE. Not satisfied with the proposed measures, SCE objected to QE’s representation of plaintiffs.

On February 25, 2019, QE filed the Dreier complaint against SCE, asserting a cause of action for inverse condemnation, among other claims. QE filed two more complaints against SCE, Blake on April 8, 2019, and Richardson on March 26, 2019.

Motion to disqualify

SCE filed a motion to disqualify QE on May 10, 2019. QE opposed the motion and both sides filed evidentiary objections. After hearing argument from the parties, the trial court granted the motion to disqualify QE.

The trial court found that QE actually obtained SCE’s material confidential information at the December 2017 joint IOU meeting, the Thomas fire pitch meeting, and during communications between QE and Hueston Hennigan. Although QE attorneys denied receiving any confidential information, the trial court resolved this disputed factual issue by finding “the SCE witnesses persuasive and the Quinn Emmanuel witnesses unpersuasive.”

The trial court rejected QE’s argument that SCE publicly disclosed, in its litigation briefs and other public filings, all the strategic and confidential information shared with QE. The trial court noted that QE’s attorneys did not claim that the entirety of their confidential discussions with SCE had been revealed in subsequent filings.

The trial court also found a substantial relationship between the subject matter of the confidential communications between SCE and QE and the Woolsey fire lawsuits, given the overlapping factual and legal issues, as well as QE’s extensive and ongoing role, on behalf of IOUs, in challenging the validity of inverse condemnation liability.

The trial court stated that it believed a “balancing test” did not apply because SCE had “shown quite persuasively that a ‘substantial relationship’ exists between the subject matters of the three communications and the newly filed Woolsey Fire Cases.” The court nevertheless found, in the alternative, that SCE was entitled to prevail under a balancing test as well.

This appeal followed.

DISCUSSION

I. Standard of review

“Generally, a trial court’s 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 court’s express or implied findings supported by substantial evidence. [Citations.] When substantial evidence supports the trial court’s factual findings, the appellate court reviews the conclusions based on those findings for abuse of discretion. [Citation.] However, the trial court’s discretion is limited by the applicable legal principles. [Citation.] Thus, where there are no material disputed factual issues, the appellate court reviews the trial court’s determination as a question of law. [Citation.]” (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143-1144 (SpeeDee Oil).)

QE insists de novo review is appropriate because even if the trial court’s factual findings are true, the disqualification order should be reversed for legal error. QE does not, however, accept as true the trial court’s factual findings, and we are unpersuaded by QE’s attempts to recharacterize those findings as legal error.

The trial court here resolved disputed factual issues — whether QE received SCE’s confidential information during meetings and communications between their attorneys, whether a substantial relationship exists between those communications and the Woolsey fire litigation, and whether SCE subsequently disclosed its confidential communications with QE in subsequent public filings. We review the trial court’s factual findings under the substantial evidence standard and its order disqualifying QE for abuse of discretion. (SpeeDee Oil, supra, 20 Cal.4th at pp. 1143-1144.)

II. Applicable legal principles

“A trial court’s authority to disqualify an attorney derives from the power inherent in every court ‘[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with the judicial proceeding before it, in every matter pertaining thereto.’ (Code Civ. Proc., § 128, subd. (a)(5).)” (Speedee Oil, supra, 20 Cal.4th at p. 1145.)

Attorney disqualification motions implicate two important but competing interests: a client’s right to chosen counsel and the need to maintain ethical standards of professional responsibility. However, “[t]he ‘paramount’ concern in determining whether counsel should be disqualified is ‘the preservation of public trust in the scrupulous administration of justice and the integrity of the bar.’ [Citations.]” (Roush v. Seagate Technology, LLC (2007) 150 Cal.App.4th 210, 219.)

Disqualification is proper when “there is a reasonable probability counsel has obtained information the court believes would likely be used advantageously against an adverse party during the course of the litigation.” (Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 309.) A party seeking to disqualify an attorney need not be a current or former client of the attorney to have standing to bring such a motion. (Meza, supra, 176 Cal.App.4th at pp. 980-981.) “There are exceptions . . . to the general rule that an attorney has no duty to preserve the confidences of nonclients. . . . ‘A conflict of interest can . . . arise because of specific obligations, such as the obligation to hold information confidential, that the lawyer has assumed to a nonclient.’ [Citation.]” (Acacia Patent Acquisition, LLC v. Superior Court (2015) 234 Cal.App.4th 1091, 1098-1099.)

Confidential information can also be obtained during preliminary consultation by a prospective client who is considering retaining a lawyer, even though actual retention does not result. (SpeeDee Oil, supra, 20 Cal.4th at pp. 1147-1148.) “The primary concern is whether and to what extent the attorney acquired confidential information. [Citation.] ‘Even the briefest conversation between a lawyer and a client can result in the disclosure of confidences.’ [Citation.] Consequently, a formal retainer agreement is not required before attorneys acquire fiduciary obligations of loyalty and confidentiality, which begin when attorney-client discussions proceed beyond initial or peripheral contacts. An attorney represents a client — for purposes of a conflict of interest analysis — when the attorney knowingly obtains material confidential information from the client and renders legal advice or services as a result. [Citations.]” (Id. at p. 1148.)

Disqualification is required when an attorney actually possesses material confidential information adverse to a former client. (H. F. Ahmanson & Co. v. Salomon Brothers, Inc. (1991) 229 Cal.App.3d 1445, 1452.) Disqualification of an attorney does not, however, require proof of actual possession of confidential information. (Rosenfeld Construction Co. v. Superior Court (1991) 235 Cal.App.3d 566, 575 (Rosenfeld).) Courts therefore do not generally inquire into whether the attorney actually possesses confidential information. (Adams v. Aerojet-General Corp. (2001) 86 Cal.App.4th 1324, 1331.) Instead, a “substantial relationship” test is applied to determine whether attorney disqualification is warranted. (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 713 (Jessen).) “[T]he correct legal standard generally requires disqualification of the attorney if ‘the [former] client demonstrate[s] a “substantial relationship” between the subjects of the antecedent and current representations.’ [Citation.]” (In re Charlisse C. (2008) 45 Cal.4th 145, 161.)

Under the substantial relationship test, attorney disqualification turns on two variables: (1) the relationship between the subjects of the former and current representations, and (2) the relationship between the attorney and the former client involved in the prior representation. (Jessen, supra, 111 Cal. App.4th at p. 709.) “If the relationship between the attorney and the former client is shown to have been direct — that is, where the lawyer was personally involved in providing legal advice and services to the former client — then it must be presumed that confidential information has passed to the attorney and there cannot be any delving into the specifics of the communications between the attorney and the former client in an effort to show that the attorney did or did not receive confidential information during the course of that relationship.” (Ibid.) In such cases, disqualification will depend on whether the subjects of the current and prior representations are linked in some rational manner. (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283.)

The “subject” of a representation includes “information material to the evaluation, prosecution, settlement or accomplishment of the litigation or transaction given its specific legal and factual issues. Thus, successive representations will be ‘substantially related’ when the evidence before the trial court supports a rational conclusion that information material to the evaluation, prosecution, settlement or accomplishment of the former representation given its factual and legal issues is also material to the evaluation, prosecution, settlement or accomplishment of the current representation given its factual and legal issues. [Citations.]” (Jessen, supra, 111 Cal.App.4th at p. 713.)

Although some appellate courts have applied a “balancing of interests” test when deciding disqualification motions (see., e.g., Elliott v. McFarland Unified School Dist. (1985) 165 Cal.App.3d 562, 567; Oaks Management Corporation v. Superior Court (2006) 145 Cal.App.4th 453, 461), other courts have specifically rejected the notion that a trial court should “enlarge its inquiry by balancing the parties’ competing interests under its equity jurisdiction.” (Jessen, supra, 111 Cal.App.4th at p. 706; River West, Inc. v. Nickel (1987) 188 Cal.App.3d 1297, 1308.)

III. No abuse of discretion

The record discloses no abuse of discretion by the trial court. In granting the motion to disqualify, the trial court resolved disputed factual issues and found that SCE disclosed material confidential information to QE during the joint IOU meeting, the pitch meeting, and subsequent communications between QE and Hueston Hennigan. The trial court further found that a substantial relationship existed between the subject matters of those antecedent communications and the current action, that QE’s involvement in challenging the validity of inverse condemnation liability on behalf of IOUs had been extensive and was ongoing, and that QE failed to establish that SCE subsequently disclosed all of the confidential information it shared with QE in court filings and other public disclosures. Substantial evidence supports the trial court’s findings.

A. Joint IOU meeting

SCE’s in house counsel stated in declarations that SCE shared “confidential wildfire-related information” with QE at the December 2017 joint IOU meeting and that QE attorney Boozell “provided in-depth legal advice” at that meeting. Boozell admitted that the attorneys present “discussed efforts and strategies for challenging inverse condemnation as applied to IOUs.” Although Boozell declared he did not recall receiving any confidential wildfire-related information at the joint IOU meeting or discussing with SCE any issues regarding inverse condemnation strategy, the trial court, after weighing the evidence, found “SCE witnesses persuasive and the Quinn Emanuel witnesses unpersuasive.” We do not reweigh the evidence, assess the credibility of the witnesses, or substitute our judgment for the trial court’s express or implied findings supported by substantial evidence. (SpeeDee Oil, supra, 20 Cal.4th at p. 1143.)

B. Pitch meeting

With regard to the pitch meeting, several SCE in-house attorneys submitted declarations stating that SCE shared confidential information with QE concerning SCE’s strategy in litigating wildfire cases in areas such as inverse condemnation, settlement, class actions, and insurance, and that QE offered tailored advice in response. Although QE’s attorneys denied receiving any confidential information from SCE during the pitch meeting, or providing SCE with legal advice in response to any disclosure of confidential information, the trial court found the QE witnesses not credible and the SCE witnesses credible.

Under the applicable standard of review, we do not reweigh the evidence, consider the credibility of witnesses, or resolve conflicts in the evidence. (Huang v. Board of Directors (1990) 220 Cal.App.3d 1286, 1294.) Rather, all conflicts in the evidence must be resolved in the prevailing party’s favor, and the trial court’s resolution of factual disputes arising from the evidence is conclusive. (Clark v. Superior Court (2011) 196 Cal.App.4th 37, 46-47.)

C. Communications with Hueston Hennigan

The evidence shows that QE obtained SCE’s confidential and privileged information during telephone and email communications with Hueston Hennigan, SCE’s outside counsel in the Thomas fire litigation. These communications continued after the Woolsey fire began and included discussions concerning strategies for defending against inverse condemnation claims.

D. Alleged public disclosure

QE argues that SCE publicly disclosed the substance of its communications with QE regarding inverse condemnation in testimony before the California State Legislature, public filings and other public statements. The trial court properly rejected that argument, noting that none of QE’s witnesses claimed, nor could they claim, that SCE’s public disclosures encompassed the entirety of its confidential communications with QE.

E. Materiality

Substantial evidence also supports the trial court’s finding that the confidential information SCE disclosed to QE was material. SCE’s witnesses stated in declarations that strategy regarding inverse condemnation was at issue and critical to the Woolsey fire cases. We reject QE’s contention that SCE’s public filings and statements regarding inverse condemnation resulted in the forfeiture of SCE’s claim that inverse condemnation strategy is material to the Woolsey fire litigation.

F. Substantial relationship

The record supports the trial court’s finding that a substantial relationship exists between the subject matters of SCE’s communications with QE and the current Woolsey fire cases. SCE’s evidence shows that the Thomas fire and Woolsey fire cases share common factual issues. The complaints filed in both cases contain allegations concerning the age and condition of SCE’s infrastructure, the adequacy of SCE’s risk management practices, and the design, construction, and maintenance of SCE’s high voltage distribution lines and equipment. QE argues there was no evidence that SCE had confidential communications with QE on these specific factual issues; however, under the substantial relationship test, disqualification does not require proof that QE obtained specific confidential information on these subjects. (Rosenfeld, supra, 235 Cal.App.3d at p. 575.) QE’s prior interactions and communications with SCE are substantially related to the Woolsey fire cases if the evidence “supports a rational conclusion” that information material to the evaluation, prosecution, settlement or accomplishment of SCE’s communications with QE is also material to the evaluation, prosecution, settlement or accomplishment of QE’s representation of the Woolsey fire plaintiffs. (Jessen, supra, 111 Cal.App.4th at p. 713.)

The evidence shows a substantial similarity in the legal issues presented in the Woolsey fire cases and SCE’s prior communications with QE. Inverse condemnation liability continues to be an issue in the Woolsey fire cases, and was a subject of confidential communications between QE and SCE.

Substantial evidence supports findings that the relationship between SCE and QE was direct and extensive, and that QE provided legal advice to SCE in their prior communications. QE attorneys participated in the December 2017 joint IOU meeting at which in-house attorneys discussed joint efforts and strategies on inverse condemnation and wildfire-related litigation, regulatory, insurance, and legislative issues. QE attorneys obtained confidential information concerning SCE’s strategies and goals in the Thomas fire cases in areas including class actions, insurance, and settlement of subrogation claims. QE also communicated with SCE’s outside counsel in the Thomas fire cases about strategies for responding to the plaintiffs’ claims and legal challenges to inverse condemnation liability.

IV. No legal error

Because the evidence supports the finding that a substantial relationship existed, QE’s possession of SCE’s confidential information must be presumed. (Jessen, supra, 111 Cal.App.4th at p. 706.) QE’s argument that SCE “could have said much more about the content of its disclosure about inverse condemnation” to show that it was confidential, material, and advantageous to QE is unavailing.

Faughn v. Perez (2006) 145 Cal.App.4th 592, on which QE relies, is inapposite. The court in that case found there was insufficient evidence to support a finding of a substantial relationship. (Id. at p. 609.) The moving party’s factual assertions were not supported by the declarations it submitted and relied too heavily on “inferences about facts that were within its control and that could have been disclosed without compromising confidential information.” (Id. at p. 610.) Here, in contrast, there was substantial evidence of both factual and legal similarities between the prior communications and the Woolsey fire cases to support the trial court’s finding of a substantial relationship.

Once a substantial relationship is established, “there cannot be any delving into the specifics of the communications between the attorney and the former client in an effort to show that the attorney did or did not receive confidential information during the course of that relationship.” (Jessen, supra, 111 Cal.App.4th at p. 713.)

DISPOSITION

The disqualification order is affirmed. SCE shall recover its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

____________________________, J.

CHAVEZ

We concur:

__________________________, Acting P. J.

ASHMANN-GERST

__________________________, J.

HOFFSTADT