2012-00123280-CU-CL

Ennis Paint Inc vs. Central Striping Service Inc

Nature of Proceeding:   Motion to Compel

Filed By:  Pearson, Matthew D.

Plaintiff’s motion to compel Defendant’s PMQ deposition was originally set for hearing
on June 27th.  The matter was continued to this date to permit the court to rule on the
motion concurrently with the Defendant’s motion to disqualify Plaintiff’s counsel.

Plaintiff’s Motion to Compel PMQ of Ennis Paint is granted.

On May 19th, 2014, Plaintiff’s counsel noticed the deposition of Defendant’s PMQ, for
June 2, 2014 at 10:30 a.m. (Amaral Decl., ¶ 13.)  Defendant did not show up for the
properly noticed deposition on said date, and Plaintiff’s counsel waited 0.5 hour for
Defendant’s appearance.  (Amaral Decl., Exh. H.)  Defendant asserts that CSS’s PMQ
did not attend the deposition because it believed that Plaintiff’s counsel had a conflict
of interest.  Defendant rests its contention on the fact that Plaintiff’s current counsel
Amaral shared a legal secretary with Thomas (who represented CCS in the 1990s on
a patent dispute)  and that plaintiff’s counsel both concurrently and successively
represented defendant.  (Opp. Motion to Compel, Pearson Decl., ¶ 2.)

Given that the only reason the deposition did not go forward was due to the contended
conflict of interest, which the Court has found does not exist, Plaintiff’s Motion to
Compel Deposition is GRANTED.

The parties are ordered to meet and confer as to the date, time and place for the
deposition to take place no later than July 10, 2014.

Defendant is ordered to pay sanctions to plaintiff  pursuant to CCP 2025.450(g) in the
reasonable amount of $830.00 (2.5 hours at $250 plus 1 hour at $330 rate) Under
CCP 2025.450(g), when a motion to compel deposition is granted, “the court shall
impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) in
favor of the party who noticed the deposition … unless the court finds that the one
subject to the sanction acted with substantial justification or that other circumstances
make the imposition of the sanction unjust.”  Under California law, the phrase
‘substantial justification’ has been understood to mean that a justification is clearly
reasonable because it is well-grounded in both law and fact.”  (Doe v. U.S. Swimming,
Inc. (2011) 200 Cal.App.4th 1424, 1434.)

Generally, a well-grounded motion to disqualify will amount to a substantial justification
to avoid mandatory sanctions under CCP 2025.450(g).  However, the court finds that
the Defendant, here, did not have a sufficient justification to seek disqualification.  On
May 16th, 2014, the parties stipulated to the deposition of CSS’s PMQ for 10:30 a.m.
on June 2, 2014.  (Stipulation, ¶ 1.)  Despite Defendant having knowledge that Amaral
and Thomas shared a legal secretary before the deposition on June 2, and that
Downey had previously represented CSS 18 years ago, Defendant did not provide
notice to Plaintiff that it would not appear until the day of the deposition via electronic
mail.  (Opp. Motion to Compel: Pearson Decl., ¶ 3; Lesniewski Decl., ¶ 5.)  Moreover,
Defendant’s motion to disqualify is not well-grounded in law and in fact.

The minute order is effectively immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.

Item  3     2012-00123280-CU-CL

Ennis Paint Inc vs. Central Striping Service Inc

Nature of Proceeding:    Motion to Disqualify Plaintiff’s Counsel

Filed By:   Pearson, Matthew D.

Defendant’s Motion to Disqualify Plaintiff’s Counsel is denied. Overruled: 5, 6, 7, 8, 9, 10, 12, 13, 14, 15, and 16.

Plaintiff’s evidentiary objections filed June 30, 2014:  Sustained as to Nos. 1, 2, 3, 8, 9,
20, and 21.  Overruled as to Nos. 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 22,
and 23.

This action, filed April 30, 2012,  arises from a dispute over an open book account
between Plaintiff Ennis Paint, Inc. dba Ennis Traffic Safety Solutions (“Ennis Paint”)
and Defendant Central Striping Service, Inc. (“CSS”).  Ennis Paint is represented by
Downey Brand, LLP (“Downey”), including counsel Annie Amaral (“Amaral”).

After preliminary discovery between the parties, Ennis Paint noticed the deposition of
CSS’s Person Most Qualified (PMQ) to occur on April 17, 2014.  (Amaral Decl., Exh.
B.)  CSS informed Ennis Paint that CSS’s PMQ would not be available until at least
May 14th.  (Amaral Decl., Exh. A.)  After meeting and conferring, the parties informally
agreed to a May 14th deposition.  (Amaral Decl., ¶ 9-10.)  Because there was no
stipulation, Ennis Paint, on May 15th, filed an ex parte application to compel CSS’s
deposition.  (Amaral Decl., ¶ 9-10.)  Ennis Paint withdrew its ex parte application after
the parties stipulated to a June 2nd deposition.  (Amaral Decl., ¶ 11.)

On May 19th, 2014, Ennis Paint noticed the deposition of CSS’s PMQ, for June 2,
2014 at 10:30 a.m.  (Amaral Decl., ¶ 13.)  On June 2, 2014, Defendant’s counsel
informed Plaintiff that CSS’s PMQ would not appear, asserting that Plaintiff’s counsel
had a conflict of interest.  (Amaral Decl., Exh. H.)  Thereafter, Ennis Paint filed a
motion to compel the deposition and CSS filed a motion to disqualify Downey from
representing Ennis Paint.

Motion to Disqualify

Preliminarily, it must be noted that disqualification of opposing counsel is authorized by
the court’s power to control the ministerial officers before it and may be justified to
protect an opposing party from the unfair use of confidential information against that
party. A motion to disqualify is equitable in nature, and reasonable diligence is
required. River West, Inc. v. Nickel (1987) 188 Cal. App. 3d 1297, 1309.

“A motion to disqualify a party’s counsel may implicate several important interests.
Consequently, judges must examine these motions carefully to ensure that literalism
does not deny the parties substantial justice. [Citation.] Depending on the
circumstances, a disqualification motion may involve such considerations as a client’s
right to chosen counsel, an attorney’s interest in representing a client, the financial
burden on a client to replace disqualified counsel, and the possibility that tactical
abuse underlies the disqualification motion.” ( People ex rel. Dept. of Corporations v.
SpeeDee Oil Change Systems, Inc.,(1999), 20 Cal.4th 1135,1144-1145.)

For example, a 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. Once this showing has been made, a rebuttable presumption arises
that the information has been used or disclosed in the current employment.’ ” (Shadow
Traffic Network v. Superior Court (1994) 24 Cal.App.4th 1067, 1084-1085.) The court
explained that this test was necessary “to implement the important public policy of
protecting against the disclosure of confidential information and the potential  exploitation of such information by an adversary.” ( Id. at p. 1085.) The court
concluded that the Shadow Traffic attorneys failed to rebut the presumption that the
accountants had deliberately or inadvertently passed along the information they had
received from Metro’s attorneys and the recusal order must stand. ( Id. at pp. 1085-
1087.)

Here, Defendant CSS asserts that Ennis Paint’s counsel should be disqualified under
two theories.  First, CSS maintains that Downey continues to represent it as its
corporate counsel, resulting in impermissible concurrent representation.  Second, CSS
contends that Downey previously represented it in a patent infringement matter,
resulting in impermissible successive representation.  The court addresses both
arguments in turn.

Concurrent (or Simultaneous) Representation

Under California’s Rules of Professional Conduct, a lawyer may not, without informed
consent, simultaneously represent two current clients with conflicting interests.
Disqualification is mandatory even when simultaneous matters have nothing in
common.  (Flatt v. Superior Court (1994) 9 Cal.4th 275, 284). CRPC, Rule 3-310(c)
provides that an attorney shall not, without the informed written consent of each client,
represent a client in a matter and at the same time accept a client in a separate matter
whose interest in the first matter is adverse to the client in the first matter. “Indeed, in
all but a few instances, the rule of disqualification in simultaneous representations
cases is a per se or ‘automatic’ one.”  (Id. [emphasis in original].)  “[A] law firm that
knowingly undertakes adverse concurrent representation may not avoid
disqualification by withdrawing from the representation of the less favored client before
[the hearing on a motion to disqualify].”  (Truck Ins. Exchange v. Fireman’s Fund Ins.
Co. (1992) 6 Cal.App.4th 1050, 1507.)

To determine whether there is continuity of representation, the court “does not depend
upon a formal withdrawal or the client’s subjective beliefs.”   (Banning Ranch
Conservancy v. Superior Court (2011) 193 Cal. App. 4th 903, 916.  Rather, the court
looks at whether there is “evidence of an ongoing mutual relationship and of activities
in furtherance of the relationship.”  (Banning Ranch Conservancy, supra, 193 Cal. App.
4th at 916 [internal quotations omitted]; see also  Worthington v. Rusconi (1994) 29
Cal.App.4th 1488, 1498.) Here, there is no such evidence.

Defendant asserts that Downey never terminated its relationship with CSS.  Defendant
additionally argues that CSS considers itself to be Downey’s current client.  However,
Defendant’s arguments are misplaced.  The existence of legal representation does not
rest upon Downey’s “formal withdrawal” or upon CSS’s “subjective beliefs.” (see
Banning Ranch Conservancy, supra, 193 Cal.App.4th at 916.)  Downey’s billing
records show that the last invoice sent to CSS was dated on July 23, 1996.  (Franklin
Decl., ¶ 2-3).  In fact, the attorney who represented CSS left Downey in 2006.  (Carroll
Decl., ¶ 7.) Defendant presents nothing by way of evidence reflecting any ongoing, and
therefore simultaneous, representation. Additionally, it also bears noting that our courts
have repeatedly held that representation ends when the task for which an attorney is
retained is completed. (See, e.g., Lockley v. Law Office of Cantrell  , Green, Pekich,
Cruz & McCort(2001) 91 Cal.App.4th 875, 887-888   ; Worthington v. Rusconi (1994)
29 Cal.App.4th 1488, 1497; 3 Mallen & Smith, Legal Malpractice (2006 ed.) Statutes of
Limitations, § 22.13, p. 385.)The representation ends when the “. . . agreed tasks have
been completed or events inherent in the representation have occurred.” (Crouse v.
Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509)

Defendant further states that a concurrent representation was initiated after James
Lesniewski, President and CEO of CSS, contacted Jim Dyer (“Dyer”), counsel at
Downey, on June 2, 2014.  James Lesniewski contacted Dyer to have Downey update
CSS’s corporate books, and maintains that Dyer advised him “on what could be done
and treated me like the current client I believe CSS to be.”  (Lesniewski, J. Decl., ¶ 6.)

Dyer asserts that during his June 2, 2014 conversation with James Lesniewski, he
informed James Lesniewski that he would have to run a conflict check before
representation.  (Dyer Decl., ¶ 6-7.)  That same day, after confirming the existence of a
conflict, Dyer contacted Downey’s General Counsel, Dan Carroll (“Carroll”) (Dyer
Decl., ¶ 7.)  Later that day, Dan Carroll notified Michael Pearson (“Pearson”), Counsel
for CSS.  (Carroll Decl., ¶ 4.)  Carroll informed Pearson that James Lesniewski had
called Dyer, and demanded that Pearson instruct James Lesniewski to not contact
Downey about representation.  (Carroll Decl., Exh. A.)  Furthermore, Carroll reiterated
to Pearson that Downey was not currently representing CSS.  (Carroll Decl., Exh. A.)

The Court is persuaded that Downey did not initiate representation during the
telephone call between James Lesniewski and Dyer. The Court also finds the timing of
Lesniewski’s call to Downey to be suspicious, and convenient, particularly in light of
the June 10 filing date of the motion to disqualify filed by CSS, and the attached
Declaration of James Lesniewski, dated June 6, 2014.

Therefore, the court rejects Defendant’s argument that Downey concurrently
represents CSS.

Successive Representation

Before a former client can disqualify an attorney and its firm under a theory of
successive representation, “the former client must show that the subjects of the
successive representations are substantially related.”  (Khani v. Ford Motor Company
(2013) 215 Cal.App.4th 916, 920; citing City and County of San Francisco v. Cobra
Solutions, Inc. (2006) 38 Cal.4th 839, 846.)  A member shall not, without the informed
written consent of the client or former client, accept employment adverse to the client
or former client where, by reason of the representation of the client of former client, the
member has obtained confidential information material to the employment.  (CRPC,
Rule 3-310(E).)  “In order to disqualify the attorney, the former client must show that
the subjects of the successive representations are the same.” Khani, supra, at p. 918.

“[D]isqualification will depend upon the strength of the similarities between the legal
problem involved in the former representation and the legal problem involved in the
current representation.” (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th
698, 709; see also section 132 of the Restatement Third of the Law Governing
Lawyers.)  “[E]ven if the issues are similar, there must be some basis to conclude that
an attorney … was privy to confidential information.”  (Fremont Indemnity Co. v.
Fremont General Corp (2006) 143 Cal.App.4th 50, 68)  In other words, there must be
an additional showing that the “attorney was in a position vis-à-vis the client to likely
have acquired confidential information material to the current representation.”  (Jessen
, supra, 111 Cal.App.4th at 710.)  Information about a client’s overall business
structure, practices or litigation philosophy does not require disqualification unless it is
material.  (See Fremont Indemnity Co, supra, 143 Cal.App.4th at 69.)  If an attorney
possesses confidential information, there is a presumption that it is imputed to the             attorney’s entire law firm.  (Id. at 67.) Successive representations will be substantially
related when the evidence before the trial court supports a rational conclusion that
information material to the evaluation, prosecution, or 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 issues.

Here, Downey’s prior representation of CSS’s in the patent infringement matter is
totally unrelated, factually and legally, to the present dispute relating to open book
accounts.  In the patent infringement dispute, Michael Thomas (“Thomas”), counsel at
Downey, defended CSS, Susan Lesniewski, and James Lesniewski.  (Thomas Decl., ¶
2.)  The plaintiffs there, The Rainline Corporation, alleged that CSS had used its
licensed technology after the license had expired.  (Thomas Decl., ¶ 2-3.)  The case
settled five months after Thomas was hired.  (Thomas Decl., ¶ 4.)  In the present
matter, Ennis Paint alleges that CSS ordered and received its product and has yet to
pay.  (Warne Decl., Exh. E – Complaint.)   CSS counterclaims that the products
delivered were late and of inferior quality.  (Warne Decl., Exh. F – 2nd Amended Cross-
Complaint.)  Clearly, the issues between the former representation and the current
representation are unrelated. In making this determination, the Court is required to
make what is essentially a factual reconstruction of the scope of the prior
representation, as it has done here; second, it must then be determined whether it is
reasonable to infer that the confidential information given would have been “to a lawyer
representing a client” in that matter; and, third, it must then be determined whether that
information is in fact substantially related to the issues raised  in the instant case
against the  former client. A substantial relationship in the context of successive legal
representation exists when the subject of the prior representation and the current
representation is rationally linked. As noted no such “linkage” here exists.

Moreover, Defendant has not shown how Downey has obtained confidential
information material to the present action .  Defendant asserts that the present dispute
is a collections matter, and that the confidential and sensitive financial information
given to Thomas discourages a settlement.  (Reply, Pearson Decl., ¶ 3-4.)
Additionally, Defendant maintains that Thomas’ direct role as counsel to CSS
presumes the acquisition of confidential information, sufficient to warrant Downey’s
disqualification.  Defendant relies on the fact that Thomas shared a legal secretary
with Amaral.  (Opp. Motion to Compel, Pearson Decl., ¶ 2.)

Notwithstanding Thomas’ direct role in representing CSS, the inquiry is whether that
attorney-client relationship yielded confidential information material to the current case.
Defendant has not shown how Thomas’ supposed knowledge of CSS’s financial
information, business practices, and litigation philosophy is material to the current
disagreement over the open book account involving a dispute over the delivery and
quality of the goods. Therefore, the court rejects Defendant’s argument that Downey’s
successive representation warrants disqualification.

Accordingly, Defendant’s Motion to Disqualify is DENIED.