Case Number: EC058955 Hearing Date: June 13, 2014 Dept: NCD

TENTATIVE RULING
#6
EC 058955
SILVERMAN v. COLOR LABS ENTERPRISES, INC.

Motion of Defendant Color Labs Enterprises, Inc. for an Order Disqualifying Jeffrey Bohrer, Esq. as Counsel for Plaintiff

TENTATIVE:
Motion to disqualify counsel is DENIED.
The court finds no violation of California Rules of Professional Conduct Rule 2-100 or Rule 5-210, particularly as it appears plaintiff will provide his informed written consent to any testimony provided by his attorney in this matter. The moving papers have failed to establish substantial facts suggesting injury to the integrity of the judicial system which would overcome plaintiff’s choice of counsel.

FACTS:
Plaintiff Jeffrey Silverman brings this action against his former employer, defendant Color Labs Enterprises, alleging that plaintiff was hired in 2007 as an independent contractor salesman, and that in late January 2008 Color Labs changed his status to employee and required plaintiff to sign a non-competition agreement in violation of Business & Professions Code section 16600. In September 2009, Color Labs terminated plaintiff’s employment, and thereafter threatened customers that they would be sued if they bought from Silverman or any company for whom he was employed, defamed him with customers and prospective customers, and threatened to never allow Silverman to work in the mailroom consumables field again.

Plaintiff also alleges that on September 2009, Color Labs falsely reported to the EDD that Silverman had been fired for dishonesty, resulting in EDD denying Silverman unemployment benefits. Silverman appealed the denial and on February 19, 2010, the Appeal Board made the determination that Silverman had not engaged in dishonest practices and therefore ruled in Silverman’s favor, granting unemployment benefits.

On September 9, 2009, Color Labs filed suit against Silverman alleging causes of action for Breach of Contract, Interference with Economic Advantage, Unfair Business Practices and Violation of the Uniform Trade Secret Act. (“Action 1”). Plaintiff alleges that this action was brought and maintained maliciously by Color Labs to scare Silverman out of the mailroom consumable industry. Plaintiff filed discovery motions against Color Labs in that action, including a motion to have RFAs deemed admitted, which were set for hearing on December 18, 2009. On December 14, counsel for Color Labs told counsel for plaintiff that Color Labs would wait until the last minute before the hearing, and dismiss the case in its entirety without prejudice so that the court would lose jurisdiction to impose sanctions, and Color Labs would refile the action. On December 17, 2009, after the court posted tentative rulings in Silverman’s favor and awarded thousands of dollars in monetary sanctions, Color Labs dismissed the action.

On March 26, 2010, Color Labs sued Silverman again, in a small claims action, claiming that Silverman was overpaid salary and to compel Silverman to return $2,262.71. (“Action 2”). On September 15, 2010, the court ruled in defendant’s favor, finding that Silverman owed no money.

On April 13, 2010, Color Labs filed a superior court case alleging causes of action for another breach of contract, alleging that Silverman conspired with Color Labs’ customers Johns and Think Green to order mailroom consumables from Color Labs and then not pay for them. (“Action 3”). This action went to trial on August 29, 2011, and judgment was entered in favor of defendant and against Color Labs.

Plaintiff alleges that all actions were brought without probable cause and to prevent Silverman from working in the industry and to make Silverman spend his money on defense costs.

ANALYSIS:
Defendant seeks an order disqualifying plaintiff’s counsel on two grounds. First, defendant argues that counsel Mr. Bohrer has improperly communicated with defendants’ client, one of the shareholders of Color Labs, without the consent of counsel for defendant. Second, defendant argues that Bohrer is a critical witness in this case, and intends to testify at trial.

Alleged Contact With Client
With respect to contact with the client, under California Rules of Professional Conduct, Rule 2-100, governing Communication with a Represented Party:
“(A) While representing a client, a member shall not communicate directly or indirectly about the subject of the representation with a party the member knows to be represented by another lawyer in the matter, unless the member has the consent of the other lawyer.
(B) For purposes of this rule, a “party” includes:
(1) An officer, director, or managing agent of a corporation or association, and a partner or managing agent of a partnership; or
(2) An association member or an employee of an association, corporation, or partnership, if the subject of the communication is any act or omission of such person in connection with the matter which may be binding upon or imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization.”
Defendant presents evidence that Bohrer communicated with one of its shareholders. The moving papers present a declaration of defendant’s counsel stating that Bohner told him he had information from a Color Labs source who was providing him with information concerning the case and alleged misconduct by Color Labs, and when cautioned that he was not authorized to have ex parte communications with any party represented by counsel, Bohrer responded that the source was a former employee, and so fair game. [Gower Decl., para. 4]. Counsel then states that during a break in a deposition of the PMK of Color Labs, “in my presence, Mr. Boher made a telephone call to an individual he referred to as ‘Hamid.’ Mr. Bohrer told ‘Hamid’ that he [Mr. Boher] was taking Mr. Varraveto’s deposition and discussed other aspects of the case which caused me to believe Mr. Bohrer was communicating with my client Hamid Tabibzadeh.” [Gower Decl., para. 6]. Gower also states he has not given any consent to counsel for plaintiff to have ex parte communications with the client. [Para. 8].

The reply presents a further declaration, with counsel stating that the court reporter told him that she also heard Bohrer speaking to “Hamid.” [Reply Gower Decl., para. 6]. This is hearsay, and it is not clear why counsel did not obtain a declaration from the court reporter, or from Hamid himself concerning this allegedle improper communication. The moving papers indicate that counsel has not been in contact with Tabibzadeh about this matter. [Gower Decl., para. 9].

The opposition denies that any such contact has taken place. The declaration of Bohrer states, “I have never spoken with, nor contacted Hamid; nor has he contacted me,” and that “I do not know how to contact Hamid were I to so desire.” [Bohrer Decl., paras. 4, 5]. Bohrer also submits a redacted cell phone bill showing all calls made on May 15, 2014, the day of the deposition, and states “I know the identity of all 6 calls therein, and received no incoming calls.” [Para. 5].

Bohrer does not explain who he was actually talking to on the phone during the deposition, or why there may have been some suspicion that it was Hamid.

In fact, the opposition goes on to argue that even if Bohrer had communicated with Hamid, this was not improper.

In sum, the moving papers appear to be based on some amount of speculation. The opposition does indicate that the former employee with whom Bohrer or plaintiff is in contact with is Calvin Wong, not “Hamid.”

Counsel as Necessary Witness
Defendant also argues that Bohrer should be disqualified because he is a necessary witness to the facts underlying the lawsuit.

The motion is based on ABA Model Rule 3.7, which provides:
“(a)A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless:

(1) the testimony relates to an uncontested issue;

(2) the testimony relates to the nature and value of legal services rendered in the case; or

(3) disqualification of the lawyer would work substantial hardship on the client.”

Defendant relies on Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197, in which the court of appeal affirmed the trial court’s granting of a motion in a custody dispute to disqualify a child’s paternal grandfather from representing the child’s father. The trial court in that case found that the paternal grandfather’s law firm had represented the mother’s father in his own custody dispute, obtaining a declaration from the mother in that case, presenting a conflict.

The court in Kennedy also noted that in that case another reason for affirming the trial court order was the “almost inevitable prospect that [the paternal grandfather] will act both as a percipient witness and an advocate…” in the action. Kennedy, at 1208. Further, the court noted that the “multiple and interconnected family entanglements present here result in a strong appearance of impropriety and undermine the integrity of the judicial system.” Kennedy, at 1211.

Here, defendant argues that Bohrer will be a necessary witness because plaintiff has alleged malice against Color Labs based on a conversation between Bohrer and Mark Newgreen, former CFO of Color Labs, and allegedly witnessed by plaintiff, in which Newgreen told Bohrer that plaintiff did not have the funds to hire Bohrer on a repeated basis, so that plaintiff must be remunerating Bohrer with oral sex as payment, and threatened Bohrer that Color Labs would keep bringing lawsuits. [Ex. E, Complaint, paragraph 44 (g) and (h)].

The opposition argues that Bohrer is not a critical and indispensable fact witness, as the statements set forth in the complaint were witnessed by and made in the presence of plaintiff, but states that “Bohrer does indeed, intend to testify to these matters…”

Respondent argues that the motion should be denied because disqualification would work a substantial hardship on the client.

The reply argues that in circumstances such as here, where counsel will be required to testify and where counsel does not choose to voluntarily withdraw, the court has “broad discretion” to order that counsel be disqualified. This is based on the Supreme Court opinion in Comden v. Superior Court (1978) 20 Cal.3d 906, 916.

Comden was decided based on former Rule 2-111(A)(4), superceded in 1989, which provided that, with exceptions not relevant here, that if “a member of the State Bar knows or should know that he or a lawyer in his firm ought to be called as a witness on behalf of his client in litigation concerning the subject matter of such employment he shall withdraw from the conduct of the trial.”

Based on the rule as then formulated the Supreme Court held that the trial court was required to determine whether counsel knows or should know that he ought to testify, and, if so, order disqualification:
“We deem the rule to require that the court first consider whether the attorney’s testimony will be necessary to protect his client’s interests and, if it concludes such testimony will likely be necessary, that it order a timely withdrawal consistent with minimizing prejudices which may result from the substitution of counsel. Whether an attorney ought to testify ordinarily is a discretionary determination based on the court’s considered evaluation of all pertinent factors, including, inter alia, the significance of the matters to which he might testify, the weight his testimony might have in resolving such matters, and the availability of other witnesses or documentary evidence by which these matters may be independently established.”
Comden, at 913.

It has been noted that under the amended rule, however, which no longer affirmatively mentions withdrawal, but requires the written consent of the client, the application of Comden has necessarily changed:
“Based on this change [in the Rules of Professional Conduct], the court in Lyle v. Superior Court (1981) 122 Cal. App. 3d 470 [175 Cal. Rptr. 918], recognized that Comden was no longer binding. “[T]he trial court under the new rule still has discretion to order withdrawal of counsel in instances where an attorney or a member of the attorney’s law firm ought to testify on behalf of his client. The amended rule, however, changes the emphasis which the trial court must place upon the competing interests, in reaching its decision. Under the amended rule . . ., the trial court, when balancing the several competing interests, should resolve the close case in favor of the client’s right to representation by an attorney of his or her choice and not as in Comden, in favor of complete withdrawal of the attorney. Under the present rule, if a party is willing to accept less effective counsel because of the attorney’s testifying, neither his opponent nor the trial court should be able to deny this choice to the party without a convincing demonstration of detriment to the opponent or injury to the integrity of the judicial process.” (Id. at p. 482, fn. omitted; see also Reynolds v. Superior Court (1986) 177 Cal. App. 3d 1021, 1028 [223 Cal. Rptr. 258].)
Smith, Smith & Kring v. Superior Court (1997) 60 Cal.App.4th 573, 579.

The court of appeal in Kennedy, in fact, recognized that the California version of the advocate –witness prohibition rule is set forth in California Rules of Professional Conduct, rule 5-210, which provides:
“A member shall not act as an advocate before a jury which will hear testimony from the member unless:
(A) The testimony relates to an uncontested matter; or
(B) The testimony relates to the nature and value of legal services rendered in the case; or
(C) The member has the informed, written consent of the client….”

The Smith case also noted that the California Supreme Court in Maxwell v. Superior Court (1982) 30 Cal.3d 606. 619, had acknowledged in a footnote Comden’s weakened application:
“‘The State Bar has liberalized the rule on attorney-witnesses. Counsel need no longer withdraw from either a civil or criminal case if the client consents in writing to continued representation…Thus the State Bar has concluded that a fully informed client’s right to chosen counsel outweighs potential conflict or threat to trial integrity posed by counsel’s appearance as witness.”
Smith, at 579, quoting Maxwell at 619, n. 9. (Emphasis in the original).

Smith then noted that in that case, there was no dispute that the attorney had obtained written consent from the client. The court held, “Therefore, in applying the current rule, we must ask, based on the evidence supplied to the trial court, was there a ‘convincing demonstration of detriment to the opponent or injury to the integrity of the judicial process?’” Smith, at 579, quoting Lyle v. Superior Court (1981) 122 Cal.App.3d 470, 482.

With respect to injury to the integrity of the judicial process, Smith noted that the court then engages in a balancing of the competing interests, starting “with the proposition that the right of a party to be represented in litigation by the attorney of his or her choice is a significant right and ought not to be abrogated in the absence of some indication the integrity of the judicial process will otherwise be injured.” Smith, at 580.

Accordingly, the court should consider the following factors:
“ First, the court must consider the combined effects of the strong interest parties have in representation by counsel of their choice, and in avoiding the duplicate expense and time-consuming effort involved in replacing counsel already familiar with the case.”

The court went on:
“Second, the court must consider the possibility counsel is using the motion to disqualify for purely tactical reasons. Should counsel freely be able to disqualify opposing counsel simply by calling them as witnesses, it would pose the very threat to the integrity of the judicial process that motions to disqualify purport to prevent….”
Smith, at 581.

“Finally, whenever an adversary declares his intent to call opposing counsel as a witness, prior to ordering disqualification of counsel, the court should determine whether counsel’s testimony is, in fact, genuinely needed.”
Id.

This last determination should be made based on the factors outlined in Comden, including,
“the significance of the matters to which he might testify, the weight his testimony might have in resolving such matters, and the availability of other witnesses or documentary evidence by which these matters may be independently established.”
Smith, at 581, quoting Comden, at 913.

Here, there is no discussion of Smith or the standards under the California Rule of Professional Conduct Rule 5-210, which prohibits advocate witness unless the client consents, and applies only to jury trials.

Defendant has failed to show that it will suffer any substantial detriment, or that counsel has obtained confidential information. It appears with respect to the integrity of the judicial system that plaintiff has a clear interest in retaining counsel who has been representing him for many years and it would require some outlay of expense to hire new counsel and begin such new counsel from scratch on these issues.

As to the second factor, the possibility that counsel is using the motion to disqualify for tactical reasons, it appears that counsel for defendant has been threatening for some time to bring a motion to disqualify, and brings this motion based in part on speculation concerning a telephone conversation. The Court does not suggest anything improper on the part of moving party here, simply that the showing on the motion to disqualify is not sufficient based on the record to date.

As to the third factor, whether the testimony is actually necessary, it is not clear that plaintiff cannot make his proof without counsel’s testimony, or that the parties are not in fact interested in having a court trial rather than a jury trial.

It may turn out that Mr. Bohrer’s testimony is necessary, but, as Smith makes clear, in the absence of some other countervailing interest, under Rule 5-210 “an attorney acting as both advocate and witness in a client’s case is tolerable.” Smith, at 580 (emphasis in the original).

In sum, there does not appear to be an established reason to interfere with plaintiff’s choice of counsel, and the motion is denied.