Metropolitan News-Enterprise


Thursday, June 24, 2010


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S.C. Declines to Review Vicarious Disqualification Ruling




The California Supreme Court yesterday declined to review a Court of Appeal ruling that a law firm is not always disqualified from representing a party adverse to the former client of an attorney who received confidential information prior to joining the firm.

The justices, at their weekly conference in San Francisco, voted 6-1 to leave intact the decision of this district’s Div. Three in Kirk v. The First American Title Insurance Company (2010) 183 Cal.App.4th 776. Only Justice Ming Chin voted to hear the case.

The high court also rejected requests by the Consumer Attorneys of California and a number of law firms to depublish the Court of Appeal opinion.

In his April 7 opinion for the Court of Appeal, Justice Walter Croskey acknowledged inconsistency in the case law but said the best rule is one that automatically disqualifies the individual lawyer, but creates only a presumption in favor of disqualifying the entire firm—the presumption being rebutted where an effective ethical wall has been erected around the attorney.

The panel reversed an order disqualifying the firm of Sonnenschein, Nath & Rosenthal from representing First American Title Insurance Company and related entities in four related class actions in which the plaintiffs accused the defendants of consumer protection violations, including paying kickbacks for business referrals and charging excessive fees.

The case was sent back to the trial court for a determination of whether the firm built an adequate ethical wall around an attorney who obtained confidential information about the class actions from the plaintiffs’ lawyers before he joined Sonnenschein and before Sonnenschein represented the defendants.

The plaintiffs are represented by the Bernheim Law Firm of Beverly Hills and the Kick Law Firm of downtown Los Angeles. The First American companies were represented—in the four class actions, in dozens of other class actions around the country, and in other matters—by a team of lawyers from Bryan Cave, LLP until those attorneys joined Sonnenschein last year.

In moving to disqualify Sonnenschein, the plaintiffs noted that Gary Cohen, a former deputy state insurance commissioner with whom the plaintiffs’ lawyers had discussed the suits, had joined that firm about a month before the Bryan Cave lawyers. Cohen was based in San Francisco, while the Bryan Cave lawyers went to Sonnenschein offices in Los Angeles and St. Louis.

The plaintiffs’ lawyers claimed that in discussing the suits with Cohen more than a year earlier, they had disclosed confidential information. They said they had hoped to hire Cohen as a consultant, but that he had declined because it was possible that an insurance company he was then representing in-house had provided coverage to First American.

After they learned that he was leaving the insurance company to join Sonnenschein, however, and before they learned that Sonnenschein would be replacing Bryan Cave as counsel for First American in the class actions, the plaintiffs contacted Cohen again, this time by e-mail. Upon learning that his firm was representing the defendants, however, Cohen told the plaintiffs’ lawyers that he was deleting their e-mail attachments unread.

Upon learning of the situation, Sonnenschein management concluded that it would place an ethical screen around Cohen, who would be prohibited from working on the class actions, discussing them with anyone else at the firm, viewing non-public documents about them, accessing related documents on the firm’s computer network, or sharing in fees generated by the representation.

Cohen did, however, help the former Bryan Cave lawyers draft a letter to the Department of Insurance in connection with another First American matter.

Los Angeles Superior Court Judge Anthony Mohr granted the motion to disqualify. He explained in his order that while “[n]o one is to blame for this situation except perhaps the itinerant nature of attorneys that has developed over the last fifteen years,” the disclosure of client confidences and attorney work product to Cohen required Sonnenschein’s disqualification.

He also found that even if the construction of an adequate ethical wall would have allowed the firm to stay in the case, “there is evidence that the wall Sonnenschein erected has not been a complete success” in light of Cohen’s role in drafting the letter in the discrimination matter.

Cohen left Sonnenschein in January of this year, while Mohr’s order was still on appeal.

Croskey, surveying cases over the last 30 years, concluded that the current state of California law is that disqualification is presumptive, rather than automatic, except in the case of “a tainted attorney possessing actual confidential information from a representation, who switches sides in the same case.”

That rule is consistent with rules in about half of the states that have addressed the issue, the justice noted, although a large majority of states now reject automatic disqualification when the person from whom the attorney obtained confidential information was only a prospective client.

While “the safest approach” would have been to screen Cohen completely from First American cases, he added, Cohen’s work on an unrelated matter for the company did not constitute a breach of the ethical wall.

Since Cohen subsequently left the firm, he added, Sonnenschein’s disqualification will only be required if he actually passed confidential information to other lawyers there prior to departing.

In other conference action, the court left standing a ruling by Div. Three that the family of a woman whose remains were allegedly mishandled by the UCLA Willed Body Program has no negligence claim against the university.

In a 2-1 decision April 7, the panel held that Ruth Waters, who died in 2001, gave the university “irrevocable” control over her remains, so any understanding between the school and Waters’ family did not create a legally enforceable duty.

Justice Patti Kitching wrote for the court, joined by Justice Richard Aldrich. Croskey dissented, arguing that the terms of the donation should not preclude an action for emotional distress suffered by family members as a result of any misrepresentation made to them.

The panel granted a writ of mandate, directing that summary judgment be granted in favor of the school.

Waters, who according to testimony became interested in the use of cadavers for medical research while training to be a nurse, entered into a donation agreement with UCLA in 1970. The agreement said her remains would be used for “teaching purposes, scientific research, or such purposes as the said University or its authorized representative shall in their sole discretion deem advisable.”

Waters’ children filed one of more than a dozen lawsuits that were brought in the wake of the 2004 revelations that hundreds of bodies and body parts donated to the Willed Body Program had been sold for profit.

The majority rejected the plaintiffs’ claim that the donation created a special relationship. Kitching said the university was entitled to summary judgment under Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, holding that a widow had no claim against the university over the loss of her husband’s remains by UC Irvine’s Willed Body Program absent evidence the body was used in a manner other than that authorized in the donation agreement.

Croskey argued in dissent that Conroy does not preclude actions based on representations outside the donor agreement.

The case is Regents of the University of California v. Superior Court (2010) 183 Cal.App.4th 75.


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