Metropolitan News-Enterprise


Monday, October 16, 2023


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Service That Directs City to Lawyers on Panel Is Not Unregistered Referral Service—C.A.

Justices Affirm Dismissal of Ex-Lawyer’s Action to Force City to Stop Outsourcing Its Ticket/Citation Functions


By a MetNews Staff Writer


former attorney

An outfit that refers a city to a panel of attorneys to conduct administrative hearings on contested traffic tickets and other citations is not operating an attorney referral service and is therefore not breaching a statutory provision outlawing such services if they have not been approved by the State Bar of California, Div. Two of the Fourth District Court of Appeal has held.

The panel on Thursday issued two nearly identical unpublished opinions by Justice Frank J. Menetrez, arising from the same case. The opinions  affirm a judgment of dismissal that followed Riverside Superior Court Judge Kira L. Klatchko’s sustaining of a demurrer, without leave to amend, to the third amended complaint (“TAC”) filed by former attorney David S. Koslow, who resigned from the State Bar with disciplinary charges pending in 1989.

Suing as a taxpayer, Koslow maintained that Cathedral City, located in the Coachella Valley north of Palm Springs, is improperly utilizing services of Data Ticket Inc. In addition to referring the city to lawyers—who are versed in municipal law and act as independent contractors—it schedules hearings, sets up payment plans, and sends reminders to city officials as to impending deadlines.

The plaintiff contended that the city is unlawfully delegating non-delegable governmental functions. He sued Data Ticket, the city, attorney Manhattan Beach Steven Napolitano, one of the hearing officers, and numerous others, seeking injunctive relief.

One of the opinions comes in Koslow v. City of Cathedral City, E079296, and the other in Koslow v. Data Ticket, E079461.

B&P §6155

Koslow asserted that Data Ticket is in violation of Business & Professions Code §6155(a) which says:

“An individual, partnership, corporation, association, or any other entity shall not operate for the direct or indirect purpose, in whole or in part, of referring potential clients to attorneys, and no attorney shall accept a referral of such potential clients, unless all of the following requirements are met: [¶] (1) The service is registered with the State Bar of California….”

Data Ticket is not registered.

Menetrez’s Opinion

Menetrez said, in each of the opinions:

“The court properly concluded that Koslow failed to allege facts sufficient to state a cause of action for injunctive relief under section 6155. Section 6155 concerns services that refer ‘potential clients to attorneys.’…The TAC alleged that Data Ticket refers the city to attorneys who perform as hearing officers in administrative citation appeals. But none of the factual allegations shows that there is an attorney-client relationship between the city and the hearing officers or that an attorney-client relationship was ever contemplated. It follows that Data Ticket was not ‘referring potential clients to attorneys’…, and the Data Ticket defendants therefore were not subject to the requirements of section 6155.”

He continued:

“Koslow’s opening brief underscores the point. He asserts that the hearing officers were serving as a third party neutrals, a ‘lawyer service,’ under rule 2.4 of the State Bar Rules of Professional Conduct. That rule states that a ‘lawyer serves as a third-party neutral when the lawyer assists two or more persons who are not clients of the lawyer to reach a resolution of a dispute, or other matter, that has arisen between them.’ (…italics added.) Assuming that the hearing officers are third party neutrals within the meaning of the rule, by definition there is no attorney-client relationship between them and the city (or between them and any other party to the hearing).”

In running, unsuccessfully, for the City Council last year, he explained, according to the online Uken Report:

“My candidacy is a podium that provides the opportunity to alert voters in Cathedral City to the unwise and even unlawful practices engaged in by the current City Council by its outsourcing of essential governmental functions.”

Koslow’s Comment

Koslow told the METNEWS that “[t]he reasoning by the three appellate justices…is flawed in the extreme, and their decisions also fail to address the underlying grounds for the litigation,” citing cases which “prohibit adjudicators who have pecuniary interests in the outcomes of the matters they adjudicate.”

He noted:

“On April 20, 2023, the United States Department of Justice issued on its website an advisory citing the federal Constitutional and case law authorities prohibiting adjudicators from having a pecuniary interest in the outcome of the matters they adjudicate.”

Koslow advised:

“To address the danger to due process rights posed by the contracts between California Cities and Data Ticket, Inc., dba Citation Processing Center, I will request the Court of Appeal (a) to certify the decisions for publication as a matter of public information; and (b) to grant a petition for rehearing to address the errors and omissions in the decisions.  I will also file a petition to the Supreme Court to accept an appeal from the decisions, as they are in conflict with another District Court of Appeal’s decision, the LegalMatch decision.

Cited Case

Koslow is referring to Jackson v., decided Nov. 26, 2019 by the First District’s Div. Four. The court held that an online service that connected persons who wanted to find a lawyer with lawyers who had paid for a subscription to the service was operating an unregistered lawyers referral service.

There, Justice Tracie L. Brown wrote:

“Based on the undisputed facts found by the trial court and under our interpretation of the statute, LegalMatch does engage in referral activity. As  we have held, a referral occurs when an entity engages in the act of directing or sending a potential client to an attorney. The act of referring is complete when LegalMatch routes a potential client to attorneys who match the geographic location and area of practice….”

Relevance Explained

Explaining the relevance of that case, Koslow said:

Legalmatch case holds (pages 9-10) that the term ‘referral’ in B&P 6155 is NOT a term of art but the dictionary definition applies.

“In the two Koslow decisions, the Court holds ‘referral’ IS a term of art and applies only when the referral results in an attorney-client relationship. The referrals Data Ticket makes results in the referral of attorneys to provide a specific legal service—Rule 2.1, Third Party Neutrals, Rules of Professional Conduct— and there is ‘no client’ for the adjudicator, but it is the City that is required to provide the hearing officer, the City requests Data Ticket to supply the hearing officer, and the City is billed BY Data Ticket for the hearing officer ($75 [per] hour). After the hearing officer assesses the fine, Data Ticket, for a fee, collects it.”

In the two appeals, Koslow was in pro per. Data Ticket and seven individuals aligned with it, as well as Napolitano, were represented by Gregory J. Ferruzzo and Sean E. Morrissey of the Newport Beach firm of Ferruzzo & Ferruzzo, while the city and 16 individuals connected with it had the services of Algeria R. Ford of the Riverside office of Burke, Williams & Sorensen.

April Opinions

Menetrez also authored his panel’s April 13, 2023 unpublished opinions in Koslow v. State Bar of California, E078594, and Koslow v. Data Ticket Inc., E078092.

 Koslow sued to force the State Bar to join his action against Data Ticket and others as the real party in interest. Klatchko dismissed his second amended complaint (“SAC”), and Court of Appeal affirmed.

Menetrez wrote:

“The SAC does not allege that the State Bar violated any laws or committed any other wrong. The SAC instead seeks an order compelling the State Bar to prosecute this action against Data Ticket and Napolitano. But the SAC does not identify the legal authority for such an order. Even if we were to construe the SAC as a petition for writ of mandate compelling the State Bar to act, that petition would fail.”

The justice added:

“Here, section 6155 authorizes Koslow to seek injunctive relief against Data Ticket and Napolitano. That is the only relief available to Koslow under the law, and his right to that relief does not depend on the State Bar’s participation in this action.”

In E078092, the appeals court affirmed Klatchko’s order denying Koslow’s motion to disqualify Ferruzzo & Ferruzzo from representing both Data Ticket and Napolitano in light of an alleged conflict in the interests of the two clients.

“Koslow failed to show any risk of harm to his legally cognizable interests, instead relying entirely on the claimed harm to Data Ticket and Napolitano,” Menetrez said. “Accordingly, he lacked standing to seek disqualification of defense counsel.”

One day before those opinion were issued, the California Supreme Court, at its petitions conference, denied a request by Koslow to transfer his four appeals to itself. The high court also spurned his accusation against Napolitano in which he contested the State Bar’s decision to take no action on a complaint he filed.


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