Metropolitan News-Enterprise


Thursday, February 29, 2024


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Court of Appeal:

Recusal of Law Firm for Punitive Purpose Was Improper

Feuer Says Lawyer’s Wrongful Retention of Immaterial Privileged Documents Did Not Justify Action


By Kimber Cooley, Staff Writer




The Court of Appeal for this district has held that an order disqualifying a law firm from representing the plaintiff in a breach of contract and wrongful discharge action improperly deprived the client of his choice of lawyers where the purpose was to punish misconduct by a member of the firm and where his allegedly improper retention of privileged documents did not prejudice the defendant.

Tuesday’s opinion was authored by Justice Gail Ruderman Feuer, with Acting Presiding Justice John L. Segal and Justice Gonzalo C. Martinez joining in the opinion. It reverses an order of disqualification by Los Angeles Superior Court Judge Wendy W.Y. Chang who found that attorney David W. Quinto, of the Beverly Hills office of One LLP, had reviewed and retained one document prepared by lawyers for the defendant, the Hollywood Foreign Press Association (“HFPA”), and another document that possibly was privileged.

Although the plaintiff wound up dismissing, without prejudice, what remained of his lawsuit following the sustaining of demurrers without leave to amend, the disqualification order, if it had stood, could have affected future representation in controversies between the plaintiff, Magnus Sundholm, a Hollywood-based entertainment journalist who reports for Swedish news outlets, and HFPA.

Feuer wrote:

“[D]isqualification of an attorney affects a party’s right to counsel of choice, and it should not be used to punish an attorney for improper conduct. Quinto’s conduct could have been addressed by an award of sanctions or, if appropriate, reporting the conduct to the State Bar of California. The drastic remedy of disqualification of counsel is appropriate only where the attorney improperly or inadvertently received information protected by the opposing party’s attorney-client privilege, the information is material to the proceeding, and its use would prejudice the opposing party in the proceeding. Here, there was no showing the HFPA documents would prejudice HFPA in the proceeding.”

Draft Bylaws

Sundholm’s lawsuit stemmed from his Oct. 19, 2021 expulsion from membership in HFPA after he filed a complaint with the Internal Revenue Service regarding the tax-exempt status of the association. He had been battling with the association based in its exclusion from membership of Sundholm’s Norwegian “life partner,” KjerstiFlaa.

In December of 2021, Sundholm filed suit against HFPA, alleging, among other things, wrongful discharge and breach of contract.

In support of his breach of contract cause of action, Sundholm alleged that his expulsion from HFPA breached the bylaws of the association, and attached a draft copy of the bylaws to an amended complaint.

Two days after the amended complaint was filed, counsel for HPFA realized the version of the bylaws attached to the complaint was a draft copy prepared by outside counsel at Ropes & Gray and was labelled with the words “Privileged and Confidential Attorney-Client Communication.” The draft bylaws also included a note from a Ropes & Gray lawyer, purportedly giving legal advice.

HFPA filed a motion to strike the draft bylaws from the record, and Chang granted the motion and ordered the filed copies of the draft bylaws to be stricken and removed from the court’s docket. Sundholm then filed a corrected amended complaint that attached HFPA’s adopted bylaws.

Demand Conveyed

After the motion to strike, HFPA’s attorneys informed One LLP that they intended to move for disqualification of the firm. They also sent an email demanding the destruction of any copies of the draft bylaws and the production of all HFPA documents containing communications that appeared to be privileged.

Quinto replied to the demand via email, saying:

“Last year I received from another source a very similar document—identical contents, slightly different cover page. I have not received any other documents marked as privileged and have no reason to believe any documents I have received are reasonably subject to a claim of privilege.”

In June of 2022, HFPA served a deposition subpoena on One LLP, seeking all documents in the law firm’s possession that HFPA had created or disseminated, including the document referenced in the email.

One LLP objected to the subpoena and indicated that it would not produce any documents.

Motion to Disqualify

In July of 2022, HFPA moved to disqualify One LLP, arguing that the firm had violated its ethical obligations by reviewing the draft bylaws that were clearly marked as privileged. HFPA also moved to compel compliance with the subpoena.

The day before the scheduled hearing on the motions to compel and disqualify, Sundholm submitted a request for dismissal without prejudice of the one cause of action remaining against HFPA.

Chang found that the request for dismissal divested the court of jurisdiction to decide the motion to compel, but not to decide the motion to disqualify. She told Quinto:

“[T]he fact that you dismissed this case in an effort to avoid a ruling on the motion to compel the documents that would have confirmed your statements under oath that you are not currently in possession of any attorney-client privilege belonging to the defendant….

“So because you’re refusing to respond to the request that would have confirmed your statements under oath that you are not in possession of any remaining privileged documents and, instead, you are choosing to dismiss this case in an effort to avoid the effect of such an order, I find that the defendant’s concern that you continue to be in possession of privileged and confidential material belonging to the defendant that you have already once historically shown in this that you have filed as a matter of public record, combined with your misunderstanding of what the privilege is and what your [ethical] obligations…, I think that results in, I think, a real significant potential that you are in continued possession of privileged materials belonging to the defendant that may affect future judicial proceedings on the part of the defendant.”

Disqualification Error

Feuer said in her opinion the order that Chang “stated the circumstances” giving rise to the disqualification, but “failed to explain how Sundholm would use the privileged information to HFPA’s disadvantage in this lawsuit—the required material link between the privileged information and the issues presented in this lawsuit.”

She added:

“Sundholm’s dismissal of the case before the trial court could enter an order compelling production, even if motivated by gamesmanship as the trial court found, does not support disqualification. In the absence of any reasonable probability the privileged information would have provided Sundholm with an unfair advantage or otherwise affected the outcome of the proceeding, disqualification was improper.”

The jurist commented:

“We are sympathetic to HFPA’s position that it cannot know the extent of the detriment caused by One LLP’s possession of privileged documents because One LLP refused to respond to the discovery subpoena seeking to obtain that information. However, the disqualification issue arose because Sundholm shared the draft bylaws with Quinto. HFPA had knowledge of what documents it provided to its members that it claimed were confidential (as acknowledged by its general counsel in his declaration), yet it never asserted that Quinto had possession of any of those documents. Nor did HFPA explain how Quinto’s possible possession of one of those confidential documents would have prejudiced HFPA in this litigation.”

The case is Sundholm v. Hollywood Foreign Press Association, 2024 S.O.S 762.

Attorneys on appeal were Quinto, along with Joanna Ardalan of One LLP, for Sundholm, and Robert J. Ellison, Marvin S. Putnam and Chandler S. Howell of the Century City office of Latham & Watkins for HFPA.


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