Friday, October 25, 2002
Court of Appeal Overturns Order Clearing Way for Law Firm to Hire Associate With Alleged Conflict
By KENNETH OFGANG , Staff Writer/Appellate Courts
Body:A Stanislaus Superior Court judge issued an improper advisory opinion by ruling that a law firm would not be disqualified from high-stakes litigation if it hired an attorney whose previous firm represented the adverse parties, the Fifth District Court of Appeal has ruled.
Judge William A. Mayhew should not have entertained a “preemptive motion” brought on behalf of businessman/philanthropist Calvin Bright by the firm of McCormick, Barstow, Sheppard, Wayte & Carruth, Justice Rebecca Wiseman wrote Tuesday in an unpublished opinion .
Bright’s wife Marjorie sued for divorce two years ago, touching off a raft of litigation involving other family members and business interests estimated to be worth between $60 million and $80 million. The Brights are major figures in real estate, construction, and other businesses in Central California and significant donors to the University of California and various community groups.
Marjorie Bright is represented, as is Lyn Bright, one of the couple’s adult daughters, by the Modesto firm of Damrell, Nelson, Schrimp, Pallios, Pacher & Silva. The McCormick firm, one of the largest in Central California, is based in Fresno with offices in Modesto and Las Vegas.
The conflict issue arose earlier this year when the McCormick firm agreed to hire a Damrell associate seeking to relocate to Fresno, Alex Aretakis—if it could do so without being forced out of the Bright litigation.
The McCormick firm filed motions in three Bright lawsuits, seeking orders precluding disqualification and attaching a declaration in which Aretakis insisted he had not worked on any of the cases. The Damrell firm responded that it was entitled to a presumption that Aretakis had access to confidential information.
Mayhew ruled that since Aretakis’ declaration had not been rebutted, his hiring by the McCormick firm would not require disqualification.
The Damrell firm then filed a writ petition, and the Court of Appeal issued an order to show cause. Just before the petition was to be argued, Aretakis informed the McCormick firm that he had accepted a position with another Fresno firm.
The Damrell firm, however, went forward with the writ proceeding after the McCormick firm said it was still willing to hire Aretakis if it could do so without being disqualified.
Both firms urged the appellate panel to rule on the merits, but Wiseman said it had no jurisdiction to do so.
“This type of preemptive motion creates the potential for gamesmanship,” the justice wrote. “Courts have acknowledged that disqualification proceedings may be abused if invoked solely to gain some tactical or strategic litigation advantage….For example, a firm may extend an offer of conditional employment yet have no intention of following through with its claim. Meanwhile, it forces the opposition to go to the expense of responding to the ‘what if’ motion.”
One problem with such motions, she said, is that judges may confuse the burden of proof and apply an incorrect legal standard. Mayhew, she said, apparently did just that—placing the burden on the Damrell firm to show that Aretakis possessed confidential information instead of presuming that he did and forcing the McCormick firm to prove otherwise.
Another problem is the burden such motions impose on the courts, Wiseman wrote.
“The widespread use of motions to disqualify opposing counsel has already reached arguably epidemic proportions,” she commented. “…Thus, expanding their use to include conditional offers of employment only exacerbates the situation.”
The justice rejected the analogy to declaratory actions concerning the interpretation of contracts. Here there was no contract, just an employment offer, and the parties to the offer were attorneys, not the parties to the litigation, she reasoned.
Wiseman acknowledged that California courts have broadened the availability of declaratory relief in recent years. But the cases, she said, all involve circumstances not present here, such as matters of public interest, potential economic loss or waste, or challenges to allegedly invalid statutes or regulations.
The case is Bright v. Superior Court, F040425.
Copyright 2002, Metropolitan News Company