Motion to Disqualify Plaintiff’s Counsel (Judge David Chaffee)

Case Management Conference

  1. Motion to Disqualify Plaintiff?s Counsel

Pertinent Background

This is a case of high-profile ?love? gone awry.

Plaintiff and defendant met in 2009.? Plaintiff had just been laid off from her job in the residential mortgage industry and was ?working as a manager at a restaurant and lounge in Newport Beach? at the time.? Defendant ?was (and is) a multi-billionaire and co-founder of semiconductor maker Broadcom Corporation.?? FAC ?7-9.? Despite a 16 year age difference, a romantic relationship blossomed.? According to plaintiff, that relationship lasted for six years, and only ended after plaintiff was ?forced to flee Nicholas for her own personal safety.?? FAC ?1. ?Plaintiff admits the relationship was tumultuous, amplified by occasional drug use.? FAC ?32.? (Defendant disputes the length and seriousness of the relationship, and the allegations of physical, emotional and drug abuse.)

 

The crux of this litigation is money, and a series of alleged oral promises made by defendant to buy plaintiff a home, shower her with cash, and to provide ?financial support and pay her expenses and other needs for the rest of her life.?? FAC ?16, 77.? Nothing is in writing.? According to plaintiff, defendant gave her $25,000/month in exchange for plaintiff moving in to his palatial residence, giving up her job, ignoring her friends, freezing her eggs, and devoting ?every waking hour to Nicholas and his needs or demands, whether personal, family, business, or charitable interests.?? FAC ?24.? Plaintiff further described the stipend as compensation for being defendant?s ?personal assistant, secretary, business advisor, life coach, confidante, nurse (after dental and orthopedic operations), social companion, household manager, social coordinator, stepmother to Nicholas?s children, and liaison to Nicholas?s ex-wife.?? FAC ?24.? Plaintiff claims contractual damages in excess of $60 million even though she did not fulfill her part in staying with defendant for the remainder of his life.? Plaintiff also claims $10 million in damages for various torts committed against her, most notably assault and battery.

 

Defendant?s Motion to Disqualify Greenberg Gross

 

Before addressing the motion itself, this Court feels compelled to remind defendant of some basic civil litigation rules.? Pursuant to CCP ?1005(b), moving papers are to be filed at least 16 court days before a hearing.? On 06/10/16, defendant filed a motion to strike, coupled with two declarations and an Appendix of Authorities (which is no longer required absent court request).? Although the motion was unilaterally set for hearing on 06/17/16, the earliest such a motion could be heard (absent a court order) would be 07/08/16.? Thus, the motion to strike and its accompanying papers was not filed in conformity with the law.? The papers would be timely as a ?reply? in support of the motion, except that the declarations are new matter which cannot be considered for the first time on reply.? See Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 241; Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538.? Either way, the defense has burdened this Court with improper papers.? The defense?s impropriety then, of course, led to an unauthorized (but meritorious) ?objection? filed by plaintiff, which led to an unauthorized ?reply brief? filed by defendant.? Counsel are forewarned that this Court will not countenance further departures from the rules.

 

Now, on to the disqualification motion ?

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The request to put on live testimony at the hearing is DENIED.? No good cause is shown for such, and the repeated accusations of ?perjury? between Gonzalez and Katz are hyperbole at best.

 

The evidentiary objections are overruled except as noted infra.? Although there are foundational issues abound, this is not a dispositive motion and most of the matters go to the weight rather than the admissibility of the evidence.

 

Pursuant to CCP ?128(a)(5), trial courts have authority to disqualify an attorney ? and his entire law firm ? from participating in a given case upon a proper showing of conflict.? Before the Court this day is a defense motion to deem Attorney Michael Katz (CA State Bar 181728) impermissibly conflicted, and to then disqualify his entire law firm (Greenberg Gross) from representing plaintiff herein.

 

As our Supreme Court observed several decades ago, ?disqualification motions involve a conflict between the client’s right to counsel of choice and the need to maintain ethical standards of professional responsibility.? The paramount concern is to preserve public trust in the scrupulous administration of justice and the integrity of the bar.? Thus, the right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.?? People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145.? However, courts should also be wary when deciding such motions since sometimes these motions are brought for improper tactical reasons.? See Rhaburn v. Superior Court (2006) 140 Cal.App.4th 1566, 1575.

  1. Is Attorney Katz Impermissibly Conflicted?

Defendant?s motion herein is predicated on CRPC 3-310(E), which prohibits a lawyer ? without the informed written consent of the client ? from accepting employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment.? There are two branches to disqualification:

  • Actual knowledge of confidential information obtained from the client which is germane to the new matter;
    OR
  • Presumed imparting of confidential information given the substantial relationship between the former legal services and those involved in the new matter.

 

Attorney Katz was a partner in the Orange County branch office of Morrison & Foerster LLP when assigned to work on a Probate matter for Henry Nicholas.? The matter was pending here in Orange County (case no A240406) for several years, starting in 2006.? Attorney Katz was counsel of record for Nicholas from 2006 through 2008, when Attorney Katz moved on to another law firm.? The question presented is whether Attorney Katz actually acquired confidential information about Nicholas germane to the pending lawsuit with Montero, or whether there is a substantial relationship between the prior services and the pending action such as to presume imputation.

 

  1. Actual Knowledge

 

What evidence does defendant have that Attorney Katz actually had confidential information from Nicholas which could be used against Nicholas in the current lawsuit?? It is hard to say.? Consider the declaration of Attorney Gonzalez (see Decl ?4):

?Mr. Katz requested and received significant privileged and confidential information about Dr. Nicholas during his engagement by (a) the Nicholas Enterprise Entities to review and advise on confidentiality provisions in its employment agreements, (b) by Dr. Nicholas in In re Nicholas Family Trust as his counsel of record, and (c) in furtherance of Dr. Nicholas?s various other litigation (e.g., Dr. Nicholas?s then-pending dissolution action in In the Marriage of Nicholas, in Orange County Superior Court Case No. 02D010487). During his representation of Dr. Nicholas, Mr. Katz participated in numerous telephone conferences and e-mail correspondence with my predecessor, Craig Gunther, and with Dr. Nicholas?s counsel of record in the then-pending dissolution action, Steven Silverstein, who also served as Dr. Nicholas?s personal attorney and as interim general counsel of the Nicholas Enterprise Entities. Mr. Katz also communicated with Dr. Nicholas?s executive/personal assistant.?

 

There is no question that Attorney Katz provided legal services to Nicholas in 2006, including but not necessarily limited to:

  • Filing a verified trust petition;
  • Propounding discovery to Nicholas? ex-wife and co-trustee;
  • Issuing deposition notices to household staff;
  • Preparing a tolling agreement;
  • Reviewing various employment contracts;
  • Reviewing limited material from the divorce case.

 

Attorney Katz does not dispute this.? There is no evidence regarding what Attorney Katz reviewed vis-?-vis the divorce case, and his involvement with the employment contracts was admittedly quite narrow.? As for the Probate action, a ?stay? was imposed quickly after it started and by the time the stay was lifted Attorney Katz had already resigned from Morrison & Foerster (which retained the Probate action in its inventory).? It appears that Katz?s active involvement with the Probate action lasted less than two months.

 

When proceeding under the ?actual knowledge? branch, the moving party must offer something more than conjecture.? See Elliott v. McFarland Unified School Dist. (1985) 165 Cal.App.3d 562, 572.? Defendant offers evidence that puts Attorney Katz in a good position to acquire confidential information, but no evidence that he actually did.? There is no evidence of any information being provided to Attorney Katz, which naturally would come in the form of a declaration from Attorneys Gunther or Silverstein.? Their silence, and that of defendant?s himself, is quite telling.? It remains speculative hearsay at best.? It may be that defendant has more incriminating writings to offer in camera, but that has to be defendant?s election.? See League of California Cities v. Superior Court (2015) 241 Cal.App.4th 976, 988-990.

 

In addition, although Attorney Gonzalez opines that ?Mr. Katz was exposed to Dr. Nicholas?s privileged and confidential information, such as his (1) pre-trial discovery, settlement and trial strategies; (2) personal and financial information protected by his right to privacy; (3) written discovery and court filings made under protective orders; and (4) other attorney work product? (see Decl ?4), this information is unclear.? One?s personal litigation ?strategy? is not necessarily confidential.? See Banning Ranch Conservancy v. Superior Court (2011) 193 Cal.App.4th 903, 918.? What confidential financial information did Attorney Katz receive that plaintiff can use in this case?? Since plaintiff was personally acquainted with defendant?s finances, wasn?t she in just as good a position to know whether defendant was a good mark?? Information relayed to Attorney Katz from sources other than Nicholas ? such as from plaintiff herself or Attorneys Gunther and Silverstein ? may not count absent some kind of special agreement.? See Roush v. Seagate Technology, LLC (2007) 150 Cal.App.4th 210, 221-227.

 

In the end, defendant has not yet established that Attorney Katz actually possessed confidential information which might have even the slightest bearing on the case at bar.? The fact that Attorney Katz ?may have? had access to information involving Nicholas? divorce case and employment transaction matters is not enough to show actual possession of confidential information.? It may, however, factor into presumptive imputation (see below).

 

  1. Presumed Imputation via Substantial Relationship

 

A substantial relationship is one in which the various representations have a logical nexus to one another, including factual or legal similarities.? City & County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 847; Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoff (1999) 69 Cal.App.4th 223, 234.? ?Successive representations will be substantially related when the evidence before the trial court supports a rational conclusion that information material to the evaluation, prosecution, settlement or accomplishment of the former representation given its factual and legal issues is also material to the evaluation, prosecution, settlement or accomplishment of the current representation given its factual and legal issues.?? Jessen v. Hartford Casualty Ins. Co.(2003) 111 Cal.App.4th 698, 713.

 

At first blush, a straight breach of contract ?Marvin? action between former lovers would seem to have little in common, much less a substantial relationship, with:

  • Probate litigation in which Nicholas accused his ex-wife (and then co-trustee) of poaching household employees away from the family trust to go work for her own ventures;
  • Reviewing, and possibly rewriting, ?no compete? employment agreements for Nicholas to use with household employees who might later decide to go work for his ex-wife;
  • Reviewing (albeit quite briefly) some information regarding Nicholas? divorce proceeding from his ex-wife.

 

The legal matters handled by Attorney Katz were many years ago, before Montero was in the picture, and involving matters unrelated to alleged promises made by Nicholas to Montero.? This might explain why Attorney Katz believed there was no conflict.? However, plaintiff?s operative pleading is not limited to broken promises (and the related torts).? Instead, plaintiff went for the jugular, filing an operative pleading so broad and far-flung with salacious innuendo touching on every aspect of Nicholas? life that it is hard to imagine how Attorney Katz could provide competent professional legal services to Nicholas in 2006 and not come across some confidential information beneficial to Montero today.? Montero?s ?everything plus the kitchen sink? approach to this case pulls in (like a vortex) almost everything pertaining to Nicholas.

 

The test for substantial relationship is less literal and more fluid.? From a holistic perspective, there is certainly some overlap between the work performed by Attorney Katz in 2006 and the issues percolating here today.? For example:

The Probate litigation involved disgruntled household employees and their allegiance (or lack thereof) to Nicholas.? In the case at bar, Montero claims that she managed, and was part of, the household staff ? many of whom she claims were subjected to abusive behavior (see FAC ?24, 26, 33, 94).? In the Probate action Attorney Katz had to minimize Nicholas? bad behavior toward household staff, but here his new firm has to do just the opposite.? The Probate action was still ongoing when Montero started her relationship with Nicholas, and Montero acknowledges that Nicholas told her about ?other litigation with his ex-wife? during their courtship (see FAC ?10).? It was one of the ways Nicholas allegedly managed to lull and lure Montero along into the one-sided relationship she now complains about (see FAC ?12).

 

Similarly, with regard to the transactional work rewriting the ?no compete? employment agreements for the household staff, Montero claims in the case at bar that she managed, and was part of, the household staff (see FAC ?24, 26, 33, 94).? With the transactional work, Attorney Katz was trying to protect Nicholas and (presumably) silence household staff, but here his new firm wants the staff to sing out loud against Nicholas to support plaintiff?s claims of abuse.

 

Finally, as it relates to the divorce case, there is no question that Attorney Katz had virtually nothing do with it except that he might have received some information regarding assets and whatnot.? Montero was already living with (at least per her contentions) Nicholas while the divorce proceedings were ongoing (see FAC ?18).? Montero also claims that she was instrumental in mediating angst between Nicholas and his ex-wife (see FAC ?24-25).? To the extent Attorney Katz may have learned anything about the divorce case (the scope of which may never be known), it certainly stands to reason that such information could be used against Nicholas.? Montero raises issues regarding his temperament, treatment of others, assets, false promises, delay, etc. ? all of which were part and parcel of the divorce case to one degree or another.

 

This Court assumes that Attorney Katz did his due diligence as any competent attorney would when representing Nicholas, and gathered information from a variety of sources to provide the best pro-Nicholas advice/service.? The information Attorney Katz would have acquired in that exercise is similar to what Montero seeks to prove by way of her bloated FAC.? Attorney Katz may have been right when he opined early on that his representation of Nicholas was not substantially related to the Montero claims, but that opinion was not based on a review of the operative pleading plaintiff intended to file.? That told a different story.? Plaintiff?s decision to swing for the fences created a substantial relationship between the case at bar and Attorney Katz?s prior services to Nicholas.? Attorney Katz is sufficiently, but perhaps unwittingly, conflicted to warrant disqualification were he actually representing Montero in the case at bar.? Since he is not involved with the case at bar, the next question is whether the entire firm is vicariously disqualified.

 

  1. Must Greenberg Gross be Disqualified?

 

When an attorney such at Katz is disqualified by a conflict of interest based on an earlier representation in another matter (successive representation conflict), his new law firm may be vicariously disqualified based on the assumption ?that attorneys, working together and practicing law in a professional association, share each other’s, and their clients’ confidential information.? ?City & County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 847-848; in accord, Beltran v. Avon Products, Inc., 867 F.Supp.2d 1068, 1083? (C.D. Cal. 2012).

 

Despite this assumption, a new firm may avoid disqualification if it erects a proper ethical screen around the disqualified attorney (here Katz) at the inception of the representation.? See People ex rel. Department of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1151-1152; Kirk v. First American Title Ins. Co. (2010) 183 Cal.App.4th 776, 800.? Proper ethical screening can avoid vicarious disqualification in limited circumstances, but the most important aspect of an effective screen is that it come into being immediately.? Kirk, at 810; In re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, 594 [?screening should be implemented before undertaking the challenged representation?].? For example, the district court in Beltran, supra, found that an ethical wall erected two weeks after the complaint was filed was not enough.

 

Here, no ethical screen was ever erected.? According to Alan Greenberg, ?after being apprised of the general nature of the prospective representation of Montero against Nicholas, Katz reported that there was no conflict on account of his previous representation because the matters were unrelated and he had no confidential information of Nicholas. Having concluded that there was no conflict, we proceeded to accept the representation of Ms. Montero.?? Greenberg Decl ?3.? Attorney Greenberg should have dug a little deeper, or at least been honest with Attorney Katz that he had no intention of limiting the Montero case to a simple breach of contract.? Once Attorneys Greenberg and Borges decided to impregnate the operative pleading, a reassessment of the conflict issue was required.? Although Katz is not ?on the team? handling this case, there are only 13 lawyers firm-wide, all of whom are under one roof.? Thus, it was imperative for the firm to erect an ethical wall around Attorney Katz whether or not it believed he had a conflict.? Unless the firm intended to use Katz?s knowledge, why not erect a wall?? Although Greenberg Gross made an error assessing the degree of conflict, the bigger error was not taking the obvious precaution of walling-off Attorney Katz anyway.? Had he been walled-off, and had the FAC been moored to a simple Marvin matrix, a different result may have occurred ? but alas that bell cannot now be unrung.

 

Finally, there is the issue of undue prejudice, which plaintiff?s counsel describes as ?extraordinary? given a requested trial date later this year.? However, there is no trial date in this case, and as plaintiff?s counsel repeatedly points out there has been to date only limited discovery and no depositions.? The pleadings are not at issue.? This case is far from trial-ready.? Although counsel contends to have spent 1,500 hours on the case, it is not clear where those hours went.? Counsel opines that it would be unfair to make Montero repeat her story to new attorneys, but Montero?s story is already spelled out in graphic detail in the operative pleading.? All she has to do is nod her head ?yes? when asked by her new attorneys ?is all of this true??? She will still have to recount her story in written discovery and deposition and trial.? Counsel offers nothing close to extreme prejudice to plaintiff in having to secure new counsel.

 

Motion to disqualify Greenberg Gross LLP is GRANTED.

 

 

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  1. Motion to Compel Defendant?s Deposition

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Service of a notice of deposition is effective to require a party or party-affiliated witness to attend and to testify.? CCP ?2025.280.? A party may serve written objection to the deposition notice based upon an ?error or irregularity? under Article 2 of the Code.? CCP ?2025.410.? The differing grounds for objection are provided by statute, and include such things as the 10-day notice and 75/150 mile requirements.? See CCP ?? 2025.210 – 2025.280.? Unavailability for a date unilaterally selected is not one of the enumerated grounds for objecting to a deposition notice, but more importantly service of an objection does not stay the deposition.? Article 2 (? 2025.210 – 2025.280) does not contain any requirement that a deposition be scheduled after agreement is reached on the date.? Even though professional courtesy dictates cooperating on deposition dates, the deponent has an affirmative obligation to file a motion to quash (for procedural errors) or a motion for protective order (to adjust the timing and/or location).? CCP ?2025.420(b).

 

Here, the motion to compel is proper.? Defendant offers no legal justification for refusing to sit for a deposition.? If plaintiff wishes to use her one deposition before written discovery and the pleadings being at issue, that is her choice to make.? Motion to compel GRANTED.? Defendant is to immediately provide 5 dates to sit for his deposition upon notice from plaintiff?s new counsel.? Plaintiff did not request monetary sanctions relating to this motion, so none are awarded.

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