People ex rel. Herrera v. Stender
152 Cal. Rptr. 3d 16
Cal. Ct. App.2012Background
- Guajardo resigned from the California State Bar with disciplinary charges pending in 2008 and IPG was formed with Stender acquiring the practice.
- IPG was registered as a California law corporation; Stender became IPG’s sole shareholder by June 16, 2010 and IPG’s offices operated in SF, San Diego, and Phoenix.
- In November 2010 the People filed a 17200 complaint alleging unlawful, unfair, and deceptive practices based on Guajardo’s unauthorized practice and failures to notify clients and others of his status.
- IPG and Stender sought a preliminary injunction; the court found likelihood of success on the merits and issued a modified injunction with notices to clients and other conduct changes.
- Stender and IPG appealed March 25, 2011; the appeal raised mootness, evidentiary privilege, and jurisdictional/standing challenges related to the injunction and notices.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether State Bar rules can support a UCL unlawful practices claim against IPG and Stender. | People argues rules bind IPG and Stender and support §17200 liability. | IPG argues rules do not create private actions and do not apply to corporations not members of the State Bar. | IPG bound; UCL liability permitted for such conduct. |
| Whether IPG and Stender violated 6180/6180.1 and Rule 1-311(D) by not notifying clients and others of Guajardo’s resignation. | People claims failure to notify violated statutory/regulatory duties and misled clients. | IPG contends notice not required or properly directed; terms misapplied to corporate entity. | Violations established; notices required and properly directed to clients and bar/recipients. |
| Whether the injunction was appropriate where harm was allegedly moot and continuing harm was uncertain. | People asserts ongoing risk Guajardo could practice unlawfully without notice. | IPG argues no ongoing threat since Guajardo left IPG and firm ceased operations. | Injunctive relief appropriate given likelihood of ongoing or recurrent misconduct. |
| Whether the attorney-client privilege/preemption of evidence precluded IPG and Stender from presenting a defense. | People contends defense can be presented without waiving privilege. | IPG asserts privilege prevents disclosure of confidential client information. | Protection balanced; defense permissible with measures; privilege not a bar here. |
| Whether the injunction improperly regulates the practice of law and preempts state bar regulation. | People views §17200 remedy as preventing fraud, not regulating professional conduct per se. | IPG argues state rules regulate bar conduct; federal preemption arguments fail. | Not preempted; court may enjoin unfair practices relating to fraud in public. |
Key Cases Cited
- Shoemaker v. County of Los Angeles, 37 Cal.App.4th 618 (Cal. Ct. App. 1995) (standard for reviewing preliminary injunctions; deference to trial court on evidentiary findings)
- Madrid v. Perot Systems Corp., 130 Cal.App.4th 440 (Cal. Ct. App. 2005) (injunctions require ongoing or likely recurrence of misconduct)
- Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663 (Cal. Ct. App. 2006) (ongoing threat required for injunctive relief under §17200)
- Janken v. GM Hughes Electronics, 46 Cal.App.4th 55 (Cal. Ct. App. 1996) (agency/employee liability; agency/concert theory in aiding and abetting)
- 1-800 Contacts, Inc. v. Steinberg, 107 Cal.App.4th 568 (Cal. Ct. App. 2003) (conspiracy/aiding-and-abetting concepts applied to corporate context)
- Solin v. O’Melveny & Myers, 89 Cal.App.4th 451 (Cal. Ct. App. 2001) (attorney-client privilege and waiver considerations in defense)
- Dietz v. Meisenheimer & Herron, 177 Cal.App.4th 771 (Cal. Ct. App. 2009) (limits on waiving privilege; four-factor test for defending under privilege)
- Gadda v. Ashcroft, 377 F.3d 934 (9th Cir. 2004) (preemption of state regulation of federal practitioners; conflict with federal immigration regime)