Lead Opinion
Opinion
I. Introduction
In Flatt v. Superior Court (1994)
Plaintiff, Khybrette Neal, appeals from an order disqualifying her attorney, Michael S. Traylor, from representing her in an employment discrimination lawsuit filed against defendants, Health Net, Inc., Foundation Health System (Health Net) and Gil Gallegos, her former employer and supervisor, respectively. Relying on Hull v. Celanese Corporation (2d Cir. 1975)
II. Background
On June 1, 2001, plaintiff filed this action against her former employer and supervisor alleging she had been wrongfully discharged from her position as human resources manager due to race and gender discrimination. She alleged causes of action for contract breach, fraud, intentional infliction of emotional distress, assault, and slander. Ms. Brockett also was employed by Health Net and had made complaints that she was the victim of gender and disability discrimination. As the human resources manager, plaintiff had reviewed and responded to at least one of Ms. Brackett’s discrimination complaints. Needless to note, this review occurred prior to plaintiff’s termination.
On September 10, 2001, during the pendancy of the present lawsuit, defendants filed a motion to disqualify Mr. Traylor as counsel of record for plaintiff. Defendants contended that Mr. Traylor met with and began representing Ms. Brockett, a member
On August 9, 2001, Ms. Sotolov received an e-mail from the legal department’s administrative assistant, Michelle Hart-Molina. Ms. Hart-Molina advised Ms. Sotolov that Ms. Brockett had been looking for plaintiff’s file earlier that day. Ms. Hart-Molina became suspicious and tried to access plaintiff’s file in the computer. The system advised her that the file had been “locked” by Ms. Brockett for two and one-half hours. The file included attorney notes and memoranda.
Also on August 9, 2001, a person identifying herself as Cynthia Brockett telephoned the office of Ballard, Rosenberg, Golper & Savitt, LLP, requesting to speak to Linda Miller Savitt, who is the lead trial counsel in this action. Ms. Brockett spoke to Lori Liebman, Ms. Savitt’s assistant. Ms. Brockett stated she worked in the Health Net legal department. Ms. Brockett wished to speak to Ms. Savitt. Ms. Liebman informed Ms. Brocket that Ms. Savitt represented Health Net. Ms. Liebman’s declaration relates, “Ms. Brockett thanked me for my time and hung up.”
On August 13, 2001, Ms. Sotolov met with Phillip Davis, vice-president and assistant general counsel of litigation for Health Net, to discuss the issues raised by Ms. Brockett’s access to plaintiff’s file and the apparent attempt to contact Ms. Savitt. Mr. Davis subsequently met with Ms. Brockett. Ms. Brockett admitted requesting plaintiff’s litigation file. Ms. Brockett admitted reviewing plaintiff’s case track file. Ms. Sotolov’s declaration stated; “[Ms.] Brockett advised Mr. Davis that she was a ‘very close friend’ of [plaintiff] and that she wished to review her employment file because she was ‘concerned’ about her.” However, Ms. Brockett denied calling outside counsel. Ms. Brockett was placed on a one-week paid suspension, pending completion of a further investigation.
In investigating the matter, Ms. Sotolov discovered that on August 13, 2001, Ms. Brockett attempted to delete all personal documents stored in her computer. However, they retrieved the documents from Ms. Brockett’s “recycle bin” including two notes dated August 9, 2001. One note confirmed Ms. Brockett’s telephone call to Ms. Savitt’s assistant, Ms. Liebman. The
Plaintiff opposed the disqualification motion on the grounds: defendants failed to articulate a recognized theory for disqualification given that Mr. Traylor never represented defendants; there was no basis for disqualification because the evidence did not show and it could not be presumed Ms. Brockett passed on confidential information; defendants failed to provide evidence that Ms. Brockett actually accessed any confidential information; defendants failed to disclose the nature of the confidential information allegedly accessed; Ms. Brockett could not be held to the same standard as an attorney; plaintiff had not obtained an unfair advantage because Ms. Brockett did not obtain or disclose any information; plaintiff rebutted any presumption of disqualification because Ms. Brockett was a client and not an employee of Mr. Traylor; Ms. Brockett would not have any involvement with the case at issue; and the motion was brought to delay discovery.
In opposition to the motion, Mr. Traylor declared that he had never represented Health Net. On August 9, 2001, Ms. Brockett contacted him regarding legal representation for herself. When the two met on August 11, 2001, Mr. Traylor specifically advised Ms. Brockett that she could not give him any information that she might have regarding the case at bench. Mr. Traylor advised her that to do so would be unethical. Ms. Brockett indicated that she had no such information. He denied receiving any information or documents from Ms. Brockett.
Ms. Brockett declared that, while employed by Health Net, she became the victim of discrimination based on disability, gender, and sexual orientation. She complained numerous times to Health Net employees. Plaintiff was one of the people who responded to Ms. Brockett’s complaints. They had not communicated with each other except for the response to Ms. Brockett’s work-related issues. She respected plaintiff as a human resources officer. Ms. Brockett was aware from office chatter that on plaintiff’s last day of work, an ambulance came for plaintiff. Ms. Brockett also knew that plaintiff had sued the company and decided to contact Mr. Traylor. Ms. Brockett admitted that she went into Case Track, the document database. However, Ms. Brockett stated she did it only to obtain Mr. Traylor’s name solely in order to seek an attorney to represent her in her suit against Health Net. Ms. Brockett denied seeing any notes or correspondence from any attorneys or any information about defendants’ position in this case. She saw no investigation notes, opinions, or settlement information. Ms. Brockett admitted calling Ms. Savitt. Ms. Brockett was under the erroneous belief that she was calling plaintiff’s counsel. She indicated that she only spent five minutes reviewing the Case Track database. It was a common occurrence in the office to gain access to a file and not log out immediately. This would account for the allegation that Ms. Brockett spent two and one-half hours reviewing plaintiff’s case. Ms. Brockett further admitted asking Susan Martel to see plaintiff’s litigation file. Ms. Martel advised Ms. Brockett that the request was inappropriate. However, a few minutes later, Ms. Martel pointed to where the file might be found. Ms. Brockett did not pursue the issue any further because it seemed to be inappropriate. Ms. Brockett confirmed that Mr. Traylor had advised her that she could not disclose
Plaintiff also filed a declaration. While working for Health Net as a human resources manager, plaintiff met Ms. Brockett. Plaintiff was assigned to review Ms. Brackett’s claims against Health Net. Plaintiff denied having any other contact with Ms. Brockett. Plaintiff has never asked anyone for any documents, materials, or other information about Health Net.
In reply, defendants argued that plaintiff had missed the point of the motion in that it was not based on Mr. Traylor’s prior representation of Health Net. Rather, the disqualification motion rested on the Mr. Traylor’s decision to communicate with and represent an employee of Health Net, which is sufficient for disqualification under standards set forth in Hull v. Celanese Corporation, supra, 513 F.2d at pages 569-572, and In re Complex Asbestos Litigation (1991)
After a hearing and argument, the trial court granted the motion. Relying primarily on Hull v. Celanese Corporation, supra, 513 F.2d at pages 569-572, the trial court indicated that disqualification was warranted under the circumstances of the case including Ms. Brockett’s admission that she accessed plaintiffs legal file. Plaintiff filed a timely appeal from the order disqualifying her attorney from representing her in this action.
III. Discussion
A. The Standard of Review
We review the trial court’s disqualification ruling for abuse of discretion. (People ex rel. Dept, of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at pp. 1143-1144; Strasbourger Pearson Tulcin Wolff Inc. v. Wiz Technology, Inc. (1999)
In exercising its discretion in this case, the trial court stated: “The Court finds the factual scenario very troubling. Given Cynthia Brockett’s acknowledged access to Defendant’s privileged attorney-client communications by virtue of her former employment in Defendant’s legal department, and the fact that Plaintiff’s counsel now represents her in litigation against the Defendant, there exists a reasonable probability that Plaintiff’s counsel has obtained privileged information. [^Q Although there do not appear to be any cases precisely on point, the facts are closest to those at issue in Hull v. Celanese Corporation[supra,]
Thus, in this case, the trial court based its ruling on Ms. Brockett’s admission that she accessed plaintiff’s legal file. The declarations filed in support of and in opposition to the disqualification motion presented conflicting evidence as to how long Ms. Brockett reviewed the file and whether she actually reviewed confidential materials. Ms. Brockett claimed she only reviewed the file for a few minutes. But Ms. Brockett admitted that she may have left the file open for a much longer period of time. She also claimed that she did it solely to obtain Mr. Traylor’s name and telephone number. She also declared that she did not see anything confidential. Defendants presented evidence that the computer records indicated that Ms. Brockett was in the file for two and one-half hours. In addition, Ms. Brockett requested plaintiff’s personnel file. Defendants presented declarations that the records contained confidential information including the results of attorney requested investigations. The file also contained correspondence between defendants and their attorneys. We presume the court determined all disputed factual matters in favor of defendants. As a result, we assume the truth of defendants’ factual contentions that are supported by the evidence Ms. Brockett had access to the file for two and one-half hours and there was confidential information in the database. (People ex rel. Dept, of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at pp. 1143-1144; Adams v. Aerojet-General Corp., supra,
However, the trial court further concluded that there was a reasonable probability that Ms. Brockett shared the confidential information with Mr. Traylor, which justified disqualification of plaintiff’s chosen counsel. There was no direct evidence that the information was shared. Defendants had no way of disputing the declarations of Ms. Brockett and Mr. Traylor that no information was shared. The trial court nevertheless concluded it was entitled to presume that any information Ms. Brockett reviewed in the files was passed on to Mr. Traylor and the legal significance
B. Disqualification Principles
A judge’s authority to disqualify an attorney has its origins in the inherent power of every court in the furtherance of justice to control the conduct of ministerial officers and other persons in pending judicial proceedings. (Code Civ. Proc., § 128, subd. (a); People ex rel. Dept, of Corporations v. SpeeDee Oil Change Systems, Inc., supra,
In addition to loyalty to a client, at the core of California’s disqualification jurisprudence is a concern for the confidentiality of lawyer-client communications. In People ex rel. Dept, of Corporations v. SpeeDee Oil Change Systems, Inc., supra,
In terms of the presumption of possession of confidential information, the present case is entirely different. Ms. Brockett is not an attorney. Ms. Brocket has not become affiliated with Mr. Traylor, plaintiff’s attorney, as a legal secretary to a partner, an associate, in an of counsel capacity, a law clerk, or paralegal. Ms. Brocket is a client. The Supreme Court has never held that the presumption of possession of confidential information and the automatic disqualification rule applies when a nonlawyer client who may have access to privileged matters retains an attorney. In the absence of a constitutional provision, statute, regulation, direction from the Supreme Court, or other proper jurisprudential ground, we decline to adopt such a rule.
There are a number of California decisions that have discussed the issue of whether an attorney should be disqualified after being exposed to an adverse party’s confidential information. These cases, which articulate controlling neutral principles of law, are directly pertinent to the disqualification motion at issue. The cases have consistently concluded that mere exposure to confidential information of the opposing party does not require disqualification. (See Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 302-304, 308-315 [
In Fox Searchlight Pictures, Inc. v. Paladino, supra, 89 Cal.App.4th at pages 303-304, the plaintiff attempted to disqualify an attorney representing
In Bell v. 20th Century Ins. Co., supra,
In Maruman Integrated Circuits, Inc. v. Consortium Co., supra, 166 Cal.App.3d at page 446, one of the plaintiff’s former employees began working for the defendant. At a deposition, the former employee testified that while working for the plaintiff she had dealt with the defendant’s attorneys. (Ibid.) The former employee testified that, after she left the plaintiffs employment, she spoke with the defendant’s law firm two or three times. The discussions involved information she received during conversations with the plaintiff’s lawyers. (Ibid.) As noted previously, she had formerly worked for the plaintiff. She further testified that she delivered to the defendant’s law firm two letters written by her former employer, the plaintiff. (Ibid.) Maruman affirmed an order refusing to disqualify the defendant’s law firm on the basis that the plaintiff’s employee had disclosed confidential information. (Id. at pp. 447-451.)
Based on the applicable legal standards, we must conclude the trial court acted beyond the scope of its allowable judicial
Second, to the extent that a reasonable inference could be made that confidential information was disclosed, there is no applicable legal standard that supports disqualification of Mr. Traylor as plaintiff’s attorney as a sanction for Ms. Brackett’s actions. As illustrated above, California authorities have consistently concluded that disqualification is inappropriate for mere exposure to information by an attorney to confidential information. (Fox Searchlight Pictures, Inc. v. Paladino, supra, 89 Cal.App.4th at pp. 302-304, 308-315; Bell v. 20th Century Ins. Co., supra,
Third, decisional authority has consistently concluded that a party cannot improperly disclose confidential information to one’s own counsel in the prosecution of one’s own lawsuit. To do otherwise (i.e., barring discussions of an adversary’s confidences known to the client), would defeat the purpose of confidentiality, which is to promote full and open discussions between attorney and client. (Fox Searchlight Pictures, Inc. v. Paladino, supra, 89 Cal.App.4th at pp. 302-304, 308-315; Bell v. 20th Century Ins. Co., supra,
Fourth, disqualification is also an ineffective remedy because it would not prevent the party from giving new counsel the information, which would leave the adversary in the same position as before. (In re Complex Asbestos Litigation, supra,
Sixth, in cases such as the one at bench, where an adversarial relationship develops, the rights of the employer to avoid unwarranted public disclosure of its confidences must be balanced against the employee’s right to maintain his or her lawsuit.
We disagree with defendant’s contention that the trial court could properly rely upon the Second Circuit decision of Hull v. Celanese Corporation, supra, 513 F.2d at pages 569-572, because it was “very troubled” by Ms. Brockett’s conduct. Hull was at the heart of the trial court’s exercise of discretion. Hull involved an action by a plaintiff, Donata A. Delulo, against her employer for discrimination. In Hull, the Second Circuit Court of Appeals concluded the district court did not abuse its discretion when it disqualified the plaintiff’s counsel, the law firm of Rabinowitz, Boudin & Standard, to represent an in-house attorney, Joan Hull. (Id. at pp. 571-572.) Ms. Hull sought to intervene in the plaintiff’s suit. Ms. Hull sought to pursue her own title VII civil rights claims. Ms. Hull, the former in-house counsel for the defendant, had worked on the plaintiff’s lawsuit. It bears emphasis that Ms. Hull, the in-house attorney, had provided legal representation to the defendant in the same lawsuit. Hull concluded disqualification of the Rabinowitz firm was appropriate based on the status of the new client as in-house counsel and under the appearance of impropriety standard. The court in Hull emphasized the narrow scope of its holding when it noted: “The novel factual situation presented here dictates a narrow reading of this opinion. This decision should not be read to imply that either Hull [the former in-house counsel] or Delulio [the plaintiff] cannot pursue her claim of employment discrimination based on sex. The scope of this opinion must, of necessity, be confined to the facts presented and not read as a broad-brush approach to disqualification.” (Id. at p. 572; Maruman Integrated Circuits, Inc. v. Consortium Co., supra,
Hull is not controlling. At the heart of the Hull analysis is the notion that exposure to confidential information permits disqualification. (R-T Leasing Corp. v. Ethyl Corp. (S.D.N.Y 1979)
In addition, Hull relied upon the appearance of impropriety standard in canon 9 of the American Bar Association Model Code of Professional Responsibility (hereinafter Canon 9), which provides, “A lawyer should avoid even the appearance of professional impropriety.” (Hull v. Celanese Corporation, supra, 513 F.2d at pp. 571-572, fn. 12.) However, although this state’s courts have adverted to it, California has not adopted Canon 9 in either the State Bar Rules of Professional Conduct or in the Business and Professions Code. (Gregori v. Bank of America, supra, 207 Cal.App.3d at pp. 305-310 [social relationship between plaintiff’s attorney and a legal secretary employed by defense counsel, who was familiar with all aspects of the litigation, did not require disqualification]; accord, DCHHealth Services Corp. v. Waite, supra, 95 Cal.App.4th at pp. 833-834 [assuming duty of confidentiality owed to foundation as board member, appearance of impropriety was insufficient for disqualification].) Hence, Hull, the very authority on which the trial court based its exercise of discretion, is not controlling. By its very terms, Hull is not to be extended beyond the facts in that case, which involved an in-house counsel, Ms. Hull, who worked on the lawsuit in which she sought to intervene while represented by the plaintiff’s attorney, the Rabinowitz firm, and its analysis is inconsistent with California law in material respects. (Fox Searchlight Pictures, Inc. v. Paladino, supra, 89 Cal.App.4th at pp. 303-304 & fn. 15 [declining to follow Hull]; In re Meador (Tex. 1998)
We also disagree with defendants that the decision of In re Complex Asbestos Litigation, supra, 232 Cal.App.3d at pages 596-603, requires affirmance. In affirming a disqualification order, the Court of Appeal, in an opinion authored by then Associate Justice Ming Chin, articulated the following general standard for disqualifying nonlawyer employee conflicts of interest: “The party seeking disqualification must show that its present or past attorney’s former employee possesses confidential attorney-client information materially related to the proceedings before the court. The party should not be required to disclose the actual information contended to be confidential. However, the court should be provided with the nature of the information and its material relationship to the proceeding. [Citation.] F0 Once this showing has been made, a rebuttable presumption arises that the information has been used or disclosed in the current employment. The presumption is a rule by necessity because the party seeking disqualification will be at a loss to prove what is known by the adversary’s attorneys and legal staff. [Citation.] To rebut the presumption, the challenged attorney has the burden of showing that the practical effect of formal screening has been achieved. The showing must satisfy
The Court of Appeal therefore concluded that the trial court did not abuse its discretion when it disqualified the plaintiff’s attorney, Jeffery B. Harrison. Mr. Harrison, an attorney for nine different plaintiffs in asbestos related litigation, hired a paralegal, Michael Vogel. Mr. Vogel had previously been employed by the law firm of Brobeck, Phegler & Harrison, which conducted the defense of the nine asbestos-related lawsuits. While with the Brobeck firm, Mr. Vogel worked on settlement evaluations; attended settlement evaluation meetings related to the matters at issue; and accessed 20 of the cases in the Brobeck firm’s computer system in which Mr. Harrison represented the plaintiffs. Initially, upon arriving at Mr. Harrison’s firm, Mr. Vogel, the paralegal, was isolated from the asbestos cases. However, Mr. Vogel began working on the cases while employed by Mr. Harrison, the plaintiff’s attorney. Mr. Vogel also used information while working for Mr. Harrison, such as contact persons for service of subpoenas, that he had acquired while employed by the Brobeck law firm. (In re Complex Asbestos Litigation, supra, 232 Cal.App.3d at pp. 580-583.) The trial court concluded there was a reasonable probability the information learned by Mr. Vogel while working for the Brobeck firm had been disclosed to or would be used at Mr. Harrison’s firm, which represented the plaintiffs. The Court of Appeal found no abuse of discretion when the trial judge disqualified Mr. Harrison from representing the plaintiffs in the nine asbestos cases. (In re Complex Asbestos Litigation, supra, 232 Cal.App.3d at pp. 596-599.)
There is a limited similarity between the facts in Complex Asbestos Litigation and this case. In both cases, an employee of the defendant’s lawyers who had access to privileged information became affiliated with an attorney representing a plaintiff. That, however, is where the similarity ends. In Complex Asbestos Litigation, the issue was whether the disqualification was appropriate because the former employee was hired by the new firm to work as a paralegal. The paralegal worked on the same litigation while working for both the lawyers representing the plaintiffs and the defendants. There was no need to apply the presumption identified in Flatt v. Superior Court, supra,
Moreover, the Complex Asbestos Litigation decision distinguished California law from a federal district court opinion, Williams v. Trans World Airlines, Inc. (W.D.Mo. 1984)
Because this case involves the former employee and now client’s right to communicate confidential information to her own attorney, we also disagree with defendants that Mr. Traylor must be disqualified for violating rule 2-100 of the State Bar Rules of Professional Conduct, which prohibits communications with parties represented by counsel.
The disqualification order is reversed. The trial court is to enter a new order denying the disqualification motion. Plaintiff, Khybrette Neal, is to recover her costs on appeal from defendants, Health Net, Inc., Foundation Health System and Gil Gallegos.
Grignon, J., concurred.
Notes
The notice of appeal was filed on September 21, 2001. The order disqualifying plaintiff’s attorney was filed on September 27, 2001. We deem the premature appeal to be timely. (Cal. Rules of Court, rule 2(d).)
All future references to a rule are to the State Bar Rules of Professional Conduct. Rule 2-100 provides: “(A) While representing a client, a member shall not communicate directly or indirectly about the subject of the representation with a party the member knows to be represented by another lawyer in the matter, unless the member has the consent of the other lawyer. HQ (B) For purposes of this rule, a ‘party’ includes: HQ (1) An officer, director, or managing agent of a corporation or association, and a partner or managing agent of a partnership; or HQ (2) An association member or an employee of an association, corporation, or partnership, if the subject of the communication is any act or omission of such person in connection with the matter which may be binding upon or imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization. HQ (C) This rule shall not prohibit: HQ (1) Communications with a public officer, board, committee, or body; HQ (2) Communications initiated by a party seeking advice or representation from an independent lawyer of the party’s choice; or [f] (3) Communications otherwise authorized by law.”
Concurrence Opinion
I concur in the result because California law appears to, be that a trial court may not disqualify an attorney for mere exposure to confidential information of the opposing party—that is, when there is no evidence that the attorney actually received or used such information. (In re Complex Asbestos Litigation (1991)
I write separately, however, because I share the trial court’s unease with the facts here. Health Net, Inc., legal department employee Cynthia Brockett (Brockett) undisputedly accessed litigant Khybrette Neal’s (Neal) Health Net legal file and then, while still an employee of Health Net, met Neal’s attorney, Michael S. Traylor (Traylor) concerning her claim against Health Net. Brockett retained Traylor as her lawyer in connection with her claim. Both Brockett’s and Neal’s claims were for wrongful termination and discrimination, and thus both cases involved Health Net’s employment practices.
There are practical problems with the rule applied in this case. Even if none of Health Net’s confidential information was actually transmitted to Traylor by Brockett, the facts create a “nagging suspicion” that Neal and Traylor have been “unfairly benefitted” in litigating against Health Net. (See MMR/Wallace Power & Indus, v. Thames Associates (D.Conn. 1991)
Both Traylor and Brockett testified that no confidential information was acquired or transmitted. There is no evidence to the contrary. Even if we assume, as we do, that their testimony is truthful, what occurred leaves the unfortunate appearance that confidential information is vulnerable to disclosure. This appearance jeopardizes the public trust in the integrity of the bar.
Generally, courts have held that a party’s interest in not having confidential information used unfairly against it and the integrity of the judicial process outweigh a litigant’s choice of counsel. (See Hull, supra,
I acknowledge that disqualification should not result from every situation in which counsel had access to an opposing party’s confidential information. For example, there are occasions in which inadvertent access by an attorney to the opposing party’s confidential information does not, and should not, result in disqualification of the attorney. (State Comp. Ins. Fund v. WPS, Inc. (1999)
Here, plaintiff’s attorney, Traylor, met with an adverse party’s current employee, Brackett, who worked in the defendant’s legal department and who had intentionally accessed confidential information about plaintiff’s lawsuit. The subject of the conversation between Traylor and Brackett involved the same subject as was involved in Neal’s case—Health Net’s employment practices. Under these circumstances, mere access should be sufficient to at least give the trial judge discretion to order disqualification. (See Triple A Machine Shop, Inc. v. State of California (1989)
A petition for a rehearing was denied August 19, 2002, and respondents’ petition for review by the Supreme Court was denied October 30, 2002.