14 Cal.4th 1282D, People v. Eubanks

• Decision Date: 23 December 1996
• Docket Number: No. S049490,S049490
• Parties: D, 14 Cal.4th 580, 927 P.2d 310, 96 Cal. Daily Op. Serv. 9329, 96 Daily Journal D.A.R. 15,370 The PEOPLE, Plaintiff and Appellant, v. Gordon EUBANKS et al., Defendants and Respondents.
• Court: California Supreme Court

Page 200

59 Cal.Rptr.2d 200

14 Cal.4th 1282D, 14 Cal.4th 580, 927 P.2d 310,

96 Cal. Daily Op. Serv. 9329,

96 Daily Journal D.A.R. 15,370

The PEOPLE, Plaintiff and Appellant, v. Gordon EUBANKS et al., Defendants and Respondents.

No. S049490.

Supreme Court of California.

Dec. 23, 1996.

As Modified Feb. 26, 1997.

Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney General, Ronald A. Bass, Assistant Attorney General, Michael D. O'Reilley, Martin S. Kaye and Eugene W. Kaster, Deputy Attorneys General, for Plaintiff and Appellant.

Gil Garcetti, District Attorney, Los Angeles, George M. Palmer and Shirley S.N. Sun, Deputy District Attorneys, as Amici Curiae on behalf of Plaintiff and Appellant.

Charles C. Marson, Morgan, Ruby, Schofield, Franich & Fredkin, San Francisco, Ruby & Schofield, Allen Ruby, San Jose, Remcho, Johansen & Purcell, Robin B. Johansen, Joseph Remcho, San Francisco, Nolan & Armstrong and Thomas J. Nolan, Palo Alto, for Defendants and Respondents.

Peter A. Chang, Jr., Santa Cruz, and Vicki I. Podberesky, Santa Monica, as Amici Curiae on behalf of Defendants and Respondents.

WERDEGAR, Justice.

When the victim of an alleged crime contributes financially to the costs of the district attorney's investigation, does the district attorney thereafter suffer from a disabling conflict of interest requiring recusal under Penal Code section 1424? On this question of first impression, we hold such financial assistance to the prosecutor's office may indeed disqualify the district attorney from acting further in a case, if the assistance is of such character and magnitude "as to render it unlikely that defendant will receive fair treatment during all portions of the criminal proceedings." (People v. Conner (1983) 34 Cal.3d 141, 148, 193 Cal.Rptr. 148, 666 P.2d 5.) In this case, where a corporation alleged to be the victim of trade secrets theft contributed around $13,000 to the cost of the district attorney's investigation, the superior court did not abuse its discretion in finding the victim's financial assistance created a conflict of interest for the prosecutor. The trial court did err in failing to apply the further test set out in Penal Code section 1424: whether the resulting conflict was so severe as to make fair treatment of the defendants unlikely. We conclude, however, that such a finding would not, on this record, be an abuse of discretion.

FACTUAL AND PROCEDURAL BACKGROUND

Defendants Gordon Eubanks and Eugene Wang were accused, by grand jury indictment, of conspiracy to steal trade secrets (Pen.Code, §§ 182, 499c), ¹ conspiracy to receive stolen property (§§ 182, 496), and conspiracy to access and make use of computer data without permission (§§ 182, 502, subd. (c)(2)). In addition to these joint conspiracy counts, Wang was charged with several counts of trade secret theft (§ 499c) and unlawful data use (§ 502, subd. (c)(2)), while Eubanks was charged with several counts of receiving stolen property (§ 496).

Both defendants moved to disqualify the Santa Cruz County District Attorney for a conflict of interest pursuant to section 1424. After an evidentiary hearing, the superior court granted the recusal motion. As permitted under section 1424, the Attorney General and the Santa Cruz County District Attorney, both of whom had appeared in the superior court to oppose recusal, appealed the ruling. The Court of Appeal reversed. We granted review on defendants' petition. ²

In September 1992, defendant Eugene Wang was a vice-president of Borland International, a software developer located in Scotts Valley (Santa Cruz County). Defendant Gordon Eubanks was president and chief executive officer of Symantec, a competitor of Borland. In July of 1992, Wang had expressed dissatisfaction with a Borland management reorganization and threatened to resign. On September 1, 1992, he submitted his resignation. Fearing Wang might have conveyed internal Borland information to outsiders, Borland officers reviewed Wang's electronic mail files. They found several messages to Eubanks containing what they believed was confidential Borland information. Borland contacted the Scotts Valley police, who in turn sought investigative assistance from the district attorney's office.

During the night of September 1, and into the morning of September 2, 1992, Borland officials worked with representatives of the police department and district attorney's office preparing warrant affidavits for searches of defendants' residences and Symantec headquarters. Apparently because the police department and prosecutor's office lacked staff with the expertise to search the Symantec computers, Alan Johnson, the district attorney's chief inspector, asked Borland officials if Borland could provide one or more technically competent employees to assist in the search. The Borland representatives Two computer specialists were located to assist with the September 2 search: David Klausner, who was referred by Borland's outside counsel, and Stephen Strawn, who had worked with the district attorney's office on prior occasions. Chief Inspector Johnson and John Hansen, associate general counsel for Borland, both testified that on the night of September 1 and 2, at the request of the district attorney's office, Borland agreed to pay for Klausner's services.

[927 P.2d 313] declined because they did not want Borland employees exposed to Symantec secrets; they suggested independent consultants be used instead.

According to Johnson, Spencer Leyton, a senior Borland executive, indicated Borland's willingness to spend up to $10,000, and possibly more, for experts to assist in the investigation. Leyton, however, did not recall discussing the matter of expert assistance at all, although he was present and talked with Johnson on the night and morning of September 1 and 2. Borland records show a $25,000 "blanket" purchase order was drawn up and approved by the legal department in November 1992 for "miscellaneous services and fees / Symantec lawsuit." Borland records for the subsequent payments to Klausner, Strawn and others for their work on the criminal investigation bear numerical references to this purchase order.

Klausner and Strawn accompanied representatives of law enforcement agencies who executed the warrant on September 2. Klausner submitted his bill for $1,400 directly to Borland on September 14, 1992. Borland paid it by a check dated January 6, 1993.

Strawn continued to work on the criminal investigation for several weeks, into October 1992, assisting the district attorney's office in retrieving and printing the contents of seized computer disc drives. In late September 1992, knowing Strawn was working on the case, Chief Inspector Johnson discussed with Arthur Danner, the Santa Cruz County District Attorney, whether Borland should be asked to pay Strawn's anticipated bill. Danner made no decision at that time. Johnson testified he then asked Borland executive Leyton whether Borland was "still willing to assist us by carrying the cost of the technicians that were necessary to process this case." Leyton, according to Johnson, answered affirmatively. Sometime after that discussion, Johnson again broached the question with Danner, who then approved submitting Strawn's invoices to Borland.

District Attorney Danner similarly testified he first considered the payment question while Strawn was still working with the office's investigators. Asked whether, at that time, he contemplated abandoning the prosecution if Borland did not pay for Strawn's services, Danner testified: "No.... It was simply at that point to have the investigation proceed because at that point we needed the additional materials and so that's what Mr. Straun [sic ] was working on to allow us to review those materials."

Danner articulated two reasons for his ultimate decision to allow Borland to pay for Strawn's assistance: First, he understood Strawn's role to be purely technical, and not to involve giving any opinion as to whether the materials retrieved were trade secrets. Danner considered Strawn's limited role important because it meant Borland's payment of his fee was less likely to become a significant issue at trial. Danner's second reason for approving the payment was that "at that time we were experiencing serious budgetary constraints in a particular fund that we utilize to pay professional and special witnesses and we really had very little money in our budget...."

Strawn submitted his bill for $9,450 to the district attorney's office on October 31, 1992. After getting approval from Danner, Chief Inspector Johnson transmitted it to Borland. Borland attorney John Hansen testified he received the invoice and "sent it along for payment." His understanding was that Strawn's services had been necessary because "somebody had to go on the search along with the authorities," and hiring Strawn thus "relieved us from having to send a Borland employee into a competitor's plant." After Borland's general counsel, relying on Hansen's recommendation, approved the payment, Borland paid Strawn's bill by a check dated January 12, 1993.

In January 1993, Strawn submitted an additional invoice for $2,700 to the district attorney's office for work done in November and December 1992. Johnson forwarded this bill to Borland as well, but as of the date of the evidentiary hearing it had not been paid.

Finally, Borland paid a private service to transcribe audiotapes of interviews with Borland employees, for use by the prosecutor. John Hansen testified a district attorney's investigator told him, sometime in late 1992, that the investigation was "indefinitely" delayed because a clerical backlog in the district attorney's office was preventing the office staff from transcribing the tapes. Hansen offered to have Borland pay someone to make the transcriptions. In January and February 1993, Borland made payments of $1,008 and $1,224 to a reporting service for...