Andric v. California

• Decision Date: 22 June 1999
• Docket Number: No. CV 96-3634 AHM VAPx.,CV 96-3634 AHM VAPx.
• Court: U.S. District Court — Central District of California
• Parties: Lisa Hervatin ANDRIC and Lawrence Low, Plaintiffs, v. State of CALIFORNIA, Defendant.

55 F.Supp.2d 1056

Lisa Hervatin ANDRIC and Lawrence Low, Plaintiffs, v. State of CALIFORNIA, Defendant.

No. CV 96-3634 AHM VAPx.

United States District Court, C.D. California.

June 22, 1999.

Leo James Terrell, Beverly Hills, CA, for plaintiff Lisa Hervatin Andric.

Neville L. Johnson, Johnson & Rishwain LLP, Los Angeles, CA, for plaintiff Hon. Lawrence Low.

John M. Rea, Chief Counsel, Anthony Mischel, Asst. Chief Counsel, Frank Nelson Adkins, Counsel, Martin Fassler, Counsel, Dept. of Industrial Relations, State of California, Sacramento, CA, for defendant State of California.

AMENDED ORDER GRANTING PLAINTIFF LOW'S MOTION TO DISQUALIFY COUNSEL FOR DEFENDANT

MATZ, District Judge.

This motion involves an ethical issue that is all-too-recurring within the legal profession: under what circumstances may a law firm hire an attorney who has previously represented a party that is litigating against the firm's client?

In this case, the professional issues are compounded by the fact that the parties themselves are attorneys. The plaintiffs are lawyers who served as Workers' Compensation Judges for the California Department of Industrial Relations ("DIR"). The claims and issues all arise out of their employment in that capacity. In their initial complaint plaintiffs sued at least one other administrative judge, an in-house lawyer, and their employer, the DIR, which administers the California workers' compensation system.¹ The lawyers who have been representing the defendants also work for the DIR. They are, in effect, in-house counsel for the very agency that employed plaintiffs. Now, on the proverbial eve of trial, plaintiff Low seeks to disqualify DIR's counsel because of an actual or potential conflict of interest.

Despite the parties' professional backgrounds — perhaps because of their backgrounds — the lawsuit has been fought with white hot intensity. In the exhibits submitted to the Court, some of the lawyers appear unable to express their positions without resort to invective.² But their hyperbole cannot disguise that an important ethical concern is at stake. For the reasons set forth below, the Court reluctantly concludes that counsel for the defendant must be recused.

FACTS

I. Procedural History of the Case

Former plaintiff Ernest Patrick Kiernan³ served as a Workers' Compensation Judge from April 18, 1988, until his termination on November 1, 1994. Plaintiff Lawrence Low ("Low") served as a Workers' Compensation Judge from May of 1991 until his termination on June 13, 1996. Plaintiff Lisa Hervatin Andric ("Hervatin") served as a Workers' Compensation Judge from June 21, 1991, until her termination on February 20, 1998.

Plaintiffs Low and Hervatin allege that, during the course of their employment, Presiding Chief Judge Rebeck (formerly a defendant) humiliated and harassed Judge Kiernan about his physical condition and mental capacity after he suffered a stroke. On March 24, 1994, Judge Rebeck called a meeting of the judges, in which he discussed what Low and Hervatin construed to be confidential medical information pertaining to Kiernan. Plaintiffs Low and Hervatin complained that Rebeck's comments violated Kiernan's privacy rights. Plaintiffs allege that Judge Rebeck and other judges and administrators in the DIR later retaliated against them by placing corrective memoranda in their files, subjecting them to discipline for baseless allegations of misconduct, and ultimately terminating them from their employment.⁴

In August and September, 1995, before they filed this action, Low and Hervatin hired the law firm of Tuttle & Taylor to represent them in this matter. Attorney Ralph Semien, then an associate at Tuttle and Taylor, worked on plaintiffs' case. Semien participated in interviews with the plaintiffs, gave them confidential advice regarding their case, and was privy to all their "confidential feelings, records, theories, private documentation, memoranda" and other communications relating to this action. Low Dec. ¶ 2; Hervatin Dec. ¶ 2. Semien drafted an internal memo to a partner at Tuttle & Taylor, outlining relevant strategies, as well as strengths and weaknesses of plaintiffs' case. Id. Semien also drafted the "key demand letter" which the partner sent to defendant prior to the filing of the complaint. Id. Semien left Tuttle & Taylor shortly afterward. Semien Dec. ¶ 5. It is not clear whether that firm did any further work on the case. However, Low asserts that Semien continued to give Hervatin and him "legal advice on this case after he left Tuttle & Taylor." Id. ¶ 2.⁵

Plaintiffs filed the original complaint in this matter on May 21, 1996. Their attorneys of record were not Tuttle & Taylor or Semien. Plaintiffs sued the State of California and certain individual defendants.⁶ They alleged causes of action for employment discrimination and retaliation in violation of the Americans with Disabilities Act, the California Fair Employment and Housing Act ("CFEHA") and various other California common law and statutory claims. Plaintiffs subsequently amended the complaint a total of four times. The Fourth (and last) Amended Complaint was filed on February 17, 1998.

By order dated June 30, 1998, the Honorable John G. Davies, the judge previously assigned to this case, granted summary judgment dismissing all causes of action alleged against the individual defendants and the ADA claim against the State. Following his order, the sole remaining claim in this case has been that, in violation of CFEHA, defendant, by and through its agents and employees, retaliated against plaintiffs because they engaged in protected speech.

II. Counsel for Defendants

All the lawyers who have represented defendant belong to what is called the "Office of Director, Legal Unit" of the DIR ("Legal Unit"). Although the briefs on this motion do not explain how the DIR Legal Unit operates, it appears that it is a cadre of lawyers who are the equivalent of in-house counsel for a private corporation. They have a statewide practice with offices located in Los Angeles, Sacramento and San Francisco. At the hearing, their lead counsel stated that the Legal Unit represents all of the DIR's many constituent divisions and agencies on all personnel matters (including litigation) and certain other facets of civil litigation. He said that the Legal Unit has close to 30 attorneys, 10-12 of whom are in Los Angeles. They function, he represented, on a decentralized basis, without statewide coordination. However, the record in this case shows that the Legal Unit lawyers are in frequent communication; they coordinate their hiring decisions; and in this case they designated attorneys from all three offices as counsel. Of the two lawyers who have been primarily responsible, one is in the San Francisco office and the other in Sacramento.

The ABA Model Rules of Professional Conduct recognize that, "With respect to the law department of an organization, there is ordinarily no question that the members of the department constitute a firm within the meaning of the Rules of Professional Conduct." Comment [2] to Rule 1.10. For all purposes, therefore, the Legal Unit must be considered as a single law firm, just as multistate firms with branch offices are, and are considered, a single firm.

III. Defendants and Their Counsel Hire Semien

In March, 1998, there was an opening for an attorney in the Los Angeles office of the Legal Unit. Anthony Mischel, Assistant Chief Counsel for the DIR in charge of the Los Angeles Office, interviewed Semien for the position. Mischel Dec. ¶ 2.⁷ During the course of the interview Semien revealed to Mischel that he had done some work on plaintiffs' case against DIR, but indicated that he "had no involvement in writing the complaint." Id. ¶ 3. At that point Mischel and Semien "agreed we would not talk about the case," and Mischel "did not inquire into how much involvement Mr. Semien had" in the case, for fear that Semien might disclose confidential information. Id.⁸

Vanessa Holton, who at the time of Semien's interview was still a named defendant in this action, is the Assistant Chief Counsel for the Legal Unit. She works in San Francisco. Mischel asserts that, "[b]ecause of the tone of the department's [previous] interactions with [the Tuttle & Taylor partner who had supervised Semien] both Ms. Holton and I had some concerns about whether Mr. Semien would be able to maintain the proper professional demeanor in his representation of the Department." Id. ¶ 5. Mischel and Holton met with Semien in April, 1998 to discuss their concern. Mischel states that "the facts in this case were not discussed" at that meeting. Id. at 5.

Following these interviews, Mischel contacted Frank Nelson Adkins, the defendant's lead trial counsel on this case, to discuss the Legal Unit's potential conflict if it were to offer Semien a position. Mr. Adkins has had overall responsibility for the defense of the DIR throughout this case. Adkins Dec. ¶ 2. During this conversation Adkins informed Mischel that Semien was named on plaintiffs' witness list. Not surprisingly, Adkins "was insistent that an impermeable `fire wall' be erected immediately" to ensure that Semien would not be involved in the case and would not discuss it with those who were. Id. ¶ 6. Afterward, Mischel told Semien that plaintiff had designated him as a witness. Semien said he was unaware of that fact. Id. In any event, for unrelated reasons he withdrew his application for the position with DIR. Id.

In November, 1998, however, Semien contacted Mischel again, expressing renewed interest in joining the Legal Unit. In December, 1998, Mischel offered him a job in the Los Angeles office, with the mutual understanding that Semien would not discuss plaintiffs' case with Mischel or anyone else in DIR. Id. ¶ 7. Mischel instructed "everyone in the Los Angeles office who handle personnel work that there was to be no discussion of the Hervatin case around Mr. Semien." Id. There are...