Cortez v. Landcare USA, LLC

• Decision Date: 10 December 2020
• Docket Number: B298044
• Parties: ISMAEL CORTEZ et al., Plaintiffs and Respondents, v. LANDCARE USA, LLC et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

ISMAEL CORTEZ et al., Plaintiffs and Respondents, v. LANDCARE USA, LLC et al., Defendants and Appellants.

B298044

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

December 10, 2020

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC687180)

APPEAL from an order of the Superior Court of Los Angeles County, Gregory Keosian, Judge. Reversed.

Rosen Saba, Ryan D. Saba, and Elizabeth L. Bradley, for Defendants and Appellants LandCare USA, LLC and Ivan Tovar.

Schwartz Semerdjian Cauley & Moot; Schwartz Semerdjian Cauley & Evans, Dick A. Semerdjian, Sarah Brite Evans, and Danielle L. Macedo, for Defendants and Appellants Octavio Aguilera and Raphael Diaz Valdivia.

The Green Law Group and Matthew T. Bechtel, for Plaintiff and Respondent Ismael Cortez.

INTRODUCTION

Ismael Cortez filed this action against his former employer, LandCare USA, LLC, and his former supervisor, Ivan Tovar (collectively, LandCare), asserting a cause of action under the Private Attorneys General Act (PAGA) on behalf of himself and similarly situated employees. Counsel for Cortez, The Green Law Group, asked counsel for LandCare, Rosen Saba, to provide the contact information for five potentially aggrieved LandCare employees. Rosen Saba told Green Law that Rosen Saba also represented the five employees. When the trial court learned of Rosen Saba's statement and expressed concern that Rosen Saba represented both LandCare and potentially aggrieved employees, Rosen Saba retracted its statement and told Green Law it did not represent the employees. A different law firm, Schwartz Semerdjian Cauley & Moot, now Schwartz Semerdjian Cauley & Evans, subsequently informed Green Law it represented two of the five potentially aggrieved employees, Octavio Aguilera and Raphael Diaz Valdivia.

Cortez filed a motion to disqualify Rosen Saba from representing LandCare and to disqualify Schwartz Semerdjian from representing the employees. The trial court granted the motion and disqualified both law firms. LandCare, Aguilera, and Valdivia appeal. We reverse.

FACTUAL AND PROCEDURAL BACKGROUND

A. Cortez Sues His Former Employer Under PAGA

Cortez filed this action alleging LandCare did not allow him and other employees to take rest breaks and did not pay himand other employees for all hours worked. Cortez asserted a single cause of action under PAGA to recover civil penalties and underpaid wages on behalf of himself and other similarly situated employees.

LandCare filed a motion to strike the complaint, arguing that trying the PAGA claim would be unmanageable because there were individual issues regarding the nature of each aggrieved employee's working conditions. In support of the motion, LandCare submitted nearly identical declarations from five LandCare USA employees, each of whom stated LandCare always permitted him to take rest breaks and paid him for all hours worked. While the motion was pending, Jamie Stein of Green Law sent an email to Ryan Saba of Rosen Saba asking LandCare to provide contact information for the five employees. Saba responded in an email that he represented the employees and that he would make them available for a deposition.

Cortez filed an ex parte application for a temporary restraining order and a preliminary injunction prohibiting Rosen Saba and LandCare from communicating with potentially aggrieved employees about the case. In opposition to the motion, LandCare argued primarily that the law did not prohibit it from communicating with its employees about a PAGA action, but in a footnote LandCare also argued that Cortez's request was "ridiculous" because the "individuals are clients of Rosen Saba . . . ." In a supplemental brief LandCare argued that the rules of professional conduct did not prohibit Rosen Saba from concurrently representing LandCare and the potentially aggrieved employees in a PAGA action.

The trial court denied LandCare's motion to strike and Cortez's ex parte application. The court declined to rule whetherRosen Saba could represent both LandCare and potentially aggrieved employees, stating that "would more properly be addressed through a discovery motion or a motion to disqualify" but that the court was "very skeptical of the proposition that a firm may, consistent with its ethical obligations, represent both an employer and putative 'aggrieved employees' in a PAGA action, where the latter stand to obtain substantial remuneration directly from the former if the PAGA plaintiff prevails." On February 1, 2019, two days after the court's order, Saba sent Stein an email stating: "I was mistaken when I stated 'our firm represents these individuals.' What I meant to say, is that our firm will coordinate with these individuals and any other LandCare employee so that the individuals will appear for a deposition, upon your request."

Cortez served deposition notices for Aguilera, Valdivia, and one other employee who submitted a declaration in support of LandCare's motion to strike. On February 11, 2019 Sarah Evans of Schwartz Semerdjian sent Green Law an email stating her firm would "likely represent" Valdivia and Aguilera at the depositions, and on February 13 she confirmed the firm would represent them.¹ Evans and Schwartz Semerdjian previously represented LandCare in litigation, including as recently as 2018. A few days after receiving Evans's email, Jeff Coyner of Green Law spoke with Evans. During their conversation Evans would not state whether LandCare was paying for, or had referred Aguilera and Valdivia to, Schwartz Semerdjian to represent theemployees in their depositions, asserting the information was protected by the attorney-client privilege.

B. Cortez Moves To Disqualify Rosen Saba and Schwartz Semerdjian

Cortez filed a motion to disqualify Rosen Saba from representing LandCare and to disqualify Schwartz Semerdjian from representing Aguilera, Valdivia, and other potentially aggrieved employees. Cortez argued Rosen Saba could not ethically represent LandCare because Rosen Saba had concurrently represented both LandCare and potentially aggrieved employees with interests adverse to LandCare in this action. Cortez argued Schwartz Semerdjian could not represent any aggrieved employees, including Aguilera and Valdivia, because LandCare was Schwartz Semerdjian's former client, LandCare's interests were adverse to the employees, and LandCare was paying Schwartz Semerdjian to represent the employees so that LandCare could "control, limit and interfere with the content of the employees' statements . . . ."

In opposition to the motion to disqualify, LandCare argued Rosen Saba could represent LandCare because, despite Rosen Saba's prior (subsequently retracted) statements to Green Law and the court, Rosen Saba did not have and never had an attorney-client relationship with any of the potentially aggrieved employees. Saba stated in his declaration his firm did "not have an attorney-client relationship with any of" the five employees. Francesca Dioguardi, an associate at Rosen Saba who interviewed the five employees and obtained their declarations, stated: "At no time did I engage in any privilegedcommunications with any potentially aggrieved employees, including the [five] declarants."

Aguilera and Valdivia argued Schwartz Semerdjian could represent them because Schwartz Semerdjian no longer represented LandCare in any pending action and because Schwartz Semerdjian complied with all of its ethical obligations. Evans submitted a declaration stating that Aguilera and Valdivia gave informed written consent to the representation after Evans disclosed Schwartz Semerdjian's prior representation of LandCare and provided them "assurances that [a] third-party payor arrangement [would] not interfere" with Schwartz Semerdjian's independent professional judgment. Evans, however, did not identify the purported third party paying Schwartz Semerdjian's fees, nor did she provide any specifics about what she disclosed to Aguilera and Valdivia before they gave written consent to the representation. Aguilera, Valdivia, and LandCare also argued that, regardless of any conflicts of interest, Cortez did not have standing to disqualify their respective attorneys because Cortez was not a prior client of either Rosen Saba or Schwartz Semerdjian.

The trial court granted Cortez's motion, disqualified Rosen Saba from representing LandCare, and disqualified Schwartz Semerdjian from representing Aguilera, Valdivia and other potentially aggrieved employees. The court found that Rosen Saba's prior statements showed it had an attorney-client relationship with Aguilera and Valdivia and that the firm's retraction of its prior statements "carrie[d] little weight." The court ruled Rosen Saba could not represent both LandCare and potentially aggrieved employees because the employees "stand toobtain substantial remuneration directly from [LandCare] if [Cortez] prevails."

With respect to Schwartz Semerdjian, the court found that, given Evans's statement she disclosed a third-party payor arrangement to Aguilera and Valdivia, the "only plausible explanation" was that LandCare was paying for Schwartz Semerdjian to represent the employees. The court concluded that, under rule 1.8.6(a) of the Rules of Professional Conduct,² Schwartz Semerdjian could not maintain its independent professional judgment representing potentially aggrieved employees because Schwartz Semerdjian had previously represented LandCare in other actions and LandCare was paying the employees' attorneys' fees in this action. The court ruled that Cortez had standing to disqualify both Rosen Saba and Schwartz Semerdjian because the firms' ethical violations...