Dimenco v. Serv. Employees Int'l Union

• Decision Date: 10 January 2011
• Docket Number: Case No: C 10-03112 SBA
• Citation: Dimenco v. Serv. Emps. Int'l Union, Case No: C 10-03112 SBA (N.D. Cal. Jan 10, 2011)
• Parties: ROSEANNE DIMENCO, TYRONE DICKENS, RICHARD MARLOWE, JUAN ANTONIO MOLINA, NICHOLAS PALAFOX, TONI RANGEL, STARLA ROLLINS, MYKELE SAUNDERS, and MARTHA VAZQUEZ, Plaintiffs, v. SERVICE EMPLOYEES INTERNATIONAL UNION, DAVID REGAN, and ELISEO MEDINA, Defendants.
• Court: U.S. District Court — Northern District of California

ROSEANNE DIMENCO, TYRONE DICKENS, RICHARD MARLOWE, JUAN ANTONIO MOLINA, NICHOLAS PALAFOX, TONI RANGEL, STARLA ROLLINS, MYKELE SAUNDERS, andMARTHA VAZQUEZ, Plaintiffs,

v.SERVICE EMPLOYEES INTERNATIONAL UNION, DAVID REGAN, and ELISEO MEDINA, Defendants.

Case No: C 10-03112 SBA

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

Filed: January 10, 2011

ORDER GRANTING DEFENDANTS' MOTION TO DISQUALIFY PLAINTIFFS' COUNSELDkt. 8, 15

PlaintiffsRoseanne Dimenco, Tyrone Dickens, Richard Marlowe, Juan Antonio Molina, Nicholas Palafox, Toni Rangel, Starla Rollins, Mykele Saunders and Martha Vazquez(collectively "Plaintiffs") are members of the SEIU United Healthcare Workers-West ("UHW"), a local union that is part of the Service Employees International Union ("SEIU").In 2009, the SEIU imposed a trusteeship and took control of the UHW due to mismanagement by UHW leaders.Pursuant to Title III of the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 464, Plaintiffs, who are represented by the law firm of Siegel & Yee, filed the instant action to terminate the trusteeship imposed by the SEIU.The parties are presently before the Court on Defendants' Motion to Disqualify Plaintiffs' Counsel.Dkt. 8.Having read and consideredthe papers filed in connection with this matter, and being fully informed, the Court hereby GRANTS the motion for the reasons set forth below.The Court, in its discretion, finds this matter suitable for resolution without oral argument.SeeFed.R.Civ.P. 78(b);Civ. L.R. 7-1(b).

I.BACKGROUND

A.FACTUAL SUMMARY

1.Imposition of a Trusteeship over the UHW

The SEIU is a labor organization representing approximately 2.2 million workers nationwide.FitzpatrickDecl. ¶ 2, Dkt. 14.The UHW is a local union affiliate of the SEIU representing nearly 150, 000 healthcare workers in California.Id.Under the SEIU Constitution and Bylaws, the SEIU International President may impose a trusteeship over a local union "for the purpose of correcting corruption or financial malpractice, " among other reasons.Id., Ex. A at Art. VIII, §§ 7(a), (f).In accordance with that provision, on August 25, 2008, the SEIU issued a notice that it would conduct a hearing to determine whether the UHW should be placed in trusteeship due to mismanagement of its affairs.Id.¶ 3.

On January 21, 2009, former United States Secretary of Labor Ray Marshall, who was appointed by the SEIU's International President to serve as the hearing officer, issued a 105-page report and recommendation in which he recommended that a trustee should be appointed to take over the affairs of the UHW.Id.Ex. B. On January 27, 2009, the SEIU appointed David Regan and Eliseo Medina as Trustees to oversee the UHW "for the purposes of correcting financial malpractice and restoring democratic procedures as well as safeguarding collective bargaining relationships and carrying out the other legitimate objects of the SEIU."Id.Ex. C.at 1.

2.Creation of the NUHW

Immediately after the establishment of the trusteeship, former UHW President Sal Rosselli resigned; he, along with other former leaders of the UHW, then created a rival union known as the National Union of Healthcare Workers ("NUHW").Id.¶ 11.Thereafter, the NUWH actively began efforts to become the collective bargainingrepresentative in place of the UHW.Specifically, in February 26, 2009, NUHW submitted four petitions to the National Labor Relations Board("NLRB") seeking to have UHW decertified and to have the NUHW appointed as the bargaining representative for approximately 43, 000 Kaiser Permanent employees in California.RothnerDecl. ¶ 3, Dkt. 12.On April 7, 2009, the NLRB rejected the petitions on the ground that they were filed during a period barred by a collective bargaining agreement.Id.¶ 4, Ex. A.However, in June 2010, the NUWH again filed NLRB petitions seeking to displace UHW in its representation of Kaiser employees.Id.¶ 5.In those proceedings, attorney Dan Siegel of Siegel & Yee served as legal counsel for the NUHW.Id.¶ 6.¹

3.The SEIU/UHW File Suit Against the NUHW

After the SEIU took control of the UHW, Trustees Regan and Medina and SEIU representatives attempted to enter the UHW's offices, but were denied access.Id.¶ 7.Finally, on January 30 and 31, 2009, they were able to enter the offices, which they found to be in a state of disarray.Id.¶ 9.Bags of shredded documents were found piled against dumpsters located outside of the UHW's offices.Id.The SEIU and UHW conducted an investigation and concluded that former UHW leadership had engaged in a purposeful scheme to render UHW ungovernable in the event of a trusteeship, created a rival union while still serving in leadership positions and misappropriated UHW resources for the benefit of NUHW.Id.¶ 12.

In the meantime, on January 28, 2009, the SEIU and UHW filed suit in this Court against the NUHW and former UHW leaders, including Rosselli, based on their obstruction of the trusteeship.SeeServ. Employees Int'l Union, et al. v. Sal Rosselli, et al., No. C 0900404 WHA ("the Rosselli action").The case was assigned to the Honorable William Alsup and was tried to a jury.On April 9, 2009, the jury rendered a $1.58 million verdictagainst the NUHW and sixteen former leaders and staff of the UHW.Id.Dkt. 623.In addition, Judge Alsup found each of the former leaders had breached their fiduciary duty under the SEIU Constitution by failing to return UHW property when the trusteeship was imposed and issued a permanent injunction accordingly.Id.Dkt. 627, 691.Attorney Dan Siegel and his firm, Siegel & Yee, represented the defendants in the district court and continue to represent them in the trial court proceedings and on appeal.FitzpatrickDecl. ¶ 13.

B.Procedural History

On July 16, 2010, Plaintiffs, all of whom are members of the UHW, filed a Complaint in this Court seeking to discontinue the SEIU trusteeship over UHW. Compl. ¶ 4, Dkt. 1.²Plaintiffs are represented by Dan Siegel and Siegel & Yee.Defendants SEIU and Trustees Regan and Medina now move to disqualify Siegel & Yee from serving as counsel for Plaintiffs on the ground that the firm is concurrently representing the NUHW in the Rosselli action and NLRB proceedings, and that such representation is adverse to the UHW.For their part, Plaintiffs devote the bulk of their opposition to the argument that Defendants lack standing to bring a motion for disqualification.In addition, they briefly contend that the Siegel & Yee firm is not representing adverse interests, as Plaintiffs and the NUHW's interests allegedly are aligned.The matter has been fully briefed and is ripe for decision.³

II.LEGAL STANDARD

A district court has the discretion to disqualify counsel as part of its "prime responsibility for controlling the conduct of lawyers practicing before it[.]"In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 658 F.2d 1355, 1358(9th Cir.1981);Gas-A-Tron of Ariz. v. Union Oil Co. of Calif., 534 F.2d 1322, 1325(9th Cir.1976)(noting that a trial court's authority to disqualify an attorney derives from the power inherent in every court to control the conduct of its ministerial officers, in the furtherance of justice).The ethical rules of the forum state—in this case, California— govern the Court's disqualification analysis.In re County of Los Angeles, 223 F.3d 990, 995(9th Cir.2000)(attorneys must "comply with the standards of professional conduct required of the members of the State Bar of California.").

"Motions to disqualify counsel are strongly disfavored."Visa U.S.A., Inc. v. First Data Corp., 241 F. Supp. 2d 1100, 1104(N.D. Cal.2003)(Hamilton, J.).Because a motion to disqualify is often tactically motivated and can be disruptive to the litigation process, requests for disqualification are subject to "particularly strict judicial scrutiny."Optyl Eyewear Fashion Int'l Corp. v. Style Cos., 760 F.2d 1045, 1050(9th Cir.1985)(internal quotations omitted).The party seeking disqualification bears a "heavy burden."City and County of San Francisco v. Cobra Solutions, Inc., 38 Cal.4th 839, 851(2006).In considering a disqualification motion, the district court is obligated to make "a reasoned judgment, "Gregori v. Bank of Am., 207 Cal.App.3d 291, 300(1989), and may resolve disputed factual issues and must make findings supported by substantial evidence, Dept. of Corps. v. SpeeDee Oil Change Syst., 20 Cal.4th 1135, 1143(1999).

III.DISCUSSION

A.STANDING

A disqualification order may be predicated upon the existence of a conflict of interest.In re County of Los Angeles, 223 F.3d at 995."A conflict of interest may arise from an attorney's concurrent or successive representation of clients with adverse interests."People v. Baylis, 139 Cal.App.4th 1054, 1064(2006) (citing Flatt v. Super. Ct., 9 Cal.4th 275, 283-84(1994).In a simultaneous representation case, "[t]he primary value at stake... is the attorney's duty—and the client's legitimate expectation—of loyalty, rather than confidentiality."Flatt, 9 Cal.4th at 284.In a successive representation case, "the chief fiduciary value jeopardized is that of client confidentiality."Id. at 283.

Plaintiffs contend that Defendants lack standing to bring the instant motion for disqualification on the ground that they are not "former clients, present clients or prospective clients" of Siegel & Yee, and otherwise lack any "personal stake sufficient to satisfy the standing requirement."Pls.' Opp'nat 3-4.As a general matter, the "majority view is that only a current or former client of an attorney has standing to complain of that attorney's representation of interests adverse to that current or former client."Colyer v. Smith, 50 F. Supp. 2d 966, 969(C.D. Cal.1999); af, Kasza v. Browner, 133 F.3d 1159, 1171(9th Cir.1998)("courts do not disqualify an attorney on the grounds of conflict of interest unless the...