In re Arriaga & Assocs. Wage & Hour Cases
| Decision Date | 26 July 2022 |
| Docket Number | H048902 |
| Parties | ARRIAGA AND ASSOCIATES WAGE AND HOUR CASES. |
| Court | California Court of Appeals Court of Appeals |
ARRIAGA AND ASSOCIATES WAGE AND HOUR CASES.
H048902
California Court of Appeals, Sixth District
July 26, 2022
NOT TO BE PUBLISHED
JCCP No. 4980
Lie, J.
Louis Christopher Arriaga and Arriaga &Associates, Inc. (A&A) (collectively, Arriaga) appeal from an order denying their motion to disqualify Bradley &Gmelich, LLP (B&G) from representing any parties prosecuting wage and hour claims against them in a coordination proceeding. Arriaga contends that B&G should have been disqualified as counsel because (1) B&G is concurrently representing both Maddison Group, Inc. (Maddison Group), an A&A competitor, and individuals and putative class members pursuing wage and hour claims against Arriaga; and (2) B&G's own interests are in conflict with the interests of the employees it seeks to represent. The trial court denied the disqualification motion because Arriaga lacks standing to pursue the relief requested. We affirm.
I. BACKGROUND
Louis Arriaga is the president and director of A&A, a California business that provides security services, principally armed security guards, to other businesses. A&A employed Jason Lara and Jose Segura as armed security guards. At the same time, Lara and Segura owned their own security guard business, Maddison Group. While Lara and Segura were still employed by A&A, A&A's primary client, Dave &Buster's, terminated
its security services contract with A&A and entered a security services contract with Maddison Group.
In May 2017, Arriaga filed a business tort action (the Arriaga action[1]) against Lara, Segura, and Maddison Group, among others, under various theories of liability based on the allegation that Segura and Lara stole Arriaga's main customer and improperly solicited A&A's employees to work for their competing business. B&G has represented Lara, Segura, and Maddison Group throughout the Arriaga action.[2]
In October 2017, Lara and Segura filed a cross-complaint against Arriaga in the Arriaga action alleging individual wage and hour claims and representative claims for civil penalties pursuant to the Private Attorneys General Act of 2004 (PAGA).
Several other plaintiffs-represented by counsel other than B&G-filed lawsuits against A&A before and after Lara and Segura filed their cross-complaint. In July 2017, plaintiffs Eddie Giron and Jesus Alarcon filed a putative class action (the Giron action[3]), alleging similar wage and hour violations against A&A. In March 2018, plaintiff George Jordan initiated a putative class and representative PAGA action (the Jordan action[4])
against A&A for alleged wage and hour violations. In December 2018, plaintiff Francisco Ibarra initiated a class and representative action (the Ibarra action[5]).
In July 2019, B&G filed a wage and hour complaint (the Martin action[6]) against Arriaga on behalf of plaintiffs Douglas Martin, Marty Verducci, and Russ Oleyer. This complaint did not include class claims.
By January 14, 2020, all the foregoing actions were coordinated in the present proceeding. All told, B&G represents five of nine individual plaintiffs pursuing class claims in the coordination proceeding.
Pursuant to a stipulated order, B&G's individual clients-Lara, Segura, Martin, Verducci, and Oleyer-consolidated their claims against Arriaga by filing a joint First Amended Class Action Cross-Complaint on July 8, 2020. This was the first pleading by which any B&G client asserted class claims.
On November 12, 2020, Arriaga moved to disqualify B&G as counsel for any claimant in the coordination proceeding. Arriaga asserted that disqualification was appropriate because (1) B&G could not represent both the class members and Maddison Group because the respective interests of these clients were in conflict; and (2) B&G put their own interests ahead of the class's interest.
On February 4, 2021, the trial court filed a written order denying the motion. Arriaga timely appealed.
II. DISCUSSION
A. Legal Principles and Standard of Review 1. Disqualification
An attorney whose own interest or duties to another would create a substantial risk of impairing the interest or representation of a client has a disqualifying conflict. (Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 426 (Sharp).) A trial court may disqualify an attorney pursuant to its statutory and inherent power" '[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.'" (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145 (SpeeDee Oil Change); City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 846 (Cobra Solutions).) The paramount concern is the preservation of public trust in the scrupulous administration of justice and the integrity of the bar. (Cobra Solutions, supra, 38 Cal.4th at p. 846; Forrest v. Baeza (1997) 58 Cal.App.4th 65, 73.) Where a purported conflict of interest arises from an attorney's concurrent representation of clients, the focus is on the attorney's duty of loyalty and whether the clients have adverse interests. (Flatt v. Superior Court (1994) 9 Cal.4th 275, 284; Sharp, supra, 163 Cal.App.4th at p. 428.) Absent competent evidence of such a conflict, however, the client's right to chosen counsel will prevail. (See Sharp, supra, 163 Cal.App.4th at p. 428.)
2. Standing
A party who moves to disqualify another's counsel must demonstrate a legally cognizable interest that would be harmed by the attorney's conflict of interest. (Moreci v. Scaffold Solutions, Inc. (2021) 70 Cal.App.5th 425, 432 (Moreci); Great Lakes Construction, Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1356 (Great Lakes).) This requirement serves to protect against the exploitation of ethical rules and the resort to disqualification as a litigation tactic. (Moreci, supra, 70 Cal.App.5th at p. 434; Great Lakes, supra,
186 Cal.App.4th at p. 1358; see also SpeeDee Oil Change, supra, 20 Cal.4th at p. 1145.) Where no such interest is shown, a trial court may properly deny a disqualification motion for lack of standing alone. (Moreci, supra, 70 Cal.App.5th at p. 444; Great Lakes, supra, 186 Cal.App.4th at p. 1359.)
"[G]eneral standing rules" require an attorney-client or" 'some sort of confidential or fiduciary relationship'" between the moving party and the attorney sought to be disqualified as a prerequisite to seeking disqualification. (Moreci, supra, 70 Cal.App.5th at p. 436; Great Lakes, supra, 186 Cal.App.4th at p. 1356.) Some courts, however, have endorsed what has been described as a "minority view" that recognizes nonclient standing where a" '" 'manifest and glaring'" '" ethical breach"' "so infects the litigation in which disqualification is sought that it impacts the moving party's interest in a just and lawful determination of [its] claims." '" (Moreci, supra, 70 Cal.App.5th at p. 433; Great Lakes, supra, 186 Cal.App.4th at p. 1357.)
3. Standard of Review
Although we generally review for abuse of discretion an order granting or denying a motion to disqualify counsel, the trial court's discretion is limited by the applicable legal principles. (SpeeDee Oil Change, supra, 20 Cal.4th at pp. 1143-1144.) Because standing to bring a disqualification motion is a question of law, we review the resolution of the standing issue de novo in light of the relevant legal principles. (Moreci, supra, 70 Cal.App.5th at p. 435; Great Lakes, supra, 186 Cal.App.4th at p. 1354; see also SpeeDee Oil Change, supra, 20 Cal.4th at p. 1144 [reviewing trial court's exercise of discretion as a question of law where the facts were undisputed, such that the trial court's decision turned on the application of legal principles to undisputed facts].)[7]
B. Analysis
The trial court concluded that Arriaga lacked standing to move to disqualify B&G because (1) B&G had no attorney-client or other confidential relationship with Arriaga; and (2) Arriaga did not establish a manifest and glaring ethical breach by B&G. In so doing, the trial court considered whether the evidence Arriaga submitted demonstrated that B&G had a conflict of interest, but found the evidence wanting. Moreover, the trial court rejected as "hypothetical and speculative" Arriaga's contention that B&G might disclose A&A's confidential information to Maddison Group. We agree.
1. The Trial Court Applied Both the General and Minority Standing Rules
Conceding it has no confidential relationship with B&G, Arriaga initially contends that the trial court failed to consider nonclient standing and Arriaga's claimed interest in what it characterizes as B&G's ethical conflict. But the trial court expressly applied the minority view permitting nonclient standing based on "an ethical breach that is 'manifest and glaring' and 'so infects the litigation in which disqualification is sought that it impacts the moving party's interest in a just and lawful determination of his or her claims." The trial court recognized, however, that a nonclient under the minority view must nonetheless meet "stringent standing requirements, that is, harm arising from a legally cognizable interest which is concrete and particularized, not hypothetical." (Great Lakes, supra, 186 Cal.App.4th at p. 1358; Moreci, supra, 70 Cal.App.5th at p. 434.)
Implicitly acknowledging its inability to meet this high bar, Arriaga appears to suggest that attorney conflicts are a different species of ethical breach conferring nonclient standing upon "the mere hint of conflict, the threat of injury and the potential to affect the outcome of the case." But the authorities on which Arriaga relies-Cal Pak Delivery, Inc. v. United Parcel Service, Inc. (1997) 52 Cal.App.4th 1, 11 (Cal Pak) and
Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197 (Kennedy)-do not support its novel proposed...
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