Sharp v. Next Entertainment Inc., B194374.

• Citation: 78 Cal. Rptr. 3d 37,163 Cal.App.4th 410
• Decision Date: 28 May 2008
• Docket Number: No. B194374.,B194374.
• Court: California Court of Appeals
• Parties: HARMON T. SHARP III et al., Plaintiffs and Appellants, v. NEXT ENTERTAINMENT INC. et al., Defendants and Appellants. DANIEL A. SHRIVER et al., Plaintiffs and Appellants, v. ROCKET SCIENCE LABORATORIES et al., Defendants and Appellants.

163 Cal.App.4th 410

78 Cal. Rptr. 3d 37

HARMON T. SHARP III et al., Plaintiffs and Appellants, v. NEXT ENTERTAINMENT INC. et al., Defendants and Appellants.

DANIEL A. SHRIVER et al., Plaintiffs and Appellants, v. ROCKET SCIENCE LABORATORIES et al., Defendants and Appellants.

No. B194374.

Court of Appeals of California, Second District, Division Three.

May 28, 2008.

CERTIFIED FOR PARTIAL PUBLICATION^*

Rothner, Segall & Greenstone, Glenn Rothner, Emma Leheny, Jean Shin; and Robert D. Newman for Plaintiffs and Appellants.

Altshuler Berzon, Scott A. Kronland, Danielle Leonard and Rebecca Smullin for the Service Employees International Union, the American Civil Liberties Union of Southern California, Protection and Advocacy, Inc., and The Impact Fund as Amici Curiae on behalf of Plaintiffs and Appellants.

Mitchell Silberberg & Knupp, William L. Cole, Jeffrey L. Richardson, Emma Luevano and Seth A. Stevelman for Defendants and Appellants.

OPINION

ALDRICH, J.

I. INTRODUCTION

The Writers Guild of America (the Guild) had reason to believe that reality television production companies and television networks violated wage and labor laws. The Guild held meetings during which employees of reality television discussed the purported violations. Some who participated in the meetings, along with other reality television employees, agreed to be the named plaintiffs in two wage and labor law class action lawsuits against the production companies and the networks (collectively defendants). Thereafter, the trial court denied defendants' motion to disqualify plaintiffs' counsel, but did disqualify some plaintiffs from acting as representatives of the putative classes.

On appeal from the trial court's order denying the disqualification order, defendants rely on California Rules of Professional Conduct of the State Bar, rule 3-310 (Rule 3-310) to contend that the trial court erred in failing to disqualify counsel for plaintiffs. This contention is based upon the facts that the firm who represented the Guild was also counsel for plaintiffs, the Guild paid for plaintiffs' attorney fees and costs, and the litigation was conceived by the Guild as part of its organizing campaign, a campaign which many plaintiffs supported. Defendants use many of the same facts to further contend that the trial court erred in failing to disqualify all plaintiffs from their roles as representatives of the uncertified classes.

In the published portion of this opinion (pts. I., II., III.A. & IV.), we hold that the trial court did not err in failing to disqualify class counsel and the trial court did not err in refusing to disqualify all plaintiffs from acting as the named representatives of the putative classes.

In their cross-appeal, plaintiffs appeal from the trial court's orders directing their counsel to ask them certain questions relating to their association with the Guild. In the unpublished portion of this opinion (pt. III.B.), we hold that the trial court's orders were vague.

Thus, we affirm in part and reverse in part.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The underlying facts

The Guild is a labor organization representing writers of film, television, news media, documentaries, animation, CD-ROM, and news media technology.

Reality television programs use ordinary people rather than professional actors in unscripted dramatic or humorous situations. The Guild believed that these shows were produced on low budgets with short deadlines, and were profitable, in part, because employees routinely worked very long hours, without breaks or overtime pay. Among other information the Guild received was that reality television employees had been paid a flat, weekly rate, but often were provided with fraudulent pay records showing they had received overtime pay.

Between January and June 2005, the Guild held a number of meetings with people working in reality television. Approximately 75 to 100 employees attended these meetings. This unstructured group was referred to as the reality television "organizing committee." The group discussed what they perceived as widespread violations of a number of state wage and hour laws, including minimum wage and overtime violations.

In early 2005, David Joseph Young, the Guild's interim executive director, had numerous conversations with Guild staff members and outside counsel, Anthony Segall, to evaluate possible litigation on behalf of reality television employees who provided services relating to story development.¹ Attorney Segall noted that by violating wage and hour laws, certain reality television employers were able to unfairly compete with unionized companies that paid legal wages. He believed that wage and hour enforcement lawsuits would create economic pressure on those who paid illegal wages. He also opined that litigation against reality television employers could facilitate the Guild's unionizing campaign. He foresaw such litigation as having strategic value because it would "create a more level playing field" and "decrease[] the incentive to not be union if [the reality television employers had] to . . . play by those same rules." Director Young believed wage and hour lawsuits might force reality television production companies to recognize the Guild as the exclusive bargaining unit for their employees.

Attorney Segall and Attorney Emma Leheny were partners in the law firm of Rothner, Segall & Greenstone (the Rothner firm). The firm had represented the Guild in a significant number of matters for many years.

In the summer of 2005, Attorneys Segall and Leheny attended meetings of the Guild's organizing committee, at which time potential lawsuits were discussed. Some employees who attended the meetings expressed an interest in participating in wage and hour litigation against their reality television employers. These employees were informed that the Guild would subsidize the cost of the litigation and were referred to the Rothner firm.

Of the 21 employees who would become the named plaintiffs in the two lawsuits giving rise to this appeal, 16 had attended meetings of the Guild's organizing committee. These employees recruited others, who also would serve as representative plaintiffs in the two lawsuits.

All 21 employees met with, and retained, the Rothner firm as class counsel. The Guild, which had selected the firm, agreed to pay the litigation expenses, including costs and the firm's hourly rate.

Each of the 21 employees signed a conflict waiver acknowledging that the Guild would subsidize the attorney fees for the two class action lawsuits and that the firm represented the Guild in other matters. For simplicity, we refer to these 21 persons as plaintiffs. Plaintiffs were adamant that they would control the litigation and decide the strategy and the outcome of the lawsuits. The Guild informed plaintiffs that they would control the cases, and not the Guild.

B. Procedural history

1. The two related cases

On July 7, 2005, 12 plaintiffs, including Harmon T. Sharp III and Troy DeVolld, filed a class action lawsuit on their behalf and similarly situated employees against four reality television production companies and four television networks for violations of state wage and hour laws relating to eight reality television programs, Sharp v. Next Entertainment, Inc. (Super. Ct. L.A. County, 2006, No. BC336170). These plaintiffs alleged violations of the Labor Code, specifically that these eight defendants failed to pay wages and overtime, provide meal and rest breaks, provide wage statements, or keep required records. The class was described as "those persons who are or have been employed by the defendants to perform services relating to story development for reality television series."²

On August 23, 2005, 10 plaintiffs, including Daniel A. Shriver and Jubba Seyyid, filed a class action lawsuit against a producer of reality television programs and one television network, relating to seven television shows, Shriver v. Rocket Science Laboratories (Super. Ct. L.A. County, 2006, No. BC338746). This second lawsuit also alleged Labor Code violations and defined the class in the same manner as the first lawsuit.³

Both lawsuits sought, among other relief, attorney fees and costs pursuant to Labor Code sections 218.5, 226, subdivision (e), 558, and 1194.

A few months after the lawsuits were filed, the Guild hired Attorney Segall to serve as the Guild's general counsel. He had been working as its outside counsel. When he became general counsel, Attorney Segall was given an office at the Guild, where he usually worked two days a week. Attorney Segall continued to be a partner in the Rothner firm. As the Guild's general counsel, Attorney Segall was responsible for overseeing various legal matters, including advising the Guild with respect to its unionizing activities.

In August 2005, one plaintiff informed the media that the Guild had helped a group of reality television writers and editors file a class action lawsuit "to end the companies' exploitative practices in this burgeoning and profitable sector of the Hollywood economy." Attorney Segall informed the media that the Guild would file lawsuits "as part of an organizing campaign until the objectives of the organizing campaign are met." The lawsuits were also mentioned on the Guild's Web site and in a number of news releases as part of the Guild's larger strategy to organize reality television employees.

The Rothner firm continued to represent the Guild in other matters. The Guild continued to help coordinate communication with plaintiffs and set up meetings at the Guild regarding the lawsuits.

After defendants in both cases answered, the trial court deemed the two cases related.

2. Discovery

The parties conducted extensive discovery. Defendants indicated they would depose Guild employees and two plaintiffs from each class action lawsuit to advance the theory that the Guild was the driving force behind the litigation. Plaintiffs objected...