U.S. v. Ketner

Citation370 F.Supp.2d 1045
Decision Date12 May 2005
Docket NumberNo. SACR05-36JVS.,SACR05-36JVS.
PartiesUNITED STATES of America, Plaintiff, v. Kenneth KETNER, Defendant.
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California

Andrew D. Stolper, Assistant United States Attorney Santa Ana, CA, for Plaintiffs.

Thomas H. Biernert, Jr., San Clemente, CA, for Defendants.

Memorandum re Motion to Disqualify

SELNA, District Judge.

On this Motion, Defendant Kenneth Ketner ("Ketner") seeks to disqualify Assistant United States Attorney Andrew Stolper ("Stolper") on the ground that Stolper worked in the Century City office of Irell & Manella LLP ("Irell") at the same time Irell's Newport Beach office represented Ketner in a bankruptcy resulting from the demise of Mortgage Capital Resources ("MCR"). The current prosecution is related to Ketner's activities at MCR.

This case raises two issues. First, does a general application of California's ethics rules require disqualification of Stolper? Second, is there a second, higher standard which requires disqualification of a government prosecutor solely on the basis of the appearance of conflict? As discussed below, the Court finds that application of standard ethical rules does not require disqualification. Assuming there is a second, higher standard applicable to prosecutors, the Court finds Stolper's prosecution of Ketner does not raise an appearance of conflict justifying disqualification.

The Court conducted oral argument on April 25, 2005, and invited the submission of further evidence concerning Stolper's dealings with additional attorneys at Irell who worked on Ketner's bankruptcy. The Court has considered this material, as well as Ketner's supplemental brief.

I. Application of General Principles.

In the last thirty years, the private practice of law has changed dramatically, and the California decisions treating ethics issues have recognized the fact. In Adams v. Aerojet-General Corp., 86 Cal.App.4th 1324, 1336, 104 Cal.Rptr.2d 116 (2001)1, the Court of Appeal dealt with the role imputed disqualifications in today's legal world:

Disqualification based on a conclusive presumption of imputed knowledge derived from a lawyer's past association with a law firm is out of touch with the present day practice of law. Gone are the days when attorneys (like star athletes) typically stay with one organization throughout their entire careers. Partners with one law firm may join a competing firm or splinter off and form their own rival firm; former defense lawyers may become plaintiffs' specialists and vice versa;... Individual attorneys today can work for a law firm and not even know, let alone have contact with, members of the same firm working in a different department of the same firm across the hall or a different branch across the globe.

(Id.; emphasis supplied.)

In today's world, the fact that a lawyer who has changed firms once worked at a firm which represented his opponent will not result in disqualification unless that there is a "possibility that the firm-switching attorney had access to confidential information while at his or her former firm that is related to the current representation." Id. at 1340, 104 Cal.Rptr.2d 116; accord Jessen v. Hartford Casualty Ins., Co. 111 Cal.App.4th 698, 711-13, 3 Cal.Rptr.3d 877 (2003). Here the uncontroverted record negates such a finding.

First, Stolper never worked on Ketner's bankruptcy. (Stolper, ¶ 5; Lobel Decl., ¶ 8.) Nor did he even work in the bankruptcy department.2 (Stolper Decl., ¶ 3.)

Second, Stolper worked in Irell's Century City office, not the Newport Beach office where the Ketner representation was centered.

Third, Stolper was virtually unknown to the Irell lawyers who worked on Ketner's bankruptcy. Following the initial hearing, the Court directed the Government to supplement its showing by submitting additional declarations from each person at Irell who spent more than 50 hours on Ketner's representation. (See Ketner's Reply, Ex. D.) The declarations now before the Court cover individuals who account for 97% of the time spent by Irell on the matter. Those declarations show:

• Eight of the 12 lawyers and paralegals never met or communicated with Stolper.3 Among those to whom Stolper was unknown was the only lawyer in the Century City office who spent substantial time on the Ketner bankruptcy.4

• One lawyer did not meet Stolper until after Stolper had left Irell, and the encounter was purely social.5

• One lawyer, who worked in the Newport Beach office, met Stolper at a new associates retreat, and ran into him socially at firm events, but never discussed the Ketner matter.6

• Only two lawyers had actually worked with Stolper. John Wagner knew Stolper from a matter which pre-dated Irell's bankruptcy representation of Ketner.7 Wagner never discussed the Ketner engagement with Stolper.8 Harry Schultz had worked on the matter.9 He spent 1.6 hours on the Ketner representation, and never discussed the matter with Stolper.10

From the perspective of Adams, it hardly comes as a surprise that as a junior associate Stolper either never met or never appeared on the professional radar screen of the attorneys who worked on Ketner's bankruptcy, save for Wagner.

Two other factors bolster the conclusion that Stolper was not exposed to the Ketner bankruptcy while at Irell. The records for the engagement were maintained in Newport Beach, not Century City where Stolper worked.11 (Berger Decl., ¶ 3.) Stolper never worked in an administrative position where his duties would have intersected with the Ketner engagement. (Stolper Decl., ¶ 3.) While the ebb and flow of lawyers among departments and offices may be a reality of today's practice in large law firms (Ketner Reply, pp. 8-10), it is clear that Stolper never had any access to confidential information. The protection of client confidences is the principal value when dealing with a case involving successive representations, and the Court is satisfied on this record that that value has not been sacrificed here. Flatt v. Superior Court, 9 Cal.4th 275, 283, 36 Cal.Rptr.2d 537, 885 P.2d 950 (1994).

Ketner seeks to avoids the effects of this showing on the assumption that there is a free flow of information in large law firms and government agencies. However, the cases making that observation do so in a different context: An attorney bringing confidential information to a new firm will cause that information to be imputed to the new firm in a conflicts analysis. People ex rel. Department of Corporations v. SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135, 1153-54, 86 Cal.Rptr.2d 816, 980 P.2d 371 (1999); Andric v. State of California, 55 F.Supp.2d 1056, 1056, 1058 (C.D.Cal.1999)(state agency in-house legal department).12 These cases do not hold that an attorney departing a firm will automatically be presumed to have confidential information which his former firm holds. There are several reasons for distinguishing the two situations.

First, when an attorney with actual confidential information comes to his new firm, he is in fact in daily contact with his colleagues, and there is an on-going opportunity-either intentionally or inadvertently-to divulge confidential information. An attorney who departs with no confidential information has no such opportunity. Second, from the standpoint of judicial supervision of the Bar's ethical obligations, it is a much easier task to consider the factual dispute as to whether the departing attorney does or does not have confidential information than to attempt to supervise prospectively safeguards put in place at the new firm to ensure that an attorney with confidential information does not breach his duty at the new firm. Said another way, it is easier to examine a static situation than to police a dynamic one. One situation requires a per se rule; the other does not. (See id. at 1069 ("There is something more than an attorney switching sides here — and that `something' presents too great a concern to be dispelled by an ethical wall").) In essence, this is the teaching of Adams.

Whatever may be said for assessing the appearance of conflict when a lawyer moves to another firm, Trone v. Smith, 621 F.2d 994 (9th Cir.1980), it is not the standard today at least as applied to lawyers in private practice.13 See cases cited in Government Opposition, pp. 14-15.

At the initial oral argument, Ketner urged the Court to analyze this case as one of "side-switching" on the theory that the criminal prosecution is an extension of the bankruptcy. Just as Stolper could not have jumped to the creditors' side of the bankruptcy and litigated against Ketner, so here he ought to be barred from the criminal prosecution. The argument itself points up the first flaw: The criminal prosecution is not the bankruptcy. Particularly where Stolper has no confidential information, there is no reason to extend the concept of side-switching.14

II. Prosecutors and the Appearance of Impropriety.

Ketner argues generally that the United States Attorney should be held to a higher standard than the private practitioner because of the public nature of her duties. Berger v. United States, 295 U.S. 78, 88, 55 S.Ct. 629, 79 L.Ed. 1314 (1935). Ketner notes specifically that United States Attorney's Manual requires recusal where "there is an appearance of a conflict of interest or loss of impartiality." USAM, § 3-2.170, cited at Ketner Motion, p. 4. Assuming that an appearance of conflict will disqualify an Assistant United States Attorney,15 the Court finds none here.

Ketner asserts that Preston v. United States, 923 F.2d 731 (9th Cir.1991), offers persuasive authority for the proposition that an attorney without confidential information brings with him by imputation any taint his firm possesses. There Judge Letts unquestionably moved from a firm with confidential knowledge to the Bench. While the recusal statute, 18 U.S.C. § 455(a), speaks to circumstances where the judge's "impartiality might reasonably be questioned," the...

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