Union Pac. R.R. Co. v. Hill

• Docket Number: 21-cv-03216-BLF
• Decision Date: 08 November 2023
• Parties: UNION PACIFIC RAILROAD COMPANY, Plaintiff, v. ROBERT E. HILL, et al., Defendants.
• Court: U.S. District Court — Northern District of California

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UNION PACIFIC RAILROAD COMPANY, Plaintiff, v. ROBERT E. HILL, et al., Defendants.

No. 21-cv-03216-BLF

United States District Court, N.D. California, San Jose Division

November 8, 2023

[Re ECF No. 86]

ORDER DENYING MOTION TO DISQUALIFY COUNSEL

BETH LABSON FREEMAN, United States District Judge.

Before the Court is Plaintiff Union Pacific Railroad Company's (“Union Pacific”) motion to disqualify Allen Matkins Leck Gamble Mallory & Natsis LLP (“Allen Matkins”) and Silicon Valley Law Group (“SVLG”), counsel for Defendant Mobile Mini, Inc. and Defendants Robert E. Hill, Robert W. Hill, and Privette Inc., respectively (collectively “Defendants”). ECF No. 86 (“Mot.”). Defendants oppose the motion. ECF No. 90 (“Opp.”). Union Pacific filed a reply. ECF No. 94 (“Reply”). The Court held a hearing on August 27, 2023. ECF No. 95. At the hearing, the Court permitted the parties to submit supplemental briefing on the question of whether vicarious disqualification is automatic. ECF Nos. 99, 100. After the hearing, the Court requested further supplemental briefing on James Meeder's relationship with Allen Matkins. ECF Nos. 105, 106, 107.

For the reasons below, the Court DENIES Union Pacific's Motion to Disqualify Counsel.

I. BACKGROUND

A. The Current Representation

Union Pacific owns the real property located at 725 Chestnut Street in San Jose, California, which abuts its railroad tracks to the southwest. ECF No. 1 (“Compl.”) ¶ 12. Union Pacific is the successor-in-interest to Southern Pacific Company and Southern Pacific Transportation Company (collectively “Southern Pacific”). See ECF No. 86-18 (“Bylsma Decl.”) ¶ 4 (describing the relationship between Union Pacific and Southern Pacific). Union Pacific has owned the property since the late 1800s and since the 1960s has leased it to various entities, including Defendants. Compl. ¶¶ 13-14.

On April 30, 2021, Union Pacific brought the present action, alleging that Defendants or entities affiliated with Defendants had contaminated the property through the use of chemicals in painting, stripping, degreasing, and priming toilets, electrical panels, power poles, portable sheds, and shipping containers. Id. ¶ 39. Union Pacific further alleges that Defendants improperly used and maintained underground storage tanks (“USTs”) located on the property. Id. Union Pacific alleges that, as a result of these activities, the property is now contaminated with numerous pollutants, including the following:

• trichloroethylene (“TCE”), tetrachloroethylene (“PCE”), cis-1,2-dichloroethene (cis-1,2-DCE), 1,1-dichloroethane (“1,1-DCA”), 1,2-dichlorobenzene, methylene chloride, 1,1,1-trichloroethane (“1,1,1-TCA”), Freon 113, benzene, toluene, ethylbenzene, xylenes, and acetone in soil;

• TCE, PCE, vinyl chloride, cis-1,2-DCE, 1,1-DCA, trans-1,2-dichloroethene (“trans-1,2-DCE”), 1,1,1-TCA, carbon tetrachloride, 1,2-dibromo-3- chloropropane, 1,1-dichloroethene, cis-1,2-DCE, 1,2-dichlorobenzene, methyl ethyl ketone (“MEK”), acetone, benzene, ethylbenzene, xylenes, and 1,4-dioxane in groundwater; and

• TCE; 1,1-DCA; 1,2-DCA; benzene; chloroform, and vinyl chloride in soil vapor. Id. ¶ 34. The contaminants continue to spread in soil, groundwater, and air. Id. ¶ 35.

On January 14, 2022, Defendants filed answers to Union Pacific's complaint, which included counterclaims against Union Pacific. See ECF Nos. 59, 60. Defendants' counterclaims allege that Union Pacific contaminated the property through its operations, activities, and omissions on or adjacent to the property. See ECF No. 59 at 27-28; ECF No. 60 at ¶ 122. Defendants have pursued this theory in discovery. For example, Mobile Mini sought additional interrogatories looking for “basic information about Union Pacific's own use of, and history of contamination involving, the chemicals here at issue (chlorinated solvents) to support its defense and counterclaim that Union Pacific itself caused the contamination.” ECF No. 86-13 at 4. This included information about Union Pacific employees with knowledge of contaminating activities, Union Pacific's programs and policies involving chlorinated solvents and underground tanks, and other legal actions involving allegations of contamination involving Union Pacific and chlorinated solvents. Id.

On August 4, 2023, Defendants deposed Mark Ransom in his individual capacity- Ransom is the former Environmental Manager of Southern Pacific from 1984 to 1990 who continued to consult for Southern Pacific and Union Pacific as part of ERM-West, Inc. ECF No. 86-19 (“Ransom Decl.”) ¶¶ 1-3. Consistent with Defendants' discovery and in support of their counterclaims, counsel from Allen Matkins and SVLG asked questions about environmental contamination related to other Union Pacific rail yards, including sites in San Luis Obispo and Bayshore. ECF No. 86-11 (“Ransom Depo.”) at 10:19-11:10; 22:19-24:9. The subjects of the deposition also included Union Pacific's “Cleaners Committee,” id. at 54:24-55:25, 60:23-61:3; Union Pacific's use of chlorinated solvents, id. at 55:1-58:21; underground vaults, id. at 77:2583:7; and Bunker C oil, id. at 79:15-18.

After the deposition, Ransom informed counsel for Union Pacific that he “was concerned that the deposition questions were predicated on confidential information that [he] had exchanged with [Allen Matkins lawyers David Cooke and James Meeder] in past cases.” Ransom Decl. ¶ 20. On August 18, 2023, after investigating the potential conflict, Union Pacific informed Defendants' counsel about the conflict. ECF No. 86-1 (“Perch-Ahern Decl.”) ¶¶ 6-7. At an August 21, 2023 meet and confer between the parties, Allen Matkins confirmed that the firm had not obtained informed written consent from Union Pacific nor had it established an ethical wall prior to August 21, 2023. Id. ¶ 10; see also Bylsma Decl. ¶¶ 6, 11 (Union Pacific confirmed that it has not provided written consent to Allen Matkins nor did it receive notice from Allen Matkins about any potential conflict). After Allen Matkins and SVLG declined to withdraw from the case, Union Pacific brought the present motion. Perch-Ahern Decl. ¶ 10.

B. The Prior Representations

Union Pacific's allegations of a conflict of interest are based on two prior representations by David Cooke and James Meeder in the mid-1990s. Cooke is currently a partner at Allen Matkins. ECF No. 90-2 (“Cooke Decl.”) ¶ 2. Meeder, a former partner at Allen Matkins, retired from the firm on June 30, 2020. ECF No. 106-1 (“Marino Decl.”) ¶ 5. On July 1, 2020, Meeder transitioned to a “limited contract attorney role” in which his work was limited to a single consolidated matter. Id. ¶ 6; see also ECF No. 90-4 (“Meeder Decl.”) ¶ 4 (describing Meeder's role as “an hourly part-time contract attorney in an of counsel position”). Meeder moved from San Francisco, California to Bend, Oregon in March 2022. Meeder Decl. ¶ 5.

Before joining Allen Matkins, both attorneys worked at Brobeck, Phleger & Harrison until the early 1990s. See Cooke Decl. ¶ 2 (Cooke worked for Brobeck, Phleger & Harrison from 1980 to 1991); Meeder Decl. ¶ 3 (Meeder worked for Brobeck, Phleger & Harrison from 1975 to 1990). Meeder and Cooke then moved to Beveridge & Diamond, where they worked until 2000, when they joined Allen Matkins. See Cooke Decl. ¶ 2; Meeder Decl. ¶¶ 3-4. The relevant prior representations occurred while Cooke and Meeder were attorneys at Beveridge & Diamond.

i. The Petra Group, Inc. v. Southern Pacific Transportation Co. (“Petra”)

Cooke represented Southern Pacific in the Petra lawsuit in or around 1994 and 1995. In 1988, Southern Pacific sold property adjacent to the railroad and right-of-way in San Luis Obispo to the Petra Group, a real estate development company. ECF No. 86-4; Cooke Decl. ¶ 7; Ransom Decl. ¶ 10. During construction, the Petra Group discovered two USTs containing Bunker C oil that had caused contamination of the purchased property. Ransom Decl. ¶ 10; ECF No. 86-5. Southern Pacific installed the vaults in 1918, but it took the vaults out of service and buried them in 1929. ECF No. 91 at 16 (Southern Pacific's Opposition to the Petra Group's Motion for a New Trial). Southern Pacific paid for part of the cost of cleanup. Id. at 6 (The Petra Group's Settlement Conference Statement). In or around 1994, the Petra Group brought a lawsuit in California Superior Court against Southern Pacific, alleging “causes of action for suppression of facts, negligent misrepresentation, failure to notify buyers of known defects, nuisance and trespass.” Id. The Petra Group alleged that Southern Pacific's failure to disclose the USTs resulted in the property's reduction in value and the company's financial ruin. Id. The case went to trial, and the jury returned a verdict in favor of Southern Pacific based on a finding that the Petra Group's claims were barred by the statute of limitations. Cooke Decl. ¶ 9; Ransom Decl. ¶ 12.

Cooke then with Beveridge & Diamond, represented Southern Pacific at trial. Cooke Decl. ¶ 7; Ransom Decl. ¶ 11; ECF No. 86-3 (listing Petra as one of Cooke's representations on the Allen Matkins website); ECF No. 86-4 (identifying Cooke as counsel for Southern Pacific at trial); ECF No. 86-5 (same). Ransom was a key witness at the Petra trial and notes that he “worked closely with Mr. Cooke to prepare for my testimony during deposition and at trial.” Ransom Decl. ¶ 11. Ransom continues that “I shared and exchanged confidential information with Mr. Cooke regarding Southern Pacific's railroad operations, and we both worked with Southern Pacific in-house counsel, who also exchanged confidential information with Mr. Cooke.” Id. Cooke states that he cannot recall working with Ransom or any confidential information that he might have acquired during the...