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Fabric Selection, Inc. v. Wal-Mart Stores

November 17, 2009

FABRIC SELECTION, INC. A CALIFORNIA CORPORATION, PLAINTIFF,
v.
WAL-MART STORES, INC., A DELAWARE CORPORATION; L'KORAL INCORPORATED, A CALIFORNIA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

Order (1) Denying Defendant's Motion to Disqualify Plaintiff's Counsel (2) Denying Plaintiff's Ex Parte Application to Strike "New Matter" from Defendant's Reply Brief [Motion filed on October 14, 2009]

Presently before the Court is Defendant Wal-Mart Stores, Inc. ("Wal-Mart")'s motion to disqualify Plaintiff Fabric Selection Inc. ("Fabric Selection")'s counsel. Wal-Mart contends that counsel for Plaintiff -- Andrew V. Jablon and Michael C. Baum of the law firm Resch Polster & Berger LLP ("RPB") -- represented Wal-Mart in a prior matter that is substantially related to the present action. Because of the close relationship between the two matters, Wal-Mart contends, Jablon and Baum had an ethical duty to obtain Wal-Mart's informed consent before undertaking to represent Fabric Selection in this matter. Because they did not do so, Wal-Mart asks the Court to disqualify Jablon, Baum, and RPB.

As explained in greater detail below, Wal-Mart has not established either that RPB actually possessed confidential information adverse to Wal-Mart's interests in the present matter, or that the two matters at issue are substantially related to one another. Accordingly, the Court denies the disqualification motion.

I. Background

The following background facts are not in dispute.

Jablon and RPB were counsel of record for Wal-Mart in L.A. Printex Industries, Inc. v. Wal-Mart Stores, Inc., Case No. CV 04-4265 ("Printex Action"). (Jablon Decl. ¶ 1.) The Printex Action commenced on June 15, 2004. (Id. ¶ 2.) Plaintiff in that case sued Wal-Mart, two of Wal Mart's vendors (Fortune Casuals, LLC ("Fortune") and John Paul Richard, Inc. ("JPR")), Fortune's fabric supplier (Absolute Textiles, Inc. ("Absolute")), and JPR's supplier (Design Collection, Inc.) contending that the defendants had infringed on three of its copyrights. (Id.) Specifically, L.A. Printex alleged that Wal-Mart's sale of garments that contained certain protected fabric designs amounted to copyright infringement.

Wal-Mart tendered defense of the Printex Action to the vendor defendants (Fortune and JPR), and they in turn tendered their defense and indemnity obligations to the supplier defendants (Absolute and Design Collection). (Id. ¶ 3.) The supplier defendants engaged RPB as counsel. (Id.) RPB, through Baum and Jablon, served as counsel of record for Fortune, JPR, Absolute, Design Collection, and Wal-Mart. On November 22, 2005, just before the case was set to go trial, the parties settled the Printex Action. (Id. ¶ 4.)

Approximately one year later, RPB began representing an unrelated printer in a dispute against Wal-Mart and several other vendors. (Id. ¶ 8.) The case was resolved by settlement agreement on March 16, 2006. (Id. ¶ 9.) On April 27, 2006, an attorney in Wal-Mart's Legal Department sent Baum a letter "terminat[ing], effective immediately, the attorney-client relationship between Wal-Mart and [RPB]." (Jablon Decl. Ex. 3.) The letter instructed RPB to "return immediately any and all files, papers, electronic documents and any other materials in your possession relating to your representation of Wal-Mart in the Printex Matter," and reminded RPB and its attorneys of their obligation to comply with ethical obligations to Wal-Mart as a former client, including the maintenance of "strict confidentiality" with respect to information they may have had access to. (Id.)

Jablon sent a cease and desist letter to Wal-Mart on behalf of Fabric Select (Plaintiff in this matter) on October 2, 2008, contending that Wal-Mart had infringed on Plaintiff's copyright in a particular fabric design. (Id. ¶ 11.) Wal-Mart responded, through Laura Chapman (counsel of record for Wal-Mart in the present matter) on October 26, 2008. (Id.) Plaintiff brought this action against Wal-Mart and L'Koral Incorporated (a garment manufacturer and Wal-Mart vendor) on March 4, 2009.

Approximately seven months later, on September 22, 2008, WalMart's counsel raised the issue of disqualification for the first time. (Id. ¶ 16.) Wal-Mart filed this disqualification motion on October 14, 2009. (Dkt. No. 32.)

II. Discussion

A. Legal Standard

"The trial court is vested with the power '[t]o control in furtherance of justice, the conduct of its ministerial officers.'" Henriksen v. Great Am. Sav. & Loan, 14 Cal. Rptr. 2d 184, 186 (Ct. App. 1992). The Court's inherent power includes the power to disqualify an attorney. Id.

The starting point for the Court's analysis is California Rules of Professional Conduct, Rule 3-310(e) ("Avoiding the Representation of Adverse Interests").* ...


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