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Varsha Sharma, Sheetal Sharma, Individual and On Behalf of All Others Similarly Situated v. Vw Credit

March 20, 2013

VARSHA SHARMA, SHEETAL SHARMA, INDIVIDUAL AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
VW CREDIT, INC., DBA AUDI FINANCIAL SERVICES, DEFENDANTS.



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

O

ORDER DENYING DEFENDANT'S MOTION TO DISQUALIFY PLAINTIFFS' COUNSEL [Docket No. 33]

Presently before the Court is the defendant VW Credit, Inc. ("VCI")'s Motion to Disqualify the plaintiffs' counsel, Brandon Block ("Block"). Having considered the parties' arguments, the Court adopts the following order.

I. BACKGROUND

Mr. Gaja Sharma leased a 2005 Audi A4 from a dealership in Los Angeles County for his daughter, plaintiff Varsha Sharma. (First Am. Compl. ¶ 8.) The dealership assigned the lease to VCI. (Id. ¶ 9.) After Mr. Sharma passed away on June 21, 2010, VCI repossessed the vehicle on November 8, 2010 and provided written notice of its intent to sell the vehicle on November 12. (Id. ¶¶ 10, 14-15.)

The plaintiffs filed this putative class action alleging that VCI violated the Rees-Levering Automobile Sales Finance Act, Cal. Civ. Code § 2981, et seq., by "fail[ing] to provide borrowers under conditional sales contracts with statutorily-mandated notice of their legal rights and obligations after repossession of vehicles." (Id. ¶¶ 1, 34--42.) The plaintiffs also allege that VCI's debt collection practices breached their underlying contract, (id. ¶¶ 43--49), and violated California's Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788, et seq., (id. ¶¶ 50--60), and Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq., (id. ¶¶ 61--71.)

The plaintiffs' counsel, Block, worked as an associate attorney for VCI's current counsel Stroock & Stroock & Lavan LLP ("Stroock") from 1999 to 2003. (Declaration of Brandon Block ("Block Decl.") ¶ 2.) From 2001 to 2003, Block worked at Stroock's office in Los Angeles. (Id. ¶ 3; Declaration of Lisa M. Simonetti ("Simonetti Decl.") ¶ 2.) During those years, Block worked on three cases in which Stroock represented VCI: (1) Rickett v. Chase Manhattan Auto. Fin. Corp., No. 277380 (L.A. Cnty. Super. Ct. filed July 10, 2002); (2) Morrissey v. Coastal Auto Mart, Inc., No. DR010045 (Humboldt Cnty. Super. Ct. filed Jan. 18, 2001); and (3) Mendoza v. Volkswagen of Am., Inc., No. BC 284120 (L.A. Cnty. Super. Ct. filed Oct. 25, 2002). (Simonetti Decl. ¶ 2.)

After he left Stroock in 2003, Block worked until 2007 as an associate attorney for Buchalter Nemer, A Professional Corporation. (Block Decl. ¶ 6.) Since then he has worked independently at the Law Offices of Brandon A. Block, A Professional Corporation. (Id. ¶¶ 6,8.) Block has not represented VCI in either of those capacities. (Id. ¶ 6.)

On August 12, 2011, the plaintiffs, represented by Block, filed this putative class action against VCI in Los Angeles Superior Court. (Docket No. 1: Notice of Removal, Exh. A.) VCI, represented by Stroock, timely removed to this Court on October 7, 2011. (Id. ¶ 1.) On January 10, 2013, VCI filed a Motion to Disqualify Block as the plaintiffs' counsel. (Docket No. 33: Motion to Disqualify ("Motion").)

II. LEGAL STANDARD

Federal courts apply state law when they determine matters of attorney disqualification. In re Cnty. of L.A., 223 F.3d 990, 995 (9th Cir. 2000). Though the California State Bar's Rules of Professional Conduct do not set standards for disqualification in the courts, "courts analyzing questions of disqualification often look to the Rules of Professional Conduct for guidance." Kirk v. First Am. Title Ins. Co., 108 Cal. Rptr. 3d 620, 631 (Ct. App. 2010). Rule 3-310(E) provides that "[a] member shall not, without the informed written consent of the client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment."

Applying this rule, the California Supreme Court has said that "[w]here an attorney successively represents clients with adverse interests, and where the subjects of the two representations are substantially related, the need to protect the first client's confidential information requires that the attorney be disqualified from the second representation." People ex rel. Dep't of Corps. v. SpeeDee Oil Change Sys., Inc., 20 Cal. 4th 1135, 1146 (1999). Courts presume that the attorney had access to confidential information if the former client establishes "the requisite substantial relationship between the subjects of the prior and the current representations." Flatt v. Superior Court, 9 Cal. 4th 275, 283 (1994). "If a substantial relationship is established, . . .

[t]he rights and interests of the former client will prevail. Conflict will be presumed; disqualification will be ordered." River W., Inc. v. Nickel, 234 Cal. Rptr. 33, 41 (Ct. App. 1987). "However, it is not in the interests of justice to make the 'substantial relationship' rule so unyielding as to permit the former client to inexcusably postpone objections without penalty." Id. "It is well settled that a former client who is entitled to object to an attorney representing an opposing party on the ground of conflict of interest but who knowingly refrains from asserting it promptly is deemed to have waived that right." Trust Corp. of Mont. v. Piper Aircraft Corp., 701 F.2d 85, 87 (9th Cir. 1983). "Therefore, a narrow exception should apply if the ...


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