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National Grange of the of Patrons of Husbandry v. California Guild

United States District Court, E.D. California

May 11, 2017

NATIONAL GRANGE OF THE ORDER OF PATRONS OF HUSBANDRY and CALIFORNIA STATE GRANGE, Plaintiffs,
v.
CALIFORNIA GUILD, formerly doing business as “California State Grange, ” and ROBERT MCFARLAND, Defendants.

          MEMORANDUM AND ORDER RE: MOTION TO DISQUALIFY

          WILLIAM B. SHUBB, UNITED STATES DISTRICT JUDGE

         On March 6, 2017, defendant Robert McFarland filed a notice with the court (“March 6 notice”) stating that one of his attorneys of record, Amanda Griffith of the Ellis Law Group, would be withdrawing from this case, and attorney Anthony Valenti of the same firm would “remain [an] attorney[] of record” for him.[1] (Docket No. 112.) Valenti had previously represented plaintiff National Grange in a related case while at the firm of Porter Scott, the National Grange's current counsel of record. (See Pls.' Mot., Mem. (“Pls.' Mem.”) at 3-4 (Docket No. 114-1).) McFarland withdrew Valenti from this case on March 10. (Docket No. 113.) Plaintiffs National Grange and California State Grange now move to disqualify the Ellis Law Group from this case on grounds that Valenti's conflict of interest should be imputed to the Ellis Law Group. (Pls.' Mot. (Docket No. 114).)

         I. Factual and Procedural Background

         On February 1, 2016, the National Grange[2] brought this action against defendants California Guild and McFarland, alleging, inter alia, trademark infringement, false designation of origin, and false advertisement under the Lanham Act. (Compl. (Docket No. 1).) McFarland is represented in this action by the Ellis Law Group. (See Decl. of Robert McFarland (“McFarland Decl.”) ¶ 2 (Docket No. 124-8).)

         On March 6, 2017, McFarland filed a notice with the court stating that he would be withdrawing Amanda Griffith of the Ellis Law Group from this case, and Anthony Valenti of the same firm would “remain [an] attorney[] of record” for him. (Docket No. 112.)

         Before being hired by the Ellis Law Group, Valenti had been employed by Porter Scott, the National Grange's current counsel of record, from March 10 to October 6, 2014. (See Decl. of Martin Jensen (“Jensen Decl.”) ¶ 6 (Docket No. 114-2).) While at Porter Scott, Valenti billed twenty-six hours working for the National Grange in a related action the National Grange had brought against the California Guild in the California Superior Court (“state action”).[3] (See id. ¶ 7; Decl. of Mark Ellis (“Ellis Decl.”) Ex. 5, Valenti Timesheet (Docket No. 124-14).) Valenti's involvement in the state action included “assist[ing] with discovery, draft[ing] memoranda, perform[ing] case law research, and communicat[ing] by phone and email with Plaintiff National Grange's former president” regarding case-related matters. (Jensen Decl. ¶ 7; see also Valenti Timesheet (corroborating Jensen declaration).)

         Four days after McFarland filed the March 6 notice, plaintiffs filed the present Motion, seeking to disqualify Valenti and the Ellis Law Group from this case. (Pls.' Mot. at 4-7.) As McFarland has already withdrawn Valenti from this case, [4] (see Docket No. 113), the only issue presented in plaintiffs' Motion that remains pending before the court is whether the Ellis Law Group should be disqualified from this case. Plaintiffs argue that the Ellis Law Group should be disqualified from this case because Valenti's conflict of interest should be imputed to the Ellis Law Group. (See Pls.' Mem. at 7-8.) McFarland argues that the Ellis Law Group should not be disqualified from this case because the Ellis Law Group has screened Valenti from working on this case since the day it hired him. (See McFarland's Opp'n at 4-5 (Docket No. 124).) Listing Valenti as an active attorney on the March 6 notice, McFarland claims, was a clerical mistake. (Id. at 5-6.)

         II. Discussion

         In determining whether the Ellis Law Group should be disqualified from this case, the court must apply California law. See S.E.C. v. King Chuen Tang, 831 F.Supp.2d 1130, 1141 (N.D. Cal. 2011) (“Federal courts in California look to [California] law to decide motions to disqualify.”); see also E.D. Cal. L.R. 180(e) (“[A]ny attorney permitted to practice in this Court . . . shall become familiar with and comply with the standards of professional conduct required of members of the State Bar of California and contained in the State Bar Act, the Rules of Professional Conduct of the State Bar of California, and court decisions applicable thereto, which are hereby adopted as standards of professional conduct in this Court.”).

         The law of vicarious disqualification, whereby a law firm is disqualified from a case on account of its employment of an attorney who has a conflict of interest with respect to that case, remains unsettled in California. Specifically, it remains unsettled under California law as to when vicarious disqualification of a firm is required, and when it is subject to a flexible case-by-case analysis.

         In Henriksen v. Great Am. Sav. & Loan, 11 Cal.App.4th 109 (1st Dist. 1992), a California appellate court held that a firm must be vicariously disqualified from a case when one of its attorneys “switche[d] sides” during that case. Id. at 115. In such situations, Henriksen held, no amount of screening will be sufficient to remove the taint of conflict from the firm. Id. at 116.

         The California Supreme Court extended Henriksen's holding in Flatt v. Superior Court, 9 Cal.4th 275 (1994), where it stated that a firm must also be vicariously disqualified from a case when one of its attorneys previously represented a party opposing the firm in the case in a “substantial[ly] relat[ed]” but different case. See id. at 283-84. Flatt's extension of Henriksen's holding, however, was dictum, as Flatt did not decide whether a firm should be disqualified. See id. at 279 (addressing whether an attorney with multiple clients has a duty to continue advising one client upon learning that the client's interests conflict with those of another client's); see also Kirk v. First Am. Title Ins. Co., 183 Cal.App.4th 776, 796 (2d Dist. 2010) (“The Flatt case . . . was not concerned with whether a tainted attorney's law firm was subject to vicarious disqualification.”).

         The California Supreme Court then called into question Flatt's extension of Henriksen's holding in People ex rel. Dep't of Corps. v. SpeeDee Oil Change Sys., Inc., 20 Cal.4th 1135 (1999), where it stated, after dispositively applying Henriksen's holding to vicariously disqualify the firm in question, that it “need not consider” whether the firm in question would also have been disqualified from the case had it employed an attorney who previously represented the party opposing the firm in the case in a “substantially related” but different case and “imposed effective screening procedures” to prevent the attorney from participating in the case at hand. Id. at 1151. Subsequent California appellate court decisions have interpreted SpeeDee Oil to stand for its unstated assumption that a firm need not be vicariously disqualified from a case when it employs an attorney who previously represented a party opposing the firm in the case in a “substantially related” but different case so long as it imposes effective screening procedures to ensure that the attorney does not participate in the case at hand. See, e.g., Farris v. Fireman's Fund Ins. Co., 119 Cal.App.4th 671, 689 n.17 (5th Dist. 2004).

         In view of SpeeDee Oil and the subsequent cases which have interpreted it, a California appellate court has summarized the present status of vicarious disqualification law in California to be as follows: (1) Henriksen's holding, which requires that a firm be vicariously disqualified from a case when one of its attorneys switched sides during that case, remains good law, and (2) where Henriksen's holding does not apply, including situations where the attorney in question previously represented a party opposing his firm in a substantially related but different case, the court should conduct a “case-by-case analysis, ” with a focus on ...


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