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United States ex rel. McNall v. Pacific Retirement Services, Inc.

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

August 29, 2019

UNITED STATES OF AMERICA ex rel. MICHAEL MCNALL and KARYL MCNALL, Plaintiffs,
v.
PACIFIC RETIREMENT SERVICES, INC., et al., Defendants.

          ORDER GRANTING MOTION TO WITHDRAW AS COUNSEL RE: ECF NO. 61

          LAUREL BEELER UNITED STATES MAGISTRATE JUDGE

         INTRODUCTION

         This case is a qui tam action brought by relators Michael McNall and Karyl McNall on behalf of the United States against defendants Pacific Retirement Services, Inc. and Rehab Specialists I, LLC (d/b/a Consonus Rehab Services). In May 2017, the government filed a notice declined to intervene, and the case was unsealed.[1]

         Between 2017 and 2019, the parties entered into numerous stipulations to extend the deadline for the defendants to respond to the complaint.[2] The parties said that one of the reasons for extending the defendants' deadline was because there was an underlying criminal proceeding that was going to go to trial (that was repeatedly continued) that would impact the defendants' responses to the complaint.[3]

         That underlying proceeding was the criminal trial of relator Michael McNall.[4] In April 2016, after this case was filed and while it remained under seal (i.e., before the government declined to intervene), the McNalls' home in Oregon exploded.[5] In early 2017, Mr. McNall was charged with arson related to that explosion.[6] Following several continuances, Mr. McNall was tried and convicted in February 2019.[7] Mr. McNall has appealed his conviction.[8]

         Cotchett, Pitre, and McCarthy, LLP (“CPM”), counsel for the McNalls, now moves to withdraw as counsel.[9] Before the outcome of Mr. McNall's criminal trial, CPM informed the McNalls that it was not willing to litigate this case on their behalf if Mr. McNall were convicted.[10]When Mr. McNall was convicted, CPM and the McNalls agreed that the McNalls would find new counsel to substitute into the case if they wished to proceed.[11] CPM states that “material changes to the circumstances of the McNalls' life have resulted in a deteriorating attorney-client relationship” and states that it has good cause to withdraw as counsel.[12]

         The defendants do not oppose CPM's motion to withdraw.[13] The government did not file an opposition to CPM's motion to withdraw.[14] Ms. McNall opposes CPM's motion.[15] Mr. McNall did not file an opposition or a statement of non-opposition.[16]

         The court held a hearing and finds that CPM has taken adequate steps to avoid foreseeable harm caused by its withdrawal. The court grants CPM's motion to withdraw for the reasons advanced in its filings and discussed at the hearing.

         ANALYSIS

         1. Governing Law

         Under Civil Local Rule 11-5(a), “[c]ounsel may not withdraw from an action until relieved by order of Court after written notice has been given reasonably in advance to the client and to all other parties who have appeared in the case.” The Local Rules further provide that if the client does not consent to the withdrawal and no substitution of counsel is filed, the motion to withdraw will be granted on the condition that all papers from the court and from the opposing party will be served on the current (and withdrawing) counsel to forward to the client until the client appears through new counsel or pro se (if the client is not a corporate defendant). N.D. Cal. Civ. L.R. 11-5(b).

         Withdrawal is governed by the California Rules of Professional Conduct. See Nehad v. Mukasey, 535 F.3d 962, 970 (9th Cir. 2008) (applying California Rules of Professional Conduct to attorney withdrawal); j2 Global Commc'ns, Inc. v. Blue Jay, Inc., No. C 08-4254 PJH, 2009 WL 464768, at *1 (N.D. Cal. Feb. 24, 2009) (citing Elan Transdermal Ltd. v. Cygnus Therapeutic Sys., 809 F.Supp. 1383, 1387 (N.D. Cal. 1992)). California Rule of Professional Conduct 1.16 sets forth several grounds under which an attorney may request permission to withdraw, including that:

(1) the client insists upon presenting a claim or defense in litigation, or asserting a position or making a demand in a non-litigation matter, that is not warranted under existing law and cannot be supported by good faith argument for an extension, modification, or reversal of existing law; (2) the client either seeks to pursue a criminal or fraudulent course of conduct or has used the lawyer's services to advance a course of conduct that the lawyer reasonably believes was a crime or fraud; (3) the client insists that the lawyer pursue a course of conduct that is criminal or fraudulent; (4) the client by other conduct renders it unreasonably difficult for the lawyer to carry out the representation effectively; (5) the client breaches a material term of an agreement with, or obligation, to the lawyer relating to the representation, and the lawyer has given the client a reasonable warning after the breach that the lawyer will withdraw unless the client fulfills the agreement or performs the obligation; (6) the client knowingly and freely assents to termination of the representation; (7) the inability to work with co-counsel indicates that the best interests of the client likely will be served by withdrawal; (8) the lawyer's mental or physical condition renders it difficult for the lawyer to carry out the representation effectively; (9) a continuation of the representation is likely to result in a violation of these rules or the State Bar Act; or (10) the lawyer believes in good faith, in a proceeding pending before a tribunal, that the tribunal will find the existence of other good cause for withdrawal.

         Before counsel can withdraw, counsel must comply with California Rule of Professional Conduct 1.16(d), which states that counsel must not withdraw from employment until counsel “has taken reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client, such as giving the client sufficient notice to permit the client to retain ...


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