Having ‘Playbook’ Info About Former Client Doesn’t Warrant Attorney’s Disqualification

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By Samson Habte  

 

An attorney is not automatically disqualified from representing a plaintiff in a “lemon law” suit against Ford Motor Co. simply because he once defended the car maker against similar claims while working for a firm that acts as Ford's corporate counsel, the California Court of Appeal, Second District, held in an opinion published April 25 (Khani v. Ford Motor Co., Cal. Ct. App. 2d Dist., No. B239611, 4/2/13, published 4/25/13).

Successive representation of clients with adverse interests is prohibited only when “the subjects of [the] representations are substantially related,” Justice Norman L. Epstein said, and the trial court misapplied key elements of the test for determining whether a “substantial relationship” existed between opposing counsel's prior work and his current case.

The lower court's first mistake, Epstein said, was its “impression that [the test] requires consideration of only the legal issues involved in successive representations.”

Additionally, he said, the lower court failed to require the moving party to demonstrate that opposing counsel's prior representation “exposed him to confidential information that would be material to his current representation.” In sum, Epstein explained:  

The trial court abused its discretion in concluding that the prior cases were substantially related to the current case just because they involved claims under the same statute. The substantial relationship test does not subject an attorney to automatic disqualification on this ground alone. The court also incorrectly assumed that [opposing counsel's] exposure to playbook information in prior lemon law cases was sufficient to disqualify him in this case without any showing of its materiality.  

 

 

 

Switching Sides

A plaintiff who bought an allegedly defective car hired attorney Payam Shahian to bring a claim under California's Song-Beverly Consumer Warranty Act, Cal. Civ. Code, §§1790 et seq., against Ford and a local dealer.

Seeking to disqualify Shahian, the defendants filed a motion accompanied by the declaration of a partner at Bowman and Brooke, a law firm serving as Ford's corporate counsel that previously employed Shahian.

According to the declaration, Shahian worked at Bowman for three years and was involved in 150 cases, including California lemon law cases. He was “privy to confidential client communications and information relating to the defense of” such cases, the declaration stated, and he gleaned information about “pre-litigation strategies, tactics, and case handling procedures.” Shahian also “regularly” communicated with Ford's in-house attorneys about lemon law cases, Ford said.


“Ford's bare-bones evidence in this case is insufficient to establish that Shahian's previous representation of Ford in California Lemon Law cases exposed him to confidential information that would be material to his current representation of Khani.”
Justice Norman L. Epstein

“The trial court granted the disqualification motion,” Epstein said, “ruling that the legal issues in lemon law cases are substantially similar, and presuming that Shahian's previous work exposed him to confidential information about Ford's handling of such cases.”

Doctrinal Development

Epstein's opinion traces recent doctrinal developments that have heightened the evidentiary burden of parties seeking disqualification.

The general rule, he explained, is that former clients seeking disqualification must show that a lawyer previously represented them in a “substantially related” matter.

The opinion cites Jessen v. Hartford Cas. Ins. Co., 3 Cal. Rptr.3d 877, 19 Law. Man. Prof. Conduct 504 (Cal. Ct. App. 2003), which, it said, provides that a substantial relationship exists where “the attorney had a direct professional relationship with the former client in which the attorney personally provided legal advice and services on a legal issue that is closely related to the legal issue in the present representation.”

In San Francisco City & County v. Cobra Solutions Inc. 135 P.3d 20, 22 Law. Man. Prof. Conduct 273 (Cal. 2006), the supreme court held that when a “direct relationship with the client” can be shown, the former client “need not prove that the attorney possesses actual confidential information.”

The trial court, Epstein said, erroneously concluded “that Cobra Solutions requires consideration of only the legal issues involved in successive representations, and it assumed that all lemon law cases raise similar legal issues.”

That case, Epstein explained, did not alter the holding of Farris v. Fireman's Fund Ins. Co., 14 Cal. Rptr.3d 618, 20 Law. Man. Prof. Conduct 330 (Cal. Ct. App. 2004), that “factual and legal similarities” between two cases must be explored, and that “playbook” information about a former client's “'overall structure and practices' would not of itself require disqualification unless it were found to be 'material'--i.e., directly in issue or of critical importance--in the second representation.”

'Bare Bones Evidence.'

In Farris, an attorney who worked as coverage counsel for an insurance company for over 10 years was precluded from later representing a policyholder in a suit which alleged that the company denied a claim in bad faith. The attorney in that case “shaped the company's practices and procedures in handling California coverage cases,” Epstein noted.

The attorney in Farris was disqualified, Epstein added, because the insurer's policies and practices he was instrumental in developing as coverage counsel “would likely be at issue in the bad faith case, and senior claims personnel with whom [he] closely worked would likely be called as witnesses.”

Similarly conclusive evidence that Shahian obtained confidential information about Ford that was material to his current client's case has not been shown, Epstein explained:  

The evidence in this case does not establish that any information to which Shahian was exposed during his representation of Ford would be material to his representation of Khani in this case. While Ford presented evidence that Shahian represented it in California Lemon Law cases, it did not establish that any confidential information about the defense in those cases would be at issue in this case. … [Shahian's former employer's] declaration does not show that Ford had any policies, practices, or procedures generally applicable to the evaluation, settlement or litigation of California Lemon Law cases at the time Shahian represented Ford, or that any such policies, practices, or procedures continued in existence unchanged between 2007 and 2011. Nor does it show that the same decision makers that were involved in cases Shahian handled for Ford are involved in this case.  

 

 

Accordingly, the trial court “abused its discretion in concluding that the prior cases were substantially related to the current case just because they involved claims under the same statute,” the court concluded.

The trial court also erred in assuming that Shahian's “playbook information” about prior lemon law cases was sufficient, absent evidence of its materiality, to disqualify him from the current case, Epstein added.

“Ford's bare-bones evidence in this case is insufficient to establish that Shahian's previous representation of Ford in California Lemon Law cases exposed him to confidential information that would be material to his current representation of Khani,” Epstein explained.

Ford was represented by Mary L. Arens of Baker & Hostetler in Columbus, Ohio; Jack Samet of the firm's Costa Mesa, Cal. office; and Rosslyn Hummer of Los Angeles.

The plaintiff was represented by Payam Shahian of Strategic Legal Practices, Los Angeles, and Neil Gielegheim of Gielegheim & Associates, Los Angeles.


Full text at http://www.bloomberglaw.com/public/document/Khani_v_Ford_Motor_Co_No_B239611_2013_BL_112916_Cal_App_2d_Dist_A.

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