CALIFORNIA CLASS ACTION LAW

In the latest round of an apparent falling out between law firms, the Central District of California struck a terminated firm’s  request to strike the notice of its termination, and considered but did not rule on the remaining firm’s alleged ethics violations.  Yumul v. Smart Balance, Inc., No. CV 10-00927 MMM (AJWx), 2010 WL 4352723 (C.D. Cal. Oct. 8, 2010).

Background

Plaintiff Rebecca Yumul filed a notice of termination of counsel, terminating Beck & Lee Business Trial Lawyers (“Beck & Lee”) as her counsel.  Id. *1. The notice was filed by Beck & Lee’s former co-counsel, the Weston firm (“Weston”), which continues to represent Yumul.  Id. Beck & Lee filed a pleading requesting that the court strike the notice of termination, alleging ethical violations by the Weston, and seeking Weston’s disqualification. Id. Beck & Lee asserts that Weston has filed a suit in the Southern District of California to determine the validity of the Joint Prosecution Agreement (“JPA”) that governed Beck & Lee’s co-counsel relationship with Weston in this and other class actions. Id. Yumul filed an ex parte application to strike Beck & Lee’s filings. Id.

Motion to Strike Terminated Counsel’s Opposition

The court granted plaintiff’s motion to strike Beck & Lee’s opposition to the notice of termination on the grounds that it interferes with her absolute right to discharge her attorney.  Id.

It has long been recognized in [California] that the client’s power to discharge an attorney, with or without cause, is absolute.” Fracasse v. Brent, 6 Cal. 3d 784, 790 (1972). See also Aaron v. Aguirre, No. 06-CV-1451 H(POR), 2008 WL 2812179, *4 (S.D. Cal. July 21, 2008) (“[T]he client possesses the ultimate authority to choose the client’s attorney, and … has the ‘absolute right’ to change attorneys at any stage in a case,” citing Meadow v. Superior Court, 59 Cal. 2d 610 (1963)); In re Complex Asbestos Litigation, 232 Cal. App. 3d 572, 586 (1991) (recognizing clients’ right to counsel of their choice).

The court distinguished Judge James Ware’s order denying plaintiffs’ motion to terminate Beck & Lee in Red et al. v. Unilever PLC et al., No. 10-cv-00387-JW. (See the prior post for a discussion.)

Judge Ware determined that “because of the unanimous interest in proceeding with the settlement … it would be in the best interest of the class if the Court established a procedure that would permit the settlement to proceed and that would defer the attorney fees division to a later proceeding.” ( Id. at 4). Specifically, he expressed concern that “granting the Motion to Terminate two of the law firms who were involved in negotiating the settlement could jeopardize the settlement.” ( Id.) Consequently, he refused to allow plaintiffs to terminate Beck & Lee and Reese Richman as class counsel.

The circumstances in this case dictate a different result. Here, there is no pending settlement. Nor, indeed, has the matter progressed beyond the initial stages of discovery. Given a party’s absolute right to terminate her attorney, refusing to give effect to plaintiff’s termination of Beck & Lee would compel her to accept representation for the pendency of this action that violates her absolute right to discharge counsel under California law. Judge Ware’s concern in Rea appears to have been how he would properly award attorneys’ fees for work done on the case, including negotiation of the settlement. Here, as noted, the case is in an early stage, and Beck & Lee can pursue a quantum meruit recovery for work done to date.

Id. *1.

Motion to Disqualify Remaining Counsel

The Court also considered whether to disqualify Weston as counsel, reasoning that “[w]hatever the propriety of Beck & Lee’s post-termination filings, the court cannot ignore the allegations they contain concerning unethical conduct by Weston, plaintiff’s current counsel.” Id. *2   The court noted that disqualification “is a drastic measure that is disfavored.”  Id. *3 (citing Crenshaw v. MONY Life Ins. Co., 318 F. Supp. 2d 1015, 1020 (S.D.Cal.2004); Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 814 (N.D. Cal. 2004)). “Courts frown on disqualification because motions seeking disqualification set up a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility.”  Id. (internal citation omitted).   The court noted that such motions are also disfavored because they are frequently pursued for tactical reasons.  Id. (citing Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 436 (1985); Optyl Eyewear Fashion International Corp. v. Style Cos ., 760 F.2d 1045, 1050 (9th Cir.1985); O’Shea v. Epson America, Inc., No. CV 09-8063 PSG (CWx), 2010 WL 2305863, *2 (C.D. Cal. June 4, 2010); Gregori v. Bank of America, 207 Cal. App. 3d 291, 300-01 (1989)).

The court questioned whether Beck & Lee had standing to file a motion for disqualification in this case.  Id. *3, n.8. The court noted that opinions are “divided as to whether a lawyer, rather than a client or litigant, has standing to seek another lawyer’s disqualification” and that the “Ninth Circuit has not squarely addressed the issue.” Id. But the court reasoned that since “Beck & Lee has the ability to secure a just and lawful determination of its claims [in a separate lawsuit], and the court questions whether it has standing to seek to disqualify the Weston firm in this case”, it did not reach a conclusion on the standing issue.

Likewise the court noted that in “determining whether to certify a class in this case, however, unethical conduct by plaintiff’s counsel would be a relevant consideration.” Id. *4 (citing Walter v. Palisades Collection, LLC, Civil Action No. 06-378, 2010 WL 308978, *10 (E.D. Pa. Jan. 26, 2010) (“Prior unethical conduct is a relevant consideration pursuant to certification under Rule 23(a)(4)”); Walter v. Palisades Collection, LLC, No. 06-378, 2010 WL 308978, *9 (E.D. Pa. Jan. 26, 2010). (“Although the Court would not in the ordinary case undertake a careful review of counsel’s qualifications where counsel is freely retained by a party for litigation, in the class action context, where counsel is charged with representing the interests of absentee class members, it is necessary and appropriate to delve into the particular qualifications of [proposed class counsel]”); Bogner v. Masari Investments, LLC, 257 F.R.D. 529, 533 (D. Ariz.2009) (examining prior ethical complaints against proposed class counsel in a FDCPA class action); Hall v. Midland Group, No. Civ. A. 99-3108, 2000 WL 1725238, *3 (E.D.Pa. Nov. 20, 2000) (“The character and ethics of class counsel may conceivably bear on the adequacy of representation”)).  But the court deferred the ethical question until plaintiff files a motion for class certification.  Id.

Judge

Hon. Margaret M. Morrow.

By CHARLES JUNG