Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-01296/USCOURTS-cand-3_06-cv-01296-12/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1121 Trademark Infringement

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LAPPERT'S ICE CREAM, INC., a

California Corporation

Plaintiff,

 v.

LAPPERT'S, INC., a Hawaii

Corporation,

Defendant. 

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No. C-06-1296 SC

ORDER GRANTING

DEFENDANT'S MOTION TO

DISQUALIFY

PLAINTIFF'S COUNSEL

I. INTRODUCTION

Presently before the Court is a motion by Defendant Lappert's

Inc. ("Defendant" or "Lappert's Hawaii") to disqualify Hanson

Bridgett Marcus Vlahos & Rudy, LLP ("Hanson Bridgett") as counsel

for Plaintiff Lappert's Ice Cream, Inc. ("Plaintiff" or "Lappert's

California"). Having considered the written submissions and oral

arguments of both parties, the Court hereby GRANTS Defendant's

Motion for Disqualification of Hanson Bridgett. 

 

II. BACKGROUND

This case arises from a dispute between two related companies

over the control of the intellectual property rights of an ice

cream business. See Amended Complaint, Docket No. 47. Lappert's

Hawaii was co-founded in 1983 by three people: Walter Lappert,

Michael Lappert, Walter's son from a prior marriage, and Mary

Pratt, Walter's wife. They also opened a store in Sausalito,

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California in 1984. Walter and Mary divorced in 1991, and each

was awarded a 50% share of Lappert's Hawaii. Lappert's California

is presently 100% owned by Michael Lappert. When Walter Lappert

died in 2003, his 50% share of Lappert's Hawaii and all other

intellectual property he purportedly held as an individual passed

to his son Michael who currently owns 50% of Lappert's Hawaii. 

See Motion to Disqualify, Docket No. 73; Opp'n, Docket No. 83.

In this case, Lappert's California claims that it owns four

U.S. federal trademark registrations and other Hawaii state

registrations for Lappert's related intellectual property. See

Amended Complaint. Lappert's Hawaii has counter-claimed for

ownership of the relevant intellectual property, claiming that it

was developed and paid for by Lappert's Hawaii and that Walter

Lappert's registration of the rights in his own name, without the

knowledge or consent of Mary Pratt, was invalid, ultra vires

conduct, and fraud on the United States Patent and Trademark

Office. See Answer to Amended Complaint.

Defendant Lappert's Hawaii seeks to disqualify Hanson

Bridgett as counsel for Plaintiff Lappert's California because

Hanson Bridgett formerly represented Lappert's Hawaii in 1996 and

helped Walter Lappert transfer two Hawaii trade-name registrations

from Lappert's Hawaii to himself. See Motion to Disqualify.

III. LEGAL STANDARD

"It has long been established in civil cases that the court

has the power, on motion of a party, to disqualify an opposing

attorney from participating in a trial when, for example, the

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attorney improperly seeks to proceed against a former client." 

People v. Superior Court (Greer), 561 P.2d 1164, 1170 (Cal. 1977). 

The power to disqualify an attorney is one aspect of the trial

court's broad authority “[t]o control in furtherance of justice,

the conduct of its ministerial officers . . . .” Cal. Code Civ.

Proc., § 128(a)(5); People ex rel. Dept. of Corporations v.

SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135, 1145 (1999).

The prohibition against representing a new client whose

interests are adverse to a former client is grounded in both the

California State Bar Rules of Professional Conduct and relevant

case law. Rule 3-310(E) provides: “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.”

Courts evaluate conduct under Rule 3-310(E) according to the

"substantial relationship" test: 

When a substantial relationship has been shown to exist

between the former representation and the current

representation, and when it appears by virtue of the nature

of the former representation or the relationship of the

attorney to his former client confidential information

material to the current dispute would normally have been

imparted to the attorney or to subordinates for whose legal

work he was responsible, the attorney's knowledge of

confidential information is presumed.

Goldberg v. Warner/Chappell Music, Inc., 125 Cal. App. 4th 752,

759 (2005). A lawyer who accepts employment in violation of the

rules is subject to disqualification upon motion of the former

client. Henriksen v. Great American Savings & Loan, 11 Cal. App.

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4th 109, 113-114 (1992). "The paramount concern must be to

preserve public trust in the scrupulous administration of justice

and the integrity of the bar. The important right to counsel of

one's choice must yield to ethical considerations that affect the

fundamental principles of our judicial process." SpeeDee Oil, 20

Cal. 4th at 1145.

IV. DISCUSSION

A. The Attorney-Client Relationship between Hanson Bridgett

and Lappert's Hawaii

Lappert's Hawaii moves to disqualify Hanson Bridgett based on

information discovered while reviewing documents produced by

Lappert's California in early February of 2007. Lappert's Hawaii

states that in early February it learned that Hanson Bridgett

represented Lappert's Hawaii in a series of transactions in 1996

whereby Walter Lappert renewed trade-names with the Hawaii

Department of Commerce and Consumer Affairs for "Lappert's Ice

Cream" and "Lappert's Aloha Ice Cream" and then transferred the

trade-names to himself. See Danaye-Elmi Decl., Ex. O and P,

Docket No. 76. The coverletters to each set of forms, signed by

Pam Rolph, Intellectual Property Paralegal for Hanson Bridgett,

state that the forms are "On behalf of our client, Lappert's Inc." 

Id. Hanson Bridgett needed to send the forms on behalf of the

company and not Walter Lappert because these trade-names had

previously been assigned to the corporation. Id. at Ex. N. As

such, in the present litigation, Hanson Bridgett is currently

adverse to Lappert's Hawaii, its former client from 1996.

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B. The Prior and Current Representations are Substantially

Related.

Lappert's Hawaii asserts that the 1996 transactions are

substantially related to the current case because they involve the

same type of conduct involved in their counterclaims, namely the

fraudulent transfer of intellectual property from Lappert's Hawaii

to Walter Lappert as an individual. In addition, this specific

series of deals is described at paragraph 14 of Defendant's

counterclaims. See Docket No. 49, ¶ 14. Lappert's Hawaii

maintains that during the course of Hanson Bridgett's

representation of the company in these deals, it likely received

confidential information from Walter Lappert concerning the

history and development of Lappert's Hawaii and its intellectual

property. This is based on the reasonable assumption that a

lawyer involved in transferring assets from a company to one of

its two principal officers would necessarily inquire as to purpose

for the transfer and whether the other officer had been informed.

Lappert's California disputes Defendant's characterization of

the 1996 transactions. In their Opposition and Sur-Reply briefs,

Plaintiff's counsel describes the transfer of the trade-names as

ministerial, requiring only the submission of two pre-printed,

one-page, "fill in the blank" forms. See Sur-Reply, Docket No.

102 at 4. Plaintiff's description, however, understates the

significance of the transactions. By representing Lappert's

Hawaii in transferring the trade-names from the company to Walter

Lappert, Hanson Bridgett participated in one of the deals at the

heart of the current litigation. See City Nat. Bank v. Adams, 96

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Cal. App. 4th 315, 330 (2002). Indeed, as previously discussed,

the counterclaims of Lappert's Hawaii center around the purported

fraudulent transfer of intellectual property from the company to

Walter Lappert. The 1996 deals at issue in Defendant's Motion to

Disqualify certainly comprise an important part of Defendant's

case. As stated in City National Bank, "[w]hen the prior and

current representations are in exactly the same matter or involve

the work performed by the lawyer for the former client, there is

no exception to the conclusive presumption of the exchange of

confidential information." 96 Cal. App. 4th at 330. The Court

finds that the prior representation of Lappert's Hawaii by Hanson

Bridgett is substantially related to the current representation

and that the nature of the former representation suggests that

confidential information would normally have been imparted to

Hanson Bridgett. Thus, there is a legal presumption that Hanson

Bridgett acquired confidential information concerning Lappert's

Hawaii in the course of its prior representation.

C. The Presumption that Hanson Bridgett Acquired Confidential

Information is Imputed to the Entire Firm.

According to California law, "knowledge obtained by one

member of a firm of lawyers is imputed to all the other members." 

Rosenfeld Constr. Co. v. Superior Court, 235 Cal. App. 3d 566, 572

(1991). This doctrine has been extended to nonlawyer employees of

the firm as well. See In re Tevis, 347 B.R. 679, 693 (9th Cir.

B.A.P. 2006). As such, the work done by the specific partner and

paralegal at Hanson Bridgett on the 1996 deals can be imputed to

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the other attorneys at the firm.

In its Opposition to Defendant's motion, Plaintiff Lappert's

California argues that any conflict related to the 1996

transactions should not be imputed to the entire firm. Plaintiff

states that the attorney, Lora Thielbar, and paralegal, Pamilla

Rolph, who worked on the 1996 matters are no longer with the firm

and could not have passed confidential information to the current

Hanson Bridgett attorneys involved with the case. Plaintiff cites

Goldberg v. Warner/Chappell Music for the proposition that the

Court must examine "whether confidential was actually exchanged." 

125 Cal. App. 4th at 765. In support, Plaintiff submitted

declarations from the relevant individuals, including Ms. Thielbar

and Ms. Rolph, who state that they do not recall receiving

confidential information from Lappert's Hawaii and that they do

not recall discussing the matter with the current Hanson Bridgett

attorneys. See Thielbar Decl., Docket No. 88; Rolph Decl., Docket

No. 90. 

Plaintiff's reliance on Goldberg is misplaced. In Goldberg,

the attorney-client relationship was informal and only involved

one meeting. See 125 Cal. App. 4th at 758. By contrast, in this

case, Hanson Bridgett claimed to represent Lappert's Hawaii for at

least nine months as it helped renew and then transfer the Hawaii

trade-names. See Danaye-Elmi Decl., Ex. O and P, Docket No. 76. 

Furthermore, Ms. Thielbar and Ms. Rolph remained at Hanson

Bridgett until 1999 and continued to work on Lappert's related

matters. Though Ms. Rolph left Hanson Bridgett in 1999, she

returned in 2000 and remained employed there until 2005. See

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Rolph Decl. Indeed, Ms. Rolph worked with Susan O'Neill, one of

the current attorneys for Plaintiff, on Lappert's intellectual

property issues in 2004. See Gallo Decl., Docket No. 95, ¶ 6 and

Ex. 4. In addition, Ms. Thielbar worked on federal trademark

projects for Walter Lappert in 1996 and those projects were

ultimately passed to attorneys who worked with Garner Weng,

currently lead counsel for Lappert's California. See Gallo Decl.,

¶¶ 5-8 and Exs. 3-7. In light of the various direct interactions

between the Hanson Bridgett employees who represented Lappert's

Hawaii and the Hanson Bridgett attorneys currently working on the

case, the Court finds that imputed disqualification of the entire

firm is necessary to ensure compliance with Rule 3-310(E) of the

California State Bar Rules of Professional Conduct. 

V. CONCLUSION

For the reasons described herein, the Court GRANTS

Defendant's Motion for Disqualification of Plaintiff's Counsel,

Hanson Bridgett. All pending motions, including Plaintiff's

Motion for Summary Judgment, are hereby taken off calendar pending

Plaintiff's retention of new counsel.

IT IS SO ORDERED.

Dated: March 6, 2007

 

UNITED STATES DISTRICT JUDGE

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