Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-16827/USCOURTS-ca9-14-16827-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

READING INTERNATIONAL, INC., a

Nevada corporation,

Plaintiff-Appellant,

v.

THE MALULANI GROUP, LIMITED, a

Hawaii corporation,

Defendant-Appellee.

No. 14-16827

D.C. No.

1:13-cv-00133-

JMS (KSC)

ORDER

Appeal from the United States District Court

for the District of Hawaii

J. Michael Seabright, District Judge, Presiding

Submitted to Motions Panel

September 14, 2015

Filed February 25, 2016

Before: Stephen Reinhardt, A. Wallace Tashima,

and Johnnie B. Rawlinson, Circuit Judges.

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2 READING INT’L V. THE MALULANI GRP.

SUMMARY*

Disqualification of Counsel

The panel granted appellee The Malulani Group, Inc.’s

motion to disqualify counsel for appellant Reading

International, Inc., Bronster Fujichaku Robbins. 

The panel applied Hawaii law, which has adopted the

“substantial relationship” test for reviewing attorney

disqualification where a representation may be adverse to the

interests of a former client, codified at Hawaii Rules of

Professional Conduct (“HRCP”) 1.9(a). The panel concluded

that two representations – the pending appeal and a prior case

– were substantially related, and held that attorney Kenneth

Robbins was barred from representingReading in the pending

appeal under HRCP 1.9. The panel further held that Robbins’

disqualification was imputed to the Bronster Firm under

HRCP 1.10(c). The panel also held that The Malulani Group 

had not waived its right to seek disqualification of the

Bronster Firm. The panel concluded that the Bronster Firm

was disqualified from representing Reading in this appeal.

COUNSEL

Margery S. Bronster and Rex Yoshio Fujichaku, Bronster

Fujichaku Robbins, Honolulu, Hawaii, for PlaintiffAppellant.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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READING INT’L V. THE MALULANI GRP. 3

Jay S. Handlin and Lindsay N. McAneeley, Carlsmith Ball

LLP, Honolulu, Hawaii, for Defendant-Appellee.

ORDER

Appellee The Malulani Group, Limited (“TMG”) moves

to disqualify counsel for appellant Reading International, Inc.

(“Reading”), Bronster Fujichaku Robbins (“Bronster Firm”). 

TMG seeks disqualification because attorney Kenneth

Robbins, a partner at the Bronster Firm, previously

represented TMG while a partner at the firm Robbins &

Associates.

We have jurisdiction over the appeal pursuant to

28 U.S.C. § 1291. We grant the motion to disqualify counsel. 

We express no opinion on the merits of the pending appeal.

The pending appeal challenges the district court’s

judgment in favor of TMG in Reading’s diversity action. 

Reading alleges that TMG breached a 2009 settlement

agreement stemming from an action in the First Circuit Court,

State of Hawaii, Magoon Investments, LLC v. Malulani

Investments, Limited, Civil No. 06-1-2156 GWBC (“Prior

Action”). TMG, represented by the firm Robbins &

Associates, intervened in the Prior Action as the parent

corporation of the defendant Malulani Investments. Reading,

represented by the Bronster Firm, was a plaintiff,

counterclaim defendant, and defendant in intervention in the

Prior Action.1

1 Before April 15, 2015, the Bronster Firm was known as Bronster

Hoshibata.

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4 READING INT’L V. THE MALULANI GRP.

Most of the legal work done byRobbins & Associates for

TMG in the Prior Action was performed by attorney Kenneth

Robbins and his associate attorney Sergio Rufo. TMG paid

Robbins & Associates a total of $1,211,803.17 in fees and

costs in the Prior Action.

The parties to the Prior Action mediated their dispute

beginning in June 2008. On March 11, 2009, the parties to

the Prior Action placed the broad terms of a settlement on the

record with the Hawaii Circuit Court. The mediator indicated

on the record that the parties had reached a settlement in

principle and had a form of settlement and release, but that

these documents were not in their final form, and additional

settlement documents needed to be completed as well. The

parties confirmed through counsel that they agreed to the

substance of the settlement and release agreements put on the

record.

On March 16, 2009, TMG’s president gave notice to

Robbins & Associates that TMG was terminating its

engagement, effective immediately. On June 18, 2009,

Robbins & Associates moved to withdraw as counsel for

TMG in the Prior Action. The motion to withdraw included

a declaration by Robbins & Associates associate attorney

Sergio Rufo that “the firm’s engagement as counsel for

[TMG] was terminated on March 17, 2009,” and that Robbins

& Associates “did not participate in negotiating the

settlement of, and has no further role in” the Prior Action.

The parties in the Prior Action negotiated a final set of

settlement documents which were executed on July 2, 2009. 

On the same day, the Hawaii Circuit Court dismissed the

claims and counterclaims of all parties in the Prior Action

with prejudice, and granted Robbins & Associates’ motion to

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READING INT’L V. THE MALULANI GRP. 5

withdraw as counsel for TMG. As a condition of withdrawal,

the Circuit Court required Robbins & Associates to sign the

stipulation to dismiss the Prior Action. However, the

stipulation included a statement that “TMG agrees that

Robbins & Associates has provided no legal services on

behalf of TMG in this matter since March 17, 2009.”

In 2013, Reading filed the pending action in the United

States District Court for the District of Hawaii, contending

that TMG had breached terms of the 2009 settlement

documents.2 The 2009 settlement documents have been

publicly filed. Reading is again represented by the Bronster

Firm in this action.

On February 4, 2015, the Bronster Firm filed Reading’s

opening brief in this appeal. On February 20, 2015, the

Bronster Firm informed TMG in writing that Robbins was

joining the Bronster Firm as a partner, and that Robbins

would be screened from participation in the pending action

and would be apportioned no part of the fees. The Bronster

Firm’s letter requested that TMG confirm in writing its

consent to the Bronster Firm’s continuing representation of

Reading pursuant to Hawaii Rules of Professional Conduct

(“HRPC” or Rules) 1.9 and 1.10. TMG did not provide oral

or written consent. Robbins joined the Bronster Firm

effective March 16, 2015.

2 Reading initially filed an action alleging breach of the 2009 settlement

documents in the Superior Court of Los Angeles County in May 2011. 

The California action was dismissed for lack of personal jurisdiction. 

Reading Int'l v. Malulani Invs., B238331, 2012 WL 4243892 (Cal. App.

2d Dist. Sept. 21, 2012) (affirming dismissal).

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6 READING INT’L V. THE MALULANI GRP.

On April 23, 2015, the Bronster Firm filed in the district

court a notice of change of firm name, reflecting that the firm

had changed its name to Bronster Fujichaku Robbins. On

May 20, 2015, the Bronster Firm filed Reading’s reply brief

in the pending appeal. TMG then filed the instant motion to

disqualify counsel on June 24, 2015, asserting that Robbins

is personallydisqualified from representingReading, and that

Robbins’ disqualification is imputed to the Bronster Firm.

“Because [federal courts] apply state law in determining

matters of disqualification, we must follow the reasoned view

of the state supreme court when it has spoken on the issue.” 

In re Cty. of L.A, 223 F.3d 990, 995 (9th Cir. 2000).

The Hawaii Supreme Court has adopted the “substantial

relationship” test for reviewing attorney disqualification

where a representation may be adverse to the interests of a

former client. See Otaka v. Klein, 71 Haw. 376 (1980). The

substantial relationship test was codified in HRCP 1.9(a),

which provides that “[a]lawyer who has formerlyrepresented

a client in a matter shall not thereafter represent another

person in the same or a substantially related matter in which

that person’s interests are materially adverse to the interests

of the former client unless the former client consents after

consultation, and confirms in writing.”3

For the purposes of this motion, we accept that Robbins

& Associates’ representation of TMG in the Prior Action

ended on March 17, 2009, and that Robbins & Associates

3 HRCP 1.9 does not incorporate the “appearance of impropriety”

doctrine found in the former Canon 9 of the Code of Professional

Conduct. See Otaka, 71 Haw. 376 (discussing disqualification under

former appearance of impropriety standard).

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READING INT’L V. THE MALULANI GRP. 7

performed no work for TMG after that date. Additionally, the

parties do not dispute that the current representation by the

Bronster Firm in the pending appeal is materially adverse to

TMG’s interests because TMG is the defendant-appellee in

the action and Reading has asserted claims against TMG. 

However, the parties vigorously dispute whether the Prior

Action is the same or substantially related to the current

representation.

Comment 3 to HRCP 1.9 further addresses when matters

are substantially related:

Matters are “substantially related” for

purposes of this Rule if they involve the same

transaction or legal dispute or if there

otherwise is a substantial risk that confidential

factual information as would normally have

been obtained in the prior representation

would materially advance the client's position

in the subsequent matter. . . . Information that

has been disclosed to the public or to other

parties adverse to the former client ordinarily

will not be disqualifying. Information

acquired in a prior representation may have

been rendered obsolete by the passage of time,

a circumstance that may be relevant in

determining whether two representations are

substantially related. In the case of an

organizational client, general knowledge of

the client's policies and practices ordinarily

will not preclude a subsequent representation;

on the other hand, knowledge of specific facts

gained in a prior representation that are

relevant to the matter in question ordinarily

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8 READING INT’L V. THE MALULANI GRP.

will preclude such a representation. A former

client is not required to reveal the confidential

information learned by the lawyer in order to

establish a substantial risk that the lawyer has

confidential information to use in the

subsequent matter. A conclusion about the

possession of information may be based on

the nature of the services the lawyer provided

the former client and information that would

in ordinary practice be learned by a lawyer

providing such services.

TMG contends the pending appeal is substantially related

to the Prior Action, which culminated in the 2009 settlement,

in which Robbins was counsel for TMG. In particular, TMG

points to Reading’s argument before the district court and on

appeal that the parties in the Prior Action had intended that

TMG would not have a right to cure claimed breaches of the

settlement documents. TMG futher asserts that Robbins had

confidential information related to the current action by virtue

of his representation of TMG in the Prior Action, including

TMG’s strategies with respect to settlement.

Reading maintains that the current action is not

substantially related to the Prior Action, because it asserts

that Robbins did not personally participate in the drafting,

negotiation, or execution of settlement documents in the Prior

Action, Robbins’ firm was terminated as of March 17, 2009,

and the current action involves only TMG’s post-settlement

performance of its obligations under the publicly filed 2009

settlement documents.

In the Prior Action, Robbins represented TMG until

March 17, 2009. During the course of the representation,

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READING INT’L V. THE MALULANI GRP. 9

Robbins and his associate actively participated in mediation

of the dispute that led to the broad settlement terms entered

on the record in March 11, 2009. The pending appeal

addresses alleged breaches of the final settlement documents

finalized on July 2, 2009. Because the appeal raises issues of

the parties’ intent in entering into those settlement

documents, the factual context of the two representations

overlaps, and confidential factual information regarding the

parties’ settlement positions and strategies, even prior to

March 11, 2009, would materially advance the client’s

position in the subsequent matter. Although Reading argues

that the public filing of the settlement makes the information

non-confidential, this does not address confidential

information Robbins would have obtained in the course of his

representation regarding settlement strategy.

Accordingly, we conclude that the two representations are

substantially related, and Robbins is barred from representing

Reading in the pending appeal under HRCP 1.9.

We must therefore determine whether Robbins’

disqualification is imputed to the Bronster Firm. When an

attorney joining a new firm brings conflicts from his prior

firm, imputed disqualification is governed by HRCP 1.10(c). 

See HRCP 1.10, comment 2. HRPC 1.10(c) provides that

“[w]hen a lawyer becomes associated with a firm, and the

lawyer is prohibited from representing a client because the

lawyer’s former firm has represented a person whose interests

are materially adverse to that client in the same or a

substantially related matter, other lawyers in the firm may not

thereafter represent the client unless” the provisions of HRCP

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10 READING INT’L V. THE MALULANI GRP.

1.10(c)(1)–(3) are met.4If all requirements of HRCP 1.10(c)

are satisfied, the new firm is required to provide a written

notice to the client of the prior firm, but is not required to

obtain the prior client’s consent to the representation. 

Reading contends that the screening and notification

requirements provided in Rule 1.10(c) have been satisfied in

this case, and the Bronster Firm therefore was not required to

obtain written consent from TMG pursuant to HRCP

1.7(b)(4) in order to continue its representation of Reading.

The Hawaii Supreme Court has not yet spoken on the

applicability or interpretation of HRPC 1.10(c) since it

adopted the Rule, which became effective January 1, 2014. 

Additionally, while the HRPC are modeled on the American

Bar Association’s Model Rules of Professional Conduct, the

Model Rule regarding imputation of conflicts does not

contain a screening provision similar to that in HRCP 1.10(c). 

See ABA Model Rule of Professional Conduct 1.10

(imputation of conflicts of interest).5 We therefore look to

4 HRPC 1.10 (c): “When a lawyer becomes associated with a firm, and

the lawyer is prohibited from representing a client because the lawyer’s

former firm has represented a person whose interests are materially

adverse to that client in the same or a substantially related matter, other

lawyers in the firm may not thereafter represent the client unless: (1) the

disqualified lawyer did not participate in the matter and has no

confidential information regarding the matter; (2) the disqualified lawyer

is timely screened from any participation in the matter and is apportioned

no part of the fee therefrom; and (3) written notice is promptly given to

any affected former client to enable it to ascertain compliance with the

provisions of this Rule.”

5 Other states have also adopted screening provisions in their rules

regulating imputation of attorney conflicts when an attorney is newly

associated with a firm. The provisions vary in how broadly they allow

firms to apply the screening procedures to avoid the imputation of

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READING INT’L V. THE MALULANI GRP. 11

the plain terms of HRCP 1.10(c), and to the comments to the

Rule, to the extent they provide insight on how it should be

construed.

“Where the conditions of [HRCP 1.10] paragraph (c) are

met, imputation is removed, and consent to the new

representation is not required.” HRCP 1.10, comment 6. 

However, the screening procedure provided in HRCP 1.10(c)

can only be utilized when “the disqualified lawyer did not

participate in the matter and has no confidential information

regarding the matter.” HRCP 1.10(c)(1). “In situations

where the personally disqualified lawyer was involved in a

matter, or had confidential information, the new firm will

generally only be allowed to handle the matter if the former

client at the former law firm of the personally disqualified

lawyer consents and the new firm reasonably believes that the

representation will not be adversely affected, all as required

by Rule 1.7 of these Rules.” HRCP 1.10, comment 11.

Reading contends that the phrase “the matter” in HRCP

1.10(c)(1) refers only to the currently pending matter, and not

any “substantially related matter” that gave rise to the

conflicts from newly associated attorneys. See, e.g., Rhode Island Rules

ofProfessional Conduct 1.10(c) (permitting screening of newly associated

attorneys who are personally disqualified from a matter, without

qualification as to the level of the disqualified attorney’s involvement in

the prior matter); Arizona Rule of Professional Conduct 1.10(d)

(permitting screening of newly associated attorneys where “the matter

does not involve a proceeding before a tribunal in which the personally

disqualified lawyer had a substantial role”); Indiana Rule of Professional

Conduct 1.10(c)(1) (permitting screening of newly associated attorneys so

long as “the personally disqualified lawyer did not have primary

responsibility for the matter that causes the disqualification under Rule

1.9”).

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12 READING INT’L V. THE MALULANI GRP.

conflict. TMG argues that the phrase must refer back to the

reference to “the same or a substantially related matter” found

in Rule 1.10(c) in order to give those words meaning. The

court need not resolve this issue becuase we find Reading

cannot satisfy the requirement of HRCP 1.10(c)(1) that the

disqualified lawyer have “no confidential information

regarding the matter”, even if “the matter” refers only to the

currently pending action. As counsel for TMG in the Prior

Action, Robbins and his associate participated in the

mediation that led to the settlement of the Prior Action, and

had confidential communications and meetings with TMG’s

principals. Although Robbins had no role in the Prior Action

after March 17, 2009 and asserts he was not personally

involved in the drafting of the settlement documents, Robbins

and his firm represented TMG at the time the parties to the

Prior Action placed the broad terms of a settlement on the

record with the Hawaii Circuit Court. The Prior Action

resulted in the settlement documents that Reading alleges

were breached in the current action, and Reading has raised

issues on appeal regarding the intent of the parties in those

settlement documents. Based on these facts, we find Robbins

has confidential information regarding the currently pending

matter.6

6 HRPC 1.10, comment (10) notes that: “[a] transitioning lawyer very

well may have no confidential information if the lawyer did no work on

the matter at the former firm and the matter was not the subject of

discussion with the lawyer generally, for example at firm or working

group meetings. The lawyer must search his or her files and recollections

carefully to determine whether he or she has confidential information. The

fact that the lawyer does not immediately remember any details of the

former client's representation does not mean that he or she does not in fact

possess confidential information regarding the matter. However, even if

the lawyer has no confidential information about the representation of the

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READING INT’L V. THE MALULANI GRP. 13

All conditions of Rule 1.10(c) must be satisfied in order

to employ the notice-only screening procedure. Because we

find that Rule 1.10(c)(1) cannot be satisfied, we need not

reach the parties arguments regarding compliance with the

requirements of Rule 1.10(c)(2) and (3).7

We turn next to Reading’s argument that TMG has

waived its right to seek disqualification because it was aware

of Robbins’ association with the Bronster Firm for four

months before filing the motion to disqualify in this court. 

We disagree. The Bronster Firm notified TMG that Robbins

was joining its firm on February 20, 2015, requested a written

conflict waiver, and did not receive one. While the Bronster

Firm filed a notice of firm name change in the district court

docket on April 2015, its next filing in this court on behalf of

Reading was the reply brief filed on May 22, 2015. The

disqualification motion was filed one month later on June 24,

2015. Under these circumstances, Reading has not met its

burden to show that TMG has waived its right to seek

disqualification of the Bronster Firm.

This court has warned that a “motion to disqualify a law

firm can be a powerful litigation tactic to deny an opposing

party’s counsel of choice.” In re Cty. of L.A., 223 F.3d 990,

995 (9th Cir. 2000); see also Optyl Eyewear Fashion Int'l

Corp. v. Style Cos., 760 F.2d 1045, 1050 (9th Cir. 1985)

(motions to disqualify “subjected to particularly strict judicial

former client, the new firm is disqualified unless all of the screening

procedures are followed.”

7 We also need not reach TMG’s argument that the Bronster Firm’s

February 20, 2015 request for consent constitutes an admission that a

disqualifying conflict exists.

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14 READING INT’L V. THE MALULANI GRP.

scrutiny”). We are mindful of the drastic nature of

disqualification. See HRCP 1.9. comment 4 (“If the concept

of imputation were applied with unqualified rigor, the result

would be radical curtailment of the opportunity of lawyers to

move from one practice setting to another and of the

opportunity of clients to change counsel.”). However, this is

not an occasion where a firm was caught unaware of a newly

associated attorney’s potential conflicts, or where the

connection between the actions is attenuated. The Bronster

firm was well aware of both Robbins’ previous representation

of TMG and the existing action before Robbins became

associated with the firm. In associating with Robbins, the

Bronster firm accepted the risk of disqualification.

Accordingly, despite the drastic nature of disqualification, we

find that under the particular circumstances presented in this

case, HRCP 1.9 and 1.10 require imputed disqualification of

the Bronster Firm. The motion to disqualify is GRANTED.

The Bronster Firm is disqualified from representing Reading

in this appeal.

A corporation must be represented by counsel. See In re

Highley, 459 F.2d 554, 55 (9th Cir. 1972). Accordingly,

within 35 days after the date of this order, appellant shall

obtain new counsel and file a notice of appearance with the

court.

The opening and answering briefs have been filed. We

strike Reading’s reply brief, filed May 22, 2015 after the

disqualifying conflict arose. Reading may file a substitute

reply brief within 35 days after new counsel’s notice of

appearance is filed with the court.

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