Filed 6/4/14 PT Gaming v. Kang CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

PT GAMING, LLC, et al.,
Plaintiffs and Appellants,

v.
CONNIE KANG et al.,
Defendants and Respondents. B251841
(Los Angeles County Super. Ct. No. YC068331)

ORDER MODIFYING OPINION [NO CHANGE IN JUDGMENT]

THE COURT:

It is ordered that the unpublished opini on filed May 29, 2014, be modified as
follows: 1. At page 2, substitute the fo llowing for the second full paragraph: In California non-Indian gambling estab lishments, a “third-p arty provider of proposition player services” (third-party pr ovider) at each table collects winnings and2 pays loses. (Bus. & Prof. Code, § 19984 .) Agencies that employ these third-party providers must be owned and op erated independently of casi nos. John Park and Patrick Tierney owned Network Ma nagement Group (NMG), a company specializing in providing third-party providers to such estab lishments. During their partnership at NMG, St. Denis represented Park, Tierney and other entities. 2. At page 7, change the first word Appellants to Respondents. There is no change in the judgment.

*EPSTEIN, P. J. MANELLA, J. EDMON, J.**
**Judge of the Los Angeles Su perior Court, assigned by th e Chief Justice pursuant to article VI, section 6 of the California Constitution.Filed 5/29/14 (unmodified version) NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

PT GAMING, LLC, et al.,
Plaintiffs and Appellants,

v.
CONNIE KANG et al.,
Defendants and Respondents. B251841
(Los Angeles County Super. Ct. No. YC068331)

APPEAL from an order of the Superior Court of Los Angeles County, Stuart M. Rice, Judge. Reversed. Michael St. Denis Professional Corporatio n, Michael St. Denis; Law Office of Tracey Buck-Walsh, and Tr acey Buck-Walsh, for Plai ntiffs and Appellants. Fox Rothschild, Jeffrey S. Kravitz, and Patrick J. Hagan, for Defendants and Respondents.

_____________ ______________2 The issue on this appeal is standing. PT Gaming, LLC (PTG ) retained attorney Michael St. Denis to sue former employees Connie Kang, Daein Kang, and Marcus Sheely (respondents) for breach of contract. After leav ing PTG for a rival agency, respondents allegedly violated their empl oyment agreement with PTG that prohibited them from soliciting their form er colleagues to leave the company. St. Denis had represented respondents’ new employer, Certif ied Network M, Inc. (CNM) and its owner, John Park. The trial court granted responde nts’ motion to disqualify St. Denis due to a
concurrent conflict of interest. PTG and Michael St. Denis Professional Corporation (appellants) contend respondents lacked standi ng to bring the motion. It is clear that, under the circumstances alleged, Park had sta nding to disqualify St. Denis, but he has not sought to do so. Th e issue in this case is whether respondents have standing. We conclude they do not and, on that basis, reverse the order of the trial court.
FACTUAL AND PROC EDURAL SUMMARY In California off-reservation casinos, a banker at each gaming table collects winnings and pays losses, al l facilitated through a casino de aler. Agencies that employ these bankers must be owned and operated in dependently of casinos. John Park and Patrick Tierney owned Networ k Management Group (NMG), a company specializing in providing bankers to of f-reservation casinos. During their partnership in NMG, St. Denis represented Park, Tierne y, and their entities. After Park purchased a casino in 2 008, he incorporated CNM to provide proposition player services. Then Park clos ed NMG and purchased Tierney’s interest. Park also sold NMG’s banking contracts to Tierney, who formed PTG to continue providing services under those agreements. PTG hired most of NMG’s bankers and other employees. CNM and PTG compete in Sout hern California, employing bankers who previously worked for NMG, Park, or his affiliates. St. Denis continued to repr esent Park, Tierney, PTG, CNM, and Park’s affiliates “in a variety of matters in which he provide d business, litigation, and employment-related advice.” He appeared as attorn ey of record in several acti ons on behalf of Park, CNM,3 and Fortiss LLC, a company that provides co unsel to Park and CNM. St. Denis also consulted with Fortiss LLC’s general counsel, who acts as legal co-counsel to CNM and Park on employment issues. As of May 2013, St. Denis continued to represent Park and Fortiss LLC in various ongoing matters.
Between March 2010 and October 2011 , PTG hired respondents to work as
bankers in off-reservation casinos. Each si gned a “Confidentiality and Fair Competition Agreement,” which prohibited, for one ye ar following the termination of their employment with PTG, direct or indirect solic itation, hiring, recruiting, or encouragement of any PTG employee to leave the company. Between November and December 2012, respondents resigned from PTG, and began working for CNM and Fortiss LLC. About that time, respondents allege dly contacted and encouraged PTG employees to quit PTG and work for competing companies. In March 2013, PTG retained St. Denis, and filed two separate lawsuits against respondents: one against Da ein Kang and Connie Kang, a nd a second against Marcus Sheely. 1 PTG’s two complaints alleged res pondents breached their agreements by soliciting PTG employees to leave the compa ny and to transfer to competitors. PTG argued these alleged violations resulted in “s evere disruption of [its] operations, including but not limited to the loss of employees du e to [respondents’] illegal and improper recruiting . . . .” In their answer, re spondents claimed the agreements were unenforceable, and even if enforc eable, they were not breached. In May 2013, respondents moved to disqua lify St. Denis as PTG’s counsel. This motion was supported by declarat ions from Park and their co unsel. Respondents argued St. Denis’s representation of PTG was directly adverse to Park, CN M, and other current clients; there was a substantial relationship be tween current and previous cases such that

1 In June 2013, the trial court consolidated PT Gaming, LLC v. Marcus Sheely (Case No. TC 027164) and PT Gaming, LLC. v. Connie Kang, et al. (Case No. YC 068331), which became the lead case.4 the law presumed St. Denis acquired confidentia l information prejudicial to respondents; and St. Denis’s representation of PTG required him to serve as both an advocate and a witness. They also argued that PTG would not suffer pr ejudice if St. Denis were disqualified. Respondents claimed they ha d standing to bring the motion because St. Denis’s continued representation of PTG “woul d undermine the integrity of the judicial process,” pursuant to the standard in Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197, 1205 ( Kennedy ). They argued St. Denis displayed di sloyalty by suing his own client’s employees. In the alternativ e, respondents asserted sta nding because they would be prejudiced by St. Denis’s presumed knowledg e of confidential information obtained in prior representations. In June 2013, appellants filed their oppositi on, on four grounds. First, they argued
there could be no concurrent or successive conflict of interest because St. Denis never represented respondents. Se cond, respondents’ declarati ons and other evidence were inadmissible. Third, there was no eviden ce that St. Denis would serve as both an advocate and a witness. And, fourth, res pondents’ motion was ta ctically abusive and
should have been rais ed earlier. Appellants moved to stri ke the declarations of Park and respondents’ counsel because the declarati ons did not indicate they were based on personal knowledge, or sworn under the laws of the State of California. Respondents filed a reply in support of their motion, and an opposition to appellants’ motion to strike. They also submitted amended declar ations from Park and respondents’ counsel, adding th e text, “I have personal knowledge of the facts set forth below,” and declaring the statements therein were made under penalty of perjury under
the laws of the “State of California.” In August 2013, the court granted responde nts’ motion to disqualify St. Denis. It denied appellants’ request to strike the declar ations of Park and re spondents’ counsel, and overruled their evidentiary objections. It wr ote, “Because Mr. St. Denis’s representation of [appellants] in the instant action is directly adverse to the interests of [respondents’] employer, John Park, who is a current client of Mr. St. Denis, the Court GRANTS the5 Motion and disqualifies Mr. St. Denis as couns el for Plaintiff.” Appellants filed timely notices of appeal.
DISCUSSION We review an order granting or denyi ng a disqualification motion for abuse of discretion. ( Kennedy
, supra , 201 Cal.App.4th at p. 1203; Great Lakes Construction, Inc.
v. Burman (2010) 186 Cal.Ap p.4th 1347, 1354 ( Burman ).) “The trial court’s ruling is presumed correct [citation] and reversal is permissible ‘only when there is no reasonable basis for the trial court’s decision’ [citation] . We accept as correct all of the court’s express or implied findings that are supported by substantial evidence.” ( Kennedy
, supra , at p. 1203

. ) Appellants argue respondents lacked sta nding to bring the motion to disqualify St. Denis because they had not been his clients. Apparently, “no California case has held that only a client or former client may bring a disqualif ication motion.” ( Kennedy
, supra , 201 Cal.App.4th at p. 1204.) On motions to disqualify, “[s]tandi ng generally requires that the plaintiff be able to allege injury, that is, an invasion of a legally protected interest. [Citation.] . . . Generally, before the disqualification of an attorney is proper, the complaining party must have or must have ha d an attorney-client relationship with that attorney. [Citation.]” ( Burman , supra , 186 Cal.App.4th at p. 1356 [finding standing requirement “implicit” in disqualification motions].) 2 When the moving party lacks an attorney-client relationship, “some sort of co nfidential or fiduciary relationship” may be sufficient. ( Dino v. Pelayo (2006) 145 Cal.App.4th 347, 353 [in cases of actual or potential disclosure of confidential inform ation].) Nonclients “must meet [these] stringent standing requirements” by demo nstrating “harm arising from a legally

2 Because St. Denis also represents Park , this standing requir ement provides a basis for Park to disqualify St. Denis. (See also Machado v. Superior Court (2007) 148 Cal.App.4th 875, 881 [“an aggrieved nonparty who asse rts that an attorney has undertaken adverse representation should f ile a collateral injunc tive suit to end the conflicted representation”].) However, the record indicates that Park has not sought to do

so.6 cognizable interest which is concrete a nd particularized, not hypothetical.” ( Burman , supra , at p. 1358.)
One court has held that “‘where the ethi cal breach is “‘manifest and glaring’” and so “infects the litigation in which disqualific ation is sought that it impacts the moving party’s interest in a just and lawful determ ination of [his or] her claims” [citation], a nonclient might meet the standing requirem ents to bring a motion to disqualify based upon a third party conflict of interest or other ethical violation.’ [Citation.]” ( Kennedy
, supra , 201 Cal.App.4th at p. 1204 [affirming standing of moth er to move to disqualify paternal grandfather attorney in paternity di spute between mother and father, even though mother was not attorney’s client].) Respondents cannot demonstrate a fiducia ry relationship with St. Denis. PTG
retained St. Denis to sue re spondents for breach of the employment agreements with PTG. St. Denis also represents Park, owne r of CNM, for which respondents work. But respondents made no showing that St. Denis represented respondents or established any kind of relationship with them. In fact, respondents admitted that they never had a formal relationship with St. Denis. Finally, responde nts provided no releva nt authority for their claim that St. Denis’s representation of Pa rk was a basis for a fiduciary duty to respondents. Nor can respondents show that St. Denis’s representation of appellants threatens the integrity of the judicial process or ha rms respondents’ interests. St. Denis’s representation of appellants, and his simu ltaneous and previous representation of respondents’ current employer, does not impact respondents’ ability to defend themselves in the underlying action. The fact that Park may have an indirect interest in the lawsuit against respondents does not mean that any harm to him necessa rily flows to respondents. In addition, respondents’ claims that St. Denis’s interests escalat e the stakes of the underlying litigation and ex acerbate the tension between partie s do not rise to the level of “a legally cognizable interest which is concre te and particularized, not hypothetical.” ( Burman , supra , 186 Cal.App.4th at p. 1358.)7 Appellants cite two cases for the propos ition that any indirect harm to Park “necessarily flows” to respondents. ( Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft (1999) 69 Cal.App.4th 2 23, 240, 253 [unity of in terests between parent and subsidiary corporations allo ws treatment as one entity under California conflict rules]; Baxter Diagnostics Inc. v. AVL Scientific Corp. (C.D.Cal. 1992) 79 8 F.Supp. 612, 616 [plaintiff company is “inextricably intertwine d with its parent holding company” thus injury to the parent company from conflict of interest necessarily flows to plaintiff, despite lack of attorney-client relationship].) These cases held that the two corporate entities were sufficiently related to create a c onflict that merited disqualification. Here, respondents are not corporate subsidiaries or parent holding companies. It does not follow that employees of an entity suffer harm specific to their employers, for purposes of conflict analysis. Further, contrary to respo ndents’ claim, St. Denis’s conduct was not sufficiently “‘“‘manifest and glaring’”’” that “‘“it impact[e d] the moving party’s interest in a just and lawful determination of [his or] her claims”’” and undermined the inte grity of the judicial process.” ( Kennedy
, supra , 201 Cal.App.4th at pp. 1204, 1205.) Kennedy concerned a paternity dispute between a mother and a father. ( Id. at pp. 1201-1202.) The reviewing court affirmed mother’s standing to move to disqualify father’s at torney, who was also the child’s paternal grandfather. ( Id. at p. 1205.) The court wrote: “It makes no sense for a court to stand idly by and permit conflic ted counsel to participate in a case merely
because neither a client nor former client has brought a motion.” ( Id. at pp. 1204-1205.) “‘[T]he court has an independent interest in ensuring trials are conducted within ethical standards of the profession and that legal pr oceedings appear fair to all that observe them.’” ( Id. at p. 1205.) The appellate court de scribed how the “plethora of family entanglements, potential misuse of confidential information, a conflict posed by the nearcertain prospect that counsel will have to tes tify” and concern for “the preservation of the integrity of the judicial sy stem” supported the trial court’s disqualification order. ( Id. at pp. 1200, 1205-1213.)8 Kennedy is distinguishable. In that case, the paternal grandfather attorney might “have acquired confidential facts about [mother] and her family’s situation that could be used to [father’s] advantage.” ( Kennedy
, supra , 201 Cal.App.4th at p. 1205.) The court also identified “multiple and in terconnected family entanglem ents [that] re sult[ed] in a strong appearance of impropriety and undermine[d] the integrity of the judicial system.” ( Id. at p. 1211.) For example, the attorney paternal grandfat her was counsel for his son, who was litigating against his s on’s former girlfriend. ( Ibid. ) The paternal grandfather’s law firm previously had represented the mothe r’s father in a separate family law matter, during which he procured a declaration fro m the mother and employed the mother’s stepmother. ( Ibid. ) In addition, he was grandfather to the child who was the subject of the controversy. ( Ibid. ) Also, the nature and quality of the mother’s household was material to the ongoing dispute, as it would li kely impact the court’s paternity decision. ( Ibid. ) Finally, the paternal grandfather was likely to be called as a witness. ( Ibid. ) The principal factors supporting the finding in Kennedy are absent here. St. Denis represents respondents’ former employer in the suit against them , and their present employer in unrelated matters. Since St. Denis had no formal relationship with respondents, they cannot successfully claim that he obtained confidential information about them. In addition, St. Denis would not simultaneously serve as an advocate and a witness, as he submitted a decl aration that he had “no personal knowledge . . . to testify in Court regarding the employment agreement” that respondents signed. Finally, the family entanglements central to Kennedy are not present here. For these reasons, the limited exception in Kennedy does not provide respondents with standing to disqualify St. Denis. Thus, the trial court abused its disc retion in finding respondents had standing to bring the motion. Respondents contend that regardless of st anding, the trial court’s order should be affirmed since appellants cannot show the pr ejudice required for reversal. (See Code Civ. Proc., § 475.) Appellants apparently claim the disqualification of St. Denis prejudiced their ability “to retain the best po ssible counsel . . . .” Respondents argue the9 outcome would not have been different, sin ce appellants have not identified an exception to the mandatory disqualification rule in conc urrent conflict cases. In addition, they
contend Park and his entities could file a collat eral action to disqualify St. Denis. In short, respondents contend St. Denis would have been disqualified regardless of respondents’ standing to bring their moti on. However, St. Denis never represented respondents, so there is no conc urrent conflict of interest. No r is there evidence that Park or his entities have moved to disqualify St. De nis, or plan to do so. Accordingly, appellants have demonstrated prejudi ce sufficient to merit reversal. Finally, respondents argue appellants did not dispute that St. Denis’s simultaneous representation of PTG, Park, CNM, and For tiss LLC created a conflict. As a result, respondents argue, appellants forfeited that poi nt. However, appellants have limited their appeal to the question of re spondents’ standing to bri ng the motion to disqualify St. Denis. Accordingly, because we find respondents lacked sta nding to move to disqualify St. Denis, we do not decide whether the tria l court correctly determined the merits of
their motion.
DISPOSITION The order is reversed. Appellants are entitled to their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

EPSTEIN, P. J.

We concur:

MANELLA, J. EDMON, J.*

___________________ __________________ __________________ _________________ 

### * Judge of the Los Angeles Superior Cour t, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.