Filed 10/24/23 RWB Platinum Vape v. Sadler CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for 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. 

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

RWB PLATINUM VAPE, INC., A 

CALIFORNIA CORPORATION; AND 

RED WHTIE & BLOOM BRANDS, 

INC., A CANADIAN CORPORATION,

Plaintiffs and Respondents,

v.

GEORGE SADLER AND CODY 

SADLER,

Defendants and Appellants.

 D080723

 (Super. Ct. No. 37-2022-

00013335-CU-BC-CTL)

APPEAL from an order of the Superior Court of San Diego County, 

Ronald F. Frazier, Judge. Affirmed.

Austin Legal Group, APC, Tamara M. Rozmus, and Gina M. Austin, for 

Defendants and Appellants.

Kibler Fowler & Cave LLP, Matthew J. Cave, Kevin C. Kroll, and Shiqi 

W. Borjigin, for Plaintiffs and Respondents.
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I. INTRODUCTION

In 2014, George and Cody Sadler (the Sadlers)1 formed Vista Prime 

Management LLC and several other entities that collectively comprised a 

cannabis manufacturing brand named Platinum Vape. They sold the 

business to RWB Platinum Vape (RWB) in 2020. Gina Austin, the owner and 

managing attorney for Austin Legal Group APC (ALG), and ALG represented 

the Sadlers and the Platinum Vape entities in the sale. 

RWB hired George as the Chief Executive Officer (CEO) of the newly 

acquired Platinum Vape entities (referred to as VPM after the sale). ALG 

continued to represent George individually. George also retained ALG to 

represent VPM. In September 2021, VPM sued RWB, and RWB crosscomplained. ALG represented VPM and the Sadlers in that litigation. The 

parties settled on October 1, 2021. 

In April 2022, RWB sued the Sadlers for misrepresentation in 

connection with the September 2021 settlement, breach of the securities 

purchase agreement, and violations of noncompetition provisions. RWB 

moved to disqualify ALG from representing the Sadlers. The court granted 

RWB’s motion.

On appeal the Sadlers contend that RWB lacks standing to request 

ALG’s disqualification because ALG never acquired confidential information 

about RWB. They also contend that ALG did not successively represent the 

Sadlers, VPM, and RWB, so they cannot be disqualified on that basis.

Further, they maintain that ALG does not have information about RWB 

1 Because the Sadlers share a surname, we will refer to them by first 

names when we refer to them individually. No disrespect is intended. (See 

In Re Marriage of Smith (1990) 225 Cal.App.3d 469, 475, fn. 1.)
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material to the present dispute. The Sadlers argue, therefore, the court erred 

by disqualifying ALG.

We conclude RWB has standing. We also hold substantial evidence 

supports the trial court’s conclusion that RWB and VPM share a unity of 

interests and are closely enough related to treat them as a single entity for 

purposes of a conflicts analysis. We further find the previous litigation and 

the present dispute are substantially related. Accordingly, the trial court did 

not abuse its discretion in disqualifying ALG, and we affirm.2

II. FACTUAL AND PROCEDURAL BACKGROUND

The Sadlers organized Vista Prime Management, LLC in California in 

2014. They also formed several other entities that, along with Vista Prime, 

comprised a cannabis manufacturing brand named Platinum Vape.

George retained ALG to represent him individually and to represent 

the Platinum Vape entities. ALG provided the Platinum Vape entities with 

general legal advice about cannabis law and regulation compliance.

In 2020, Brad Rogers, on behalf of Red White and Bloom Brands, Inc., a 

publicly traded Canadian company, approached George to purchase the 

Platinum Vape brand. Red White and Bloom formed RWB Platinum Vape, a 

wholly owned American subsidiary, to purchase the Platinum Vape entities. 

ALG represented the Sadlers and the Platinum Vape entities in the 

transaction.

The parties executed sales documents, including a securities purchase 

agreement (SPA), a restrictive covenant agreement, and employment 

2 In their opening brief, the Sadlers also argue that ALG did not 

concurrently represent the Sadlers and VPM. Because we affirm the 

disqualification based on successive representation, we do not address this 

contention.
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agreements with George and Cody. The SPA required the Sadlers to deliver 

to RWB all items, equipment, and records required to operate the companies. 

It gave RWB full access to the premises, properties, personnel, books, records, 

contracts, and documents pertaining to VPM. 

The SPA also required RWB to enter employment agreements with 

Cody and George that would pay them annual salaries, stock bonuses, 

incentives, and vacation pay in accordance with RWB’s policies. Further, the

Sadlers each entered into restrictive covenant agreements with RWB that 

included non-competition provisions. 

In his employment agreement with RWB, George agreed to serve as the 

CEO, director, and manager of all Platinum Vape entities. George was 

eligible to participate in stock incentive plans and programs that RWB 

established. Earnings were tied to RWB’s fiscal years. The deal closed on 

September 11, 2020.

ALG then entered a new engagement agreement with VPM to provide 

general counsel services, including “corporate, land use, litigation, and 

cannabis.” George signed the engagement letter for VPM. 

For the rest of 2020 and during 2021, George managed VPM. He 

directed ALG’s provision of general legal and cannabis law compliance 

services. ALG communicated directly with RWB about VPM’s integration 

with RWB.

In September 2021, a dispute arose between the Sadlers and RWB

resulting in several lawsuits. ALG filed one of those suits against RWB and 

Rogers on behalf of VPM. 

VPM alleged that RWB interfered with VPM by attempting to steal 

assets and interfere with contracts and customers. VPM also alleged that 
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RWB attempted to access programs, accounts, and point of sale software 

stored on the computers. 

RWB filed a verified cross-complaint. RWB alleged that after it 

purchased VPM, RWB discovered financial irregularities. The crosscomplaint contended that the Sadlers engaged in embezzlement, fraud, and 

violations of their non-competition obligations. It explained that the Sadlers 

were asserting that they were the owners of VPM. The cross-complaint also

stated the Sadlers breached the SPA.

Responding to the Sadlers’ actions, RWB implemented a policy that 

required their head office to approve all expenses over $5,000. RWB also

prohibited the Sadlers from continuing as signatories on the businesses’ bank 

accounts and implemented a two-tiered signing system for spending. 

In this dispute ALG represented the Sadlers and VPM in settlement 

negotiations. ALG communicated directly with several RWB employees and 

officers. In defending VPM, ALG reviewed agreements and enjoyed access to 

the VPM agreements, and to confidential, proprietary information.

The parties agreed to a settlement around September 18, 2021, with 

the matter finally resolving on October 1, 2021. On October 4, 2021, ALG 

sent a letter ending its VPM representation. RWB terminated George’s

employment, and Rogers took over as the CEO of VPM.

In April 2022, RWB filed the instant action,3 alleging that the Sadlers 

made intentional misrepresentations and concealments to induce settlement 

in the previous litigation. The verified complaint also alleges that the 

Sadlers failed to satisfy the conditions precedent contemplated by the 

settlement agreement. It further claims the Sadlers breached the SPA, the 

3 The suit named several other defendant entities: GC Global, LLC; C.S. 

Designs, Inc., Urban Therapies Manufacturing LLC, and Urban Therapies 

Distribution LLC.
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restrictive covenant agreements, and the settlement agreement. Ms. Austin 

and ALG appeared as attorneys of record on the Sadlers’ behalf.

RWB moved to disqualify them from representing the Sadlers in the 

litigation. The Sadlers opposed the motion.

The court disqualified ALG. In its statement of decision, the court 

noted that ALG previously represented the Sadlers and VPM. It found that 

RWB and VPM are “ ‘closely enough’ ” related to confer standing to RWB to 

seek disqualification of ALG. The court also found “that RWB and VPM, 

LLC, were ‘closely enough related to be treated as one entity for purposes of 

the conflict herein.’ ” The court determined that the September 2021

litigation subject matter and the current dispute are substantially related. 

Further, it concluded that the nature of ALG’s employment meant

confidential material would normally be imparted. The trial court concluded

that ALG’s disqualification was mandatory.

III. DISCUSSION

A. Standing.

“[A] moving party must have standing, that is, an invasion of a legally 

cognizable interest, to disqualify an attorney.” (Great Lakes Construction, 

Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1357.) Standing is a legal 

question, which we may determine independent of the trial court’s ruling. 

(Id. at p. 1354.) Although the complaining party generally “must have or 

must have had an attorney-client relationship with the attorney” it seeks to 

disqualify (Id. at p. 1356), “no California case has held that only a client or 

former client may bring a disqualification motion.” (Kennedy v. Eldridge 

(2011) 201 Cal.App.4th 1197, 1204.) 
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At least arguably, a legally cognizable interest for disqualifying an 

opposing attorney may arise from generalized policy concerns surrounding 

the rule, e.g., the integrity of the process. (Lyle v. Superior Court (1981) 122 

Cal.App.3d 470, 482-483 [addressing an attorney-witness situation].) Even if 

generalized policy concerns were not an acceptable way to confer standing, if 

an attorney’s relationship with a corporate family gives the attorney “a 

significant practical advantage in a case against an affiliate, then the 

attorney can be disqualified from taking the case.” (Morrison Knudsen Corp. 

v. Hancock, et al. (1999) 69 Cal.App.4th 223, 253 (Morrison).) As we explain

post, in our view ALG’s prior relationship with VPM gives the Sadlers a 

practical advantage in this litigation against RWB. Therefore, even though 

RWB itself never retained ALG, we agree with the trial court that RWB and 

VPM “are ‘closely enough’ related for purposes of this litigation to confer 

standing to RWB to bring the motion to disqualify ALG[.]”

B. Disqualification.

“[D]isqualification motions involve a conflict between the clients’ right 

to counsel of their choice and the need to maintain ethical standards of 

professional responsibility.” (People ex rel. Dept. of Corporations v. SpeeDee 

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

However, “[t]he paramount concern must be to preserve public trust in the 

scrupulous administration of justice and the integrity of the bar.” (Ibid.)

We review an attorney’s disqualification for an abuse of discretion 

(SpeeDee Oil, supra, 20 Cal.4th at p. 1143; Jessen v. Hartford Casualty Ins. 

Co. (2003) 111 Cal.App.4th 698, 705) and “accept[ ] as correct all of [the 

court’s] express or implied findings supported by substantial evidence.” (City 

National Bank v. Adams (2002) 96 Cal.App.4th 315, 322 (City National 
8

Bank).).) We presume the trial court’s order is correct, and we indulge all 

presumptions to support the order, resolving conflicts in favor of the 

prevailing party and the trial court’s resolution of any factual disputes. (In re 

Marriage of Zimmerman (1993) 16 Cal.App.4th 556, 561-562.) “We will 

reverse the trial court’s ruling only where there is no reasonable basis for its 

action.” (City National Bank, at p. 323.)

1. Successive Representation.

Disqualification motions typically arise in two factual circumstances:

“(1) in cases of successive representation, where an attorney seeks to 

represent a client with interests that are potentially adverse to a former 

client of the attorney; and (2) in cases of simultaneous representation, where 

an attorney seeks to represent in a single action multiple parties with 

potentially adverse interests.” (In re Charlisse C. (2008) 45 Cal.4th 145, 159.) 

“In simultaneous representation cases, ‘[t]he primary value at stake . . . is the 

attorney’s duty—and the client’s legitimate expectation—of loyalty, rather 

than confidentiality.’ ” (Id. at p. 160, quoting Flatt v. Superior Court (1994) 9 

Cal.4th 275, 284 (Flatt).) In successive representation cases, the concern is 

an attorney’s duty of confidentiality. (Western Sugar Coop v. Archer-DanielsMidland Co. (C.D.Cal. 2015) 98 F.Supp.3d 1074, 1080 [applying the 

California State Bar Act and the California Rules of Professional Conduct].) 

The Sadlers contend the trial court incorrectly concluded that ALG 

previously represented RWB, making a successive representation analysis an 

abuse of discretion. RWB contends that ALG’s prior representation of VPM 

qualifies for a conflicts analysis because VPM and RWB share a unity of 

interests.
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Morrison is instructive. There, the court prevented a law firm 

(Hancock) from representing a water district in any dispute with Morrison 

Knudsen Corporation (Morrison), or Morrison’s wholly owned subsidiary, 

Centennial Engineering (Centennial), even though Hancock had never 

represented Centennial. (Morrison, supra, 69 Cal.App.4th at pp. 227, 238.) 

Morrison’s primary comprehensive insurance policy underwriters hired

Hancock to monitor the defense attorneys that Morrison retained on errors 

and omission claims, though Hancock never oversaw claims against 

Centennial. (Id. at pp. 227, 238.) Still, when the water district sued 

Centennial, the court concluded that based on a “unity of interest” analysis

Morrison and Centennial should be treated as a single entity under 

California conflict of interest rules. (Id. at pp. 238, 240-247, 252.) 

The appellate court affirmed the trial court’s reasoning. It identified 

several factors to consider when determining if corporate entities could be 

considered a single unit for evaluating representational conflicts: (1) whether 

the two entities overlap in areas like operations and management personnel; 

(2) whether the attorney previously received confidential information from 

one entity that is substantially related to the claim currently against the 

other entity; and (3) whether there is overlapping control of the legal affairs

of the two entities. (Morrison, supra, 69 Cal.App.4th at pp. 245-248.) The 

court also identified as a relevant factor whether affiliates might be joined in 

a lawsuit. (Id. at p. 247.)

Here, the trial court concluded—RWB and VPM were “ ‘closely enough 

related to be treated as one entity for purposes of the conflict herein.’ ” 

(See Morrison, supra, 69 Cal.App.4th at pp. 247-248.) We examine the record 

to determine whether substantial evidence supports this conclusion. 

(SpeeDee Oil, supra, 20 Cal.4th at p. 1143.)
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The SPA gave RWB full control over VPM’s operations. It stated that 

RWB would have all items and equipment required to operate the companies. 

It provided for RWB to possess keys to the properties and full access to the 

premises, properties, personnel, books records, contracts, and documents that 

pertained to VPM.

Although George ran the day-to-day operations of VPM, he did so only 

because RWB provided him with that authority through the employment 

agreement. RWB retained sole discretion to address George’s compensation

and any stock incentive plans. And George’s earnings were tied to RWB’s 

fiscal year.

Not only did the SPA give RWB full control over VPM’s operations, but 

RWB expected to be heavily involved in VPM’s activities. Attorney billing

invoices show that ALG communicated with RWB in March 2021 about 

VPM’s integration with RWB. RWB’s verified cross-complaint from the 

September 2021 lawsuit explains that after RWB became concerned about 

VPM’s finances, RWB required its approval for VPM spending over $5,000.

RWB also instituted a policy requiring two-tiered signing authority for 

business bank accounts. These actions and details demonstrate operational 

overlap and integration.

Allegations in VPM’s September 2021 verified cross-complaint against 

the Sadlers similarly reflect that it was the parties’ intent that VPM would be 

fully integrated into RWB. The September 2021 cross-complaint alleges the

Sadlers were in violation of their agreements because they were preventing 

RWB from accessing VPM’s physical facilities, bank accounts, QuickBooks

records, databases, and accounts receivable and payable, among other things.

Thus, RWB intended to have access to and control over VPM.
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The Sadlers maintain that ALG never obtained any of RWB’s 

confidential information because RWB was represented in the previous 

dispute by attorneys other than ALG. This reasoning ignores ALG’s exposure 

to VPM’s legal issues and business practices. ALG provided general legal 

business services and cannabis law compliance services to VPM until October 

1, 2021. It also represented VPM in the previous lawsuit, negotiating the 

settlement agreement on behalf of VPM. That lawsuit addressed whether 

there were financial irregularities in how the Sadlers managed VPM. The 

parties disputed control over assets, access to programs and accounts, and 

relationships with customers. As VPM’s attorney, ALG was privy to 

confidential information about how the Sadlers ran VPM, the contracts VPM 

negotiated and entered, control over VPM’s facilities, and VPM’s financial 

management.

The current dispute alleges the Sadlers fraudulently induced the 

settlement by misrepresenting and concealing information about VPM, 

including information about its finances. Moreover, the verified complaint 

alleges that the Sadlers made intentional misrepresentations to induce 

settlement. RWB also alleges the Sadlers stole or destroyed some of VPM’s

confidential records to prevent RWB from uncovering financial and operating 

irregularities. ALG’s knowledge about what the Sadlers told RWB and how 

that matched VPM’s business documentation, or the existence of such 

documentation at all, is relevant to this dispute. Given ALG’s previous

access to VPM’s agreements and legal business, as well as its direct 

representation of both the Sadlers and VPM in the dispute giving rise to this 

litigation, the court’s factual conclusion that ALG had access to relevant, 

confidential information is not unreasonable. 
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The trial court did not expressly address in its order two factors 

mentioned in Morrison: whether there is overlapping control of the legal 

affairs of the RWB and VPM and whether affiliates might be joined in a 

lawsuit. (Morrison, supra, 69 Cal.App.4th at p. 247.) Neither of these factors 

tips the scales against finding a unity of interests. Although the Sadlers 

managed the day-to-day legal affairs of VPM during the previous litigation,

RWB appears to do so now because Rogers, who is the CEO and Chairman of 

the Board of Directors of RWB, is the current CEO of VPM. Further, when 

the court asked the Sadlers’ counsel at the disqualification hearing whether 

VPM could be joined, the attorney did not dispute that possibility.

 

2. Substantially Related Matters.

The Sadlers next contend that ALG’s prior representation of VPM 

pertained only to VPM’s general business practices. The Sadlers further 

contend that ALG did not represent RWB and so has no confidential 

information specific to RWB that is substantially related to the current 

litigation. The Sadlers argue that RWB fails to identify any category of 

information that ALG gained through its contacts with RWB, noting that 

ALG did not assist RWB with the transaction documents, the settlement 

agreement, or otherwise represent RWB in the previous dispute. However, 

because we treat RWB and VPM as the same entity for purposes of a conflict 

analysis, we consider ALG’s previous representation of VPM in reaching our 

conclusion.

“To determine whether there is a substantial relationship between 

successive representations, a court must first determine whether 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 
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closely related to the legal issue in the present representation.” (City and 

County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 847

(Cobra Solutions).) If the former representation involved a direct personal 

relationship because the attorney personally provided legal advice and 

services on an issue closely related to the issue in the present litigation, the 

attorney is presumed to possess confidential information. (Ibid.) If the 

attorney’s contact with the prior client was not direct, the court examines the 

attorney’s relationship to the prior client and considers the relationship 

between the prior and current representations. (Ibid.) If the subject of the 

previous representation “ ‘make[s] it likely the attorney acquired confidential 

information’ that is relevant and material to the present representation, then 

the two representations are substantially related. [Citations.]” (Ibid.) 

“When a substantial relationship between the two representations is 

established, the attorney is automatically disqualified from representing the 

second client.” (Cobra Solutions, at p. 847, citing Flatt, supra, 9 Cal.4th at p. 

283.)

From September 11, 2021, until October 1, 2021, ALG provided general 

legal business services and cannabis compliance services for VPM. ALG also 

represented VPM in the lawsuit it filed against RWB, and it defended VPM 

against RWB’s cross-complaint. Although VPM’s complaint regarded control 

over access to programs, accounts, and point of sale software, the crosscomplaint regarded VPM’s contracts and clients, as well as whether VPM had 

financial irregularities and whether the Sadlers engaged in embezzlement, 

fraud, and violations of their non-competition obligations while managing 

VPM. 

The current dispute questions whether the Sadlers acted fraudulently

to induce the settlement agreement, as well as whether they violated its 
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terms. Like the previous cross-complaint, the complaint here also alleges 

that the Sadlers violated their non-competition obligations and breached the 

SPA. Accordingly, in its representation of VPM in the previous litigation, 

ALG “personally provided legal advice and services on a legal issue that is 

closely related to the legal issue in the present representation.” (Cobra 

Solutions, supra, 38 Cal.4th at p. 847.) Further, the trial court did not err in 

presuming ALG possessed confidential information because there is a

substantial relationship between the subject of the prior and the current 

representations. Accordingly, “access to confidential information by the 

attorney in the course of the first representation (relevant, by definition, to 

the second representation) is presumed and disqualification of the attorney’s 

representation of the second client is mandatory; indeed, the disqualification 

extends vicariously to the entire firm. [Citations.]” (Flatt, supra, 9 Cal.4th at 

p. 283.) Thus, it was not an abuse of discretion to disqualify ALG.
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IV. DISPOSITION

The judgment is affirmed. Appellants to bear costs on appeal.

RUBIN, J.

WE CONCUR:

BUCHANAN, Acting P. J.

CASTILLO, J.