Court Opinion

ID: 9751744
Source: CourtListenerOpinion
Date Created: 2023-08-28 16:57:06.366193+00
Date Added: 2024-06-11T07:26:58.415644
License: Public Domain

*1342SCOTLAND, P. J., Concurring and Dissenting.
I agree with much of the majority’s analysis, but disagree with the result.
In the context of an attorney-client relationship, the doctrine of imputed knowledge is a product of public policy and pragmatism. As a matter of public policy, it is presumed that an attorney has knowledge of confidential information adverse to the opposing party in a lawsuit when the former representation of that party by the attorney or the attorney’s firm had a substantial relationship to the matters at issue in the current lawsuit and when the nature of the former relationship between the attorney or the attorney’s firm and the party was such that confidential information material to the current dispute normally would have been imparted to the attorney. (H. F. Ahmanson & Co. v. Salomon Brothers, Inc. (1991) 229 Cal.App.3d 1445, 1452, 1453, 1454 [280. Cal.Rptr. 614].)
A former client’s legitimate expectations of loyalty, trust, and security in the attorney-client relationship, and the need for public confidence in the scrupulous administration of justice and the integrity of the bar, require such a presumption. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145, 1147 [86 Cal.Rptr.2d 816, 980 P.2d 371]; H. F. Ahmanson & Co. v. Salomon Brothers, Inc., supra, 229 Cal.App.3d at p. 1453.)
This also is a “rule of necessity” in that it ordinarily is not within the power of the opposing party to prove what is in the mind of the attorney who formerly was affiliated with the law firm that represented the opposing party on matters substantially related to the current lawsuit. (H. F. Ahmanson & Co. v. Salomon Brothers, Inc., supra, 229 Cal.App.3d at p. 1453.)
As emphasized by the majority in this case, disqualification of an attorney from undertaking representation adverse to a client of the attorney’s former law firm does not require proof that the attorney actually possesses confidential information about that client which is material to the current dispute. It merely must appear from the nature of the relationship between the attorney’s former law firm and the client that confidential information material to the current dispute against the client “ ‘would normally have been imparted to the attorney . . . .’ ” (H. F. Ahmanson & Co. v. Salomon Brothers, Inc., supra, 229 Cal.App.3d at p. 1454, citation omitted.)
The fact this rule is overinclusive, may impose significant hardship on the attorney’s current client, and may unfairly limit the attorney’s employment opportunities (H. F. Ahmanson & Co. v. Salomon Brothers, Inc., supra, 229 Cal.App.3d at p. 1453) is immaterial because the importance of the public *1343policy at stake is paramount. (See People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at pp. 1145-1147.)
As the majority properly points out, this rule does not mean an attorney always is disqualified from representing a new client in an action brought against a party that had been represented by a law firm to which the attorney previously was a member. If the attorney can establish, to the trial court’s satisfaction, that information about the opposing party substantially related to the matter at issue in the new lawsuit would not normally have been imparted to the attorney while he or she was a member of the law firm that had represented the opposing party, there is no basis to impute that information to the attorney and, thus, no basis to disqualify the attorney.
That an attorney should be able to rebut the presumption of knowledge imputed as a result of the attorney’s former affiliation with a law firm that represented the opposing party is important for the reasons stated by the majority. However, we must recognize that allowing the attorney to do so—rather than applying a conclusive presumption of knowledge—creates practical problems.
Depending on the circumstances, discovery may be necessary in order to present the trial court with facts essential to determine whether the attorney was in a position with the former law firm such that confidential information about the former law firm’s client that is material to the current dispute against that client normally would have been imparted to the attorney. This means that, assuming the former law firm still exists, the parties may have to engage in problematic and expensive discovery regarding the inner workings of the firm (e.g., how it assigned and handled the case; how litigation strategy was formed and discussed among partners and associates; whether members of the firm chat about cases in the hallway where their discussions could be overheard by others in the firm who are not directly involved in the litigation; whether billing records show the attorney charged any time to the client, etc.). In addition, such discovery would draw into this controversy a law firm that otherwise is not involved in the litigation, causing it to expend time and suffer the burden of responding to litigation in which it has no interest and will gain no benefit.
For this reason, I conclude that the attorney seeking to avoid disqualification should have a formidable burden to present a compelling prima facie showing that either (1) the prior representation of the opposing party by the attorney’s former law firm did not have a substantial relationship to the matters at issue in the current lawsuit, or (2) the nature of the former relationship between the law firm and the opposing party was such that *1344confidential information material to the current dispute normally would not have been imparted to the attorney.
I also conclude that the attorney cannot make such a prima facie showing merely by declaring that he or she does not recall having any discussions regarding confidential information about the opposing party while affiliated with the former law firm or that the attorney has never received such information. Allowing such a conclusory declaration to rebut the presumption of imputed knowledge would run counter to the commonsense notion that the opposing party seldom will be in a position to counter the attorney’s claim of ignorance, and would run afoul of the purpose of the presumption, i.e., the need to fulfill a former client’s legitimate expectations of loyalty, trust, and security in the attorney-client relationship, and to promote public confidence in the scrupulous administration of justice and the integrity of the bar. (People ex rel. Dept, of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at pp. 1145, 1147; H. F. Ahmanson & Co. v. Salomon Brothers, Inc., supra, 229 Cal.App.3d at p. 1453.)
Moreover, because of its problematic nature, I conclude that discovery should be permitted only after the attorney makes the aforesaid prima facie showing.
In this case, plaintiff’s attorney, Michael Hackard, did not dispute that there was a substantial relationship between the matters at issue in this lawsuit against defendant Aerojet-General Corporation (Aerojet) and the matters upon which legal work was done for Aerojet by Hackard’s former law firm. Hence, the trial court applied a conclusive presumption of imputed knowledge and ruled that Hackard’s disqualification as counsel for plaintiff was required as a matter of law. The majority correctly finds that the trial court erred in applying a conclusive presumption of imputed knowledge.
Nevertheless, unlike the majority, I conclude that remand is inappropriate because, as I shall explain, Hackard failed to make a prima facie showing that the nature of the relationship between Hackard’s former law firm and Aerojet was such that confidential information material to the current dispute normally would not have been imparted to Hackard.
Contrary to the large, multi-office firm at question in Dieter v. Regents of University of Cal. (E.D.Cal. 1997) 963 F.Supp. 908, cited by the majority, Hackard’s former law firm was a small office of seven to ten attorneys, of which Hackard was a name partner and Aerojet was a major client. It is inconceivable that, in such a small firm with only three partners, there would not have been discussions among all the attorneys, particularly the partners, *1345about material matters relating to the representation of a major, sustaining client like Aerojet. It takes no imagination to recognize that confidential information which would be useful to someone later suing Aerojet normally would be imparted during discussions about billing matters or billing rates, during casual conversations at social occasions with Aerojet principals, or in the many other types of contacts among attorneys in the firm that would not constitute direct representation and would not show up on billing records. The client was too big, the firm too small, and the matters at issue too closely related to say there is no conflict. (See People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at pp. 1153-1154 [It is an “everyday reality that attorneys, working together and practicing law in a professional association, share each other’s, and their clients’, confidential information”; in fact, it is this “close, personal, continuous, and regular relationship between a law firm and the attorneys affiliated with it” and “its attendant exchanges of information, advice, and opinions” that justify “the conflict imputation rule”].)
In light of the important public policy at stake in this dispute, Hackard’s declaration that he did not recall having “any” discussions with attorneys at his former law firm regarding Aerojet and that, while a shareholder of his former law firm, he never performed any work on Aerojet files, never met with Aerojet representatives, and “never received any information” about Aerojet’s practices and procedures was too conclusory to rebut the presumption of imputed knowledge derived from the commonsense conclusion that, in light of the size of Hackard’s former law firm and his status as one of three named partners, confidential information about its major client, Aero-jet, material to the current dispute normally would have been imparted to Hackard. Likewise, declarations of his partners in the former law firm stating that they “do not recall” discussing with Hackard any matters relating to Aerojet are insufficient to rebut the presumption of imputed knowledge.
Consequently, I would affirm the order of disqualification.
Respondent’s petition for review by the Supreme Court was denied May 16, 2001. Kennard, J., was of the opinion that the petition should be granted.