Attorney disqualification is improper remedy for failure to produce documents and respond to subpoena

The Second District, Division Seven, has ruled that while an attorney who fails to produce documents and/or produce a privilege log may be subject to sanctions, or perhaps even referral to the State Bar, a trial court erred when it instead disqualified said counsel from representing one of the parties. (Sunholm v. Hollywood Press Association (February 27, 2024) B324842.)  This is true even though the document withheld may have contained the other party's privileged information and, further, the to-be disqualified counsel was less than forthright about whether he currently possessed privileged material.

In Sundholdm privileged documents were accidentally filed and served upon counsel for plaintiff, who had sued the Holywood Foreign Press Association after he was expelled.  HFPA mistakenly attached a draft copy of its by-laws to its complaint notwithstanding that these by-laws were marked as attorney-client privileged material.  HFPA made an ex parte application to strike these by-laws from the record, which request was granted.  An amended complaint was then filed with the final version of the by-laws attached, as these did not contain any privileged material.  

Counsel Quinto of One LLP, attorney for plaintiff Sundholm, was then the subject of a motion to disqualify brought by the HFPA after it was alleged that he had, inter alia, 1) kept a copy of the privileged material, and 2) failed to respond to a deposition subpoena to produce documents including the privileged material.  This motion to disqualify of HFPA was made alongside its motion to compel production of the document which Quinto possessed and coyly said might be privileged.  Sundholm then sought to dismiss the remainder of his complaint against HFPA to avoid either motion being granted.  

Wendy W. Y. Chang, Judge presiding of the Superior Court of Los Angeles County, found the court lacked jurisdiction to consider the motion to compel due to the dismissal of the remainder of the complaint. The trial court nonetheless held it could rule upon the motion to disqualify and granted said motion.

The appellate court overturned the trial court’s grant of the motion to disqualify, not because it endorsed Quinto’s conduct, but because such was not the proper remedy for Quinto’s action.  In an opinion written by Justice Feuer, the court held:

We agree with the trial court that Quinto improperly refused to produce documents in response to a subpoena from HFPA seeking HFPA documents in Quinto’s possession that were privileged or to provide a privilege log. But disqualification of an attorney affects a party’s right to counsel of choice, and it should not be used to punish an attorney for improper conduct. Quinto’s conduct could have been addressed by an award of sanctions or, if appropriate, reporting the conduct to the State Bar of California. The drastic remedy of disqualification of counsel is appropriate only where the attorney improperly or inadvertently received information protected by the opposing party’s attorney-client privilege, the information is material to the proceeding, and its use would prejudice the opposing party in the proceeding. Here, there was no showing the HFPA documents would prejudice HFPA in the proceeding. We reverse. (Id., p. 2.)

Key to the court’s finding the trial court erred was the drastic nature of the remedy of disqualification of counsel.  The Second District explained disqualification is appropriate only where the following test is met: 1) opposing counsel improperly or inadvertently receives information protected by the opposing party’s attorney-client privilege, 2) the information is material to the proceeding itself, and 3) use of such by opposing party would result in actual prejudice of party seeking disqualification.  HFPA, however, could not establish it suffered prejudice from the retention of the privileged material given the suit against it was dismissed.

Analysis: mistakes — whether inadvertent or intentional — were made by counsel for both parties

Counsel for HFPA — Robert Ellison— admitted that a draft copy of the by-laws which included attorney-client privileged information was filed with the Court and served on opposing counsel.  Though swiftly corrected, this was a potential breach of the duty of due care owed to the client, necessitating the ex parte application to strike this matter.

At the same time, counsel for Quinto failed to either produce the privileged document or produce a privilege log detailing what document was being withheld.

Unresolved ethical issues, including “back ups” of information which should be "returned"

The Court of Appeal found that because HFPA could not establish prejudice from the retention of the privileged information, it did not need to consider whether Quinto acted unethically.  However, as the Court of Appeal explained at footnote six, the scenario in Sundholm implicates the ethical duty of counsel to disclose and possibly return inadvertently-disclosed privileged material:   

              

Pursuant to State Fund, supra, 70 Cal.App.4th at pages 656 to 657, “When a lawyer who receives materials that obviously appear to be subject to an attorney-client privilege or otherwise clearly appear to be confidential and privileged and where it is reasonably apparent that the materials were provided or made available through inadvertence, the lawyer receiving such materials should refrain from examining the materials any more than is essential to ascertain if the materials are privileged, and shall immediately notify the sender that he or she possesses material that appears to be privileged. The parties may then proceed to resolve the situation by agreement or may resort to the court for guidance with the benefit of protective orders and other judicial intervention as may be justified. We do, however, hold that whenever a lawyer ascertains that he or she may have privileged attorney-client material that was inadvertently provided by another, that lawyer must notify the party entitled to the privilege of that fact.” (See Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 817-818 [adopting the State Fund holding and extending it to material protected by the work product doctrine].) 

The opinion therefore does not provide sufficient guidance to say with certainty whether or not Quinto acted unethically, instead merely hinting that he may have.  The appellate court also did not discuss the issue of what is to occur after a party notifies the other party it has inadvertently received privileged material.  

In the analog era, of course, the answer was often that the party “returns” the privileged material to the party who inadvertently disclosed such. As California Rules of Professional Responsibility, Rule 4.4, comment [1] states:

[1] If a lawyer determines this rule applies to a transmitted writing,* the lawyer should return the writing* to the sender, seek to reach agreement with the sender regarding the disposition of the writing,* or seek guidance from a tribunal.* (See Rico v. Mitsubishi (2007) 42 Cal.4th 907. . . .

But what does this mean in the digital era?  

Even if a document is “returned” to its sender, it most likely has already been scanned.  Moreover, even if it has ostensibly been “deleted,” a copy of the privileged material may be saved on a local or remote backup server.

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Short take-away -- "friends with benefits" may not may not qualify as a "dating relationship" under California law

A "friends with benefits" relationship may or may not qualify as a "dating relationship" under California law for purposes of application of domestic violence law. (M.A. v. B. F. (February 5, 2024) G061598.)  The Fourth District Division Three summarized the issue and its holding as follows:

We are asked here to determine whether a relationship characterized in modern parlance — and by the plaintiff in this case — as “friends with benefits” constitutes a dating relationship under Family Code section 6210, so as to support a tort claim for domestic violence. Whether such a dating relationship exists is inherently a fact-intensive inquiry, not susceptible to resolution based on shorthand labels or descriptors. We therefore do not hold a “friends with benefits” relationship is necessarily a dating relationship or that it can never be one. We simply conclude, on the specific record before us, substantial evidence supports the trial court’s finding that the relationship between plaintiff M.A. and defendant B.F. was not a dating relationship within the meaning of the relevant statutes. We affirm. (Id., pp. 1-2.)

This issue arises because California's Civil Code section 1708.6(a) provides the tort of "domestic violence" requires a "relationship."  Further, Penal Code section 13700 defines domestic violence to include "dating or engagement relationship" and Family Code section 6210 has a similar definition.

The majority in M.A. affirmed the trial court's judgment in favor of B.A. under a "substantial evidence" standard of review, showing deference to its review of the evidence.  It therefore found the trial court had the discretion to find, or, in the case here, to not find, a "friends with benefits" situation involved a "relationship," noting "different inferences" could be drawn from the facts. (Id., p. 13.)  The majority also noted section 6210 uses the phrase "frequent, intimate associations” but does not define such.

Justice Sanchez dissented from the majority opinion written by Justice Gooding.  The dissent concluded that under the facts here plaintiff M.A. fell under "the category of victims the law was meant to protect" no matter the on-and-off nature of the encounters between her and defendant. (Id., p. 6.)

What the opinion does not explain

It is unclear from the record here why the plaintiff did not also bring a tort claim for assault and battery or other related torts, which claims do not require she prove the parties were in a "relationship."  It is, for example, unclear from the opinion whether such a claim would be time-barred.  Footnote seven only states that:

We note M.A. had remedies available to her under the law to seek redress for her injuries, including tort claims against B.F. for assault and battery. 

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Short take-away: Release by bicycle rider absolved city of liability for injury from pothole

 

The First District has held that under California law a municipality may be absolved of liability by a release signed by a participant in a bicycle ride. (Ty v. White (Feb. 13,2024) A164483.)  The allegation, of course, was that the city failed to maintain the roadway:

Plaintiff Ty Whitehead sued defendant City of Oakland for injuries he suffered after his bicycle hit a pothole during a training ride for the AIDS LifeCycle fundraiser. Prior to the training ride, plaintiff signed an agreement releasing the “owners/lessors of the course or facilities used in the Event” from future liability. The trial court granted defendant’s motion for summary judgment, concluding the release was enforceable. Plaintiff appeals, arguing the release was invalid because it concerned a matter of public interest. (Id., p. 1.)

The appellate court affirmed the grant of summary judgment despite plaintiff's claim the release violated California's Civil Code section 1668,  barring the effect of a release where the transaction implicates the "public interest."  The Ty court rejected this argument, noting that this was not analogous to a release imposed by a charitable hospital, but, rather, involved an activity that was purely voluntary:

In this case, the overall transaction was plaintiff’s signing of a release of liability so that he could participate in the AIDS LifeCycle fundraiser and its organized training rides on defendant’s streets. We cannot, as plaintiff urges, ignore this aspect of this case. Likewise, it cannot reasonably be concluded that a cycling fundraiser is an essential service such that plaintiff was robbed of his free will in deciding whether to sign the release. (Id., p. 12.)

The plaintiff also argued the release was unenforceable because the defendant was grossly negligent and such cannot be waived by a release. The First District, however, found the release was valid because the city's alleged mistakes did not constitute gross negligence, i.e., "there is no evidence that these select mistakes substantially or unreasonably increased the inherent risk of the cycling activity at issue." (Id., p. 20.)

This opinion is of import because it not only reiterates the viability of agreements releasing municipalities from harm, but also because upholding the grant of summary judgment encourages trial courts to give motions for summary judgment and adjudication based on a release serious attention.  A contrary result from the appellate court, finding there were "triable issues" as to the effect of the release and that plaintiff was entitled to proceed to trial, would have discouraged trial courts from ruling a release is valid as a matter of law.

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Short take-away: PAGA action cannot be dismissed solely on manageability grounds

 

Short take-away:  Trial courts do not have inherent power to strike PAGA claims because they are supposedly "unmanageable"

The California Supreme Court has resolved a split of authority between appellate districts as to whether a trial court has inherent power to strike a Private Attorney General Act claim on grounds it is not manageable. (Estrada v. Royal Carpet Mills (January 18, 2024) S274340.)   Such PAGA claims are made under the "Labor Code Private Attorneys General Act of 2004," found at Labor Code section 2698, et seq.

Plaintiff Estrada filed suit, asserting Royalty violated Labor Code provisions requiring that it provide required break and rest periods, as well as seeking PAGA penalties for these Labor Code violations.  Plaintiff filed amended complaints realleging the individual claims as a class action.  The trial judge, the Hon. Randall J. Sherman, of the Orange County Superior Cout, held a bench trial as to the issue of individual vis a vis class claims and, though a class had already been certified, issued an order decertifying the class due to inconsistent individual claims, dismissing the PAGA claim, and entering a judgment of dismissal.

The Fourth District, Division Three, reversed the trial court and the Supreme Court granted review.  Chief Justice Guerrero wrote for a unanimous court and explained:

We now conclude that trial courts lack inherent authority to strike PAGA claims on manageability grounds. In reaching this conclusion, we emphasize that trial courts do not generally possess a broad inherent authority to dismiss claims. Nor is it appropriate for trial courts to strike PAGA claims by employing class action manageability requirements. And, while trial courts may use a vast variety of tools to efficiently manage PAGA claims, given the structure and purpose of PAGA, striking such claims due to manageability concerns — even if those claims are complex or time-intensive — is not among the tools trial courts possess. (Id., p. 2; footnote omitted.)

The Supreme Court explained that while trial courts do have inherent authority to establish procedures where no procedure exists, this does not extend to a broad power to dismiss claims.  Estrada  thus quoted from Weiss v. People ex rel. Dept. of Transportation (2020) 9 Cal. 5th 840, at 865, on this point:

While "[t]here may be cases in which the use of a nonstatutory motion procedure to dismiss a cause of action before trial is called for, . . . courts should be wary of such requests.” (Id., p. 8.)

Therefore, Estrada concluded that the requirement of "manageability" present in class action suits did not apply to PAGA claims. (Id., p. 20-22.)

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2024 California Supreme Court preveiw

2024 brings us the second year of service by California's new Chief Justice

On January 2, 2023, Chief Justice Patricia Guerrero was sworn in as the 29th Chief Justice of California.  She followed former Chief Justice Tani Cantil-Sakauye, who was regarded as a strong leader who brought stability and consistency to the administration of justice.  2024 will therefore be Chief Justice Guerrero's second year of service.

Predictions for 2024

If we were to hazard a prediction as to the ideology and direction of the Court in 2024, we would predict that its stability and consistency would continue.  In fact, there is only one remaining Republican appointee, Justice Corrigan, who was appointed by Governor Schwarzenegger in 2005.

More to the point, given the fact that Mr.  Schwarzenegger hardly governed as a political conservative, it appears the court is entirely moderate to left of center in terms of ideology.  There have been no notable four to three decisions in recent memory and the Court has become known for its unanimous seven to zero decisions. 

Key rulings likely to involve the scope of protections for employees

In 2024 the Supreme Court has already issued an opinion regarding whether a trial court may dismiss a Private Attorney General (PAGA) claim related to meal and rest breaks on "manageability" grounds. (Estrada v. California Commerce Club).  We will discuss Estrada in a future post, but it is worth noting this is not the only case relating to employment pending before the Supreme Court and, indeed, other cases with employment law issues may be granted review.  

The question then becomes:  will counsel for employees continue their recent success?  We will see, and, in the meantime, note that briefs of cases that have or will soon be argued are available here. 

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Court, not arbitrator, decides whether minor may disaffirm contract including arbitration provision

 

Class action suit by minors alleging deceptive practices in "in app" purchases may proceed despite the fact the videogame license came with arbitration provision

A minor, of course, may affirm or disaffirm a contract once they reach the age of majority. (Family Law Code sections 6700 and 6710.)  This is to protect minors from "their lack of judgment and experience. . . ." (Sparks v. Sparks (1950) 101 Cal. App. 2d 129, at 137.)  

California's Second District, Division Six, has upheld the role of a trial court in determining whether a minor has disaffirmed a contract made by said minor. (J.D. v. Electronic Arts (January 17, 2024) E080414.)  The appellate court summarized the complaint and challenges to such as follows:

On February 14, 2022, J.R. II filed a putative class action against EA, alleging causes of action for unlawful and unfair business practices in violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), violation of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.), and unjust enrichment.  J.R. alleged that EA deceptively induced players of Apex Legends, “especially impressionable minors,” to purchase digital game-specific currency in order “to purchase cosmetic items, characters, lootboxes, and other items within the Apex Legends virtual world.”
EA moved to stay the action and to compel arbitration under Code of Civil Procedure sections 1281.2 and 1281.4, arguing that J.R. II’s claims are covered by an arbitration agreement contained within EA’s user agreement, which J.R. II agreed to in order to play Apex Legends. (Id., p. 1.)

Finding it had the authority to decide whether J.R. disaffirmed the contract with EA, the trial court found he had done so according to the declaration he had submitted in opposition to the motion.  The Hon. Craig Riemer, Judge Presiding of the Riverside County Superior Court, thus denied EA's motion to compel contractual arbitration under the rules of the American Arbitration Association; therefore permitted the class action to proceed.

EA appealed and argued that because the contract provided arbitration should proceed according to the rules of the AAA, the arbitrator must decide the issue of whether J.R. disaffirmed all or part of the agreement to arbitrate.  J.R. argued that he had disaffirmed the entire user agreement, including the "delegation clause" regarding arbitration, and argued the trial court had the authority to decide this issue.

In an opinion written by Justice Menetrez, the Second District found J.R.'s declaration provided that he had in fact disaffirmed the entire contract, including the delegation provision.  The court also explained the delegation provision was severable from the remainder of the contract and that the disaffirmance of this provision was valid no matter whether defenses to other parts of the agreement were valid.    

Analysis

This opinion continues the California trend of the increasing role of trial courts supervising private arbitration and, indeed, in deciding major legal issues related to what can or cannot be arbitrated.  Put another way, the time in which a trial court was more likely to have the arbitrator decide all issues related to contractual arbitration appears to be long passed. 

This suit also illustrates the dangers inherent in the apparently lucrative business of encouraging minors to make in-app purchases without the permission of their parents.

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