Kermit D. Marsh, Esq.
2019 saw several important decisions regarding the ethical standards that are significant to litigators. Although the issues varied, there was one consistent theme: The consequences for failure to comply with ethical standards can be serious.
One attorney managed to be the subject of not just one, but two Court of Appeal decisions on this issue.
In O'Gara Coach Co., LLC v. Ra, prior to being admitted to practice law, Richie, a law school graduate, served as president and chief operating officer of O'Gara Coach (also referred to as the "company" herein). The year after Richie ceased employment with the company, he was admitted to the bar and opened a law practice. His law firm thereafter represented a former employee, Ra, against the company.1
The company sought to disqualify Richie and his law firm on the grounds that Ritchie obtained confidential and privileged information about the company and its interactions with Ra, while Richie was employed there as an executive.2 The company asserted that Ritchie's law firm was not entitled to exploit that information in litigation adverse to the company.3
The trial court denied the motion to disqualify. It ruled that the company had failed to establish an attorney-client relationship between it and Richie.4 According to the trial court, there was "no authority cited to disqualify a former employee who then becomes an attorney."5
The Court of Appeal reversed. It reasoned that "disqualification of Richie and his law firm was required as a prophylactic measure because the firm was in possession of confidential information, protected by the company's attorney-client privilege."6 The attorney-client privilege belonged to the company. Richie, although no longer an officer of the company, had "no right to disclose information protected by that privilege without [the company's] consent."7 Because Richie was a member of the California State Bar, the Court of Appeal concluded, the company was "entitled to insist that [Richie] honor his ethical duty to maintain the integrity of the judicial process by refraining from representing" his former company's employees in litigation against the company that involved matters as to which he possessed "confidential information."8 The Court of Appeal ruled that Richie possessed confidential attorney-client privileged information materially related to the matters at issue, although the information had been obtained by Richie when he was an officer of the company, not its lawyer. In other words, the Court of Appeal held that an attorney's subsequent admission to the bar does not nullify his or her prior access to confidential and privileged information, which may constitute proper grounds for disqualification.9
Less than a year later, the Court of Appeal again visited Richie's representation of a former employee against the company, albeit a different former employee. This second decision, Wu v. O'Gara Coach Company, LLC, limited the circumstances in which disqualification would apply.10
Unlike the trial court in Ra, the trial court in this case granted the motion to disqualify Richie's law firm and its attorneys from representing the former company's employee, Wu. The trial court found that Richie had significant responsibility for the formation and implementation of the company's anti-harassment and anti-discrimination policies.11 One of Richie's responsibilities was to ensure a workplace free of unlawful harassment and discrimination.12 Richie was one of two individuals at the company to whom the employees reported harassment and discrimination complaints.13 The trial court also added that "more likely than not that in those roles he [Richie] consulted with outside counsel for [the company]."14 The trial court further added that it appeared "highly probable" that Richie might be an important principal percipient witness, both regarding the company's adoption and enforcement of the company's policies and practice and whether Richie was made aware of Wu's complaints and what actions he took or did not take in responding to those complaints.15 On those grounds, the trial court disqualified Richie.
[Page 39]
The Court of Appeal reversed, concluding that several of the trial court's findings were not supported by the evidence introduced by the company. The Court noted that "central" to its holding in Ra was undisputed evidence, based upon the declaration of one of the company's outside attorneys, that Richie possessed attorney-client privileged information directly relevant to the dispute with Ra. In contrast, in Wu, the company offered no evidence regarding Richie's knowledge of matters related to...
