Case 2:14-cv-02762-JVS-JC Document 375 Filed 07/31/15 Page 1 of 4 Page ID #:14943
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Date
Case No.
CV 14-02762 JVS (JCx)
Title
Southwest Regional Council of Carpenters v. Michael McCarron
Present: The Honorable
July 31, 2015
James V. Selna Nancy Boehme
Not Present
Deputy Clerk
Court Reporter
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants:
Not Present
Not Present
Proceedings:
(IN CHAMBERS) Order Disqualifying DeCarlo & Shanley From Representing Southwest Carpenters Training Fund
On June 2, 2015, the Court issued an order to show cause (“OSC”) why law firm DeCarlo & Shanley (“D&S”) should not be disqualified from representing Third-party Defendant Southwest Carpenters Training Fund (“SWTF”) due to an apparent conflict of interest between SWTF and Plaintiff Southwest Regional Council of Carpenters (“SWRCC”), also a current D&S client. (Docket No. 332.) D&S responded to the OSC, maintaining that it should be permitted to continue to represent SWTF despite its representation of SWRCC in the same case. (Docket No. 359.) Defendant Michael McCarron (“McCarron”) has also filed a response. (Docket No. 364.) I.
LEGAL STANDARD
“The right to disqualify counsel is within the discretion of the trial court as an exercise of its inherent powers.” Visa U.S.A., Inc. v. First Data Corp., 241 F. Supp. 2d 1100, 1103-04 (N.D. Cal. 2003) (citing United States v. Wunsch, 84 F.3d 1110, 1114 (9th Cir. 1996) (district court has inherent power to sanction unethical behavior)). In exercising its discretion, the Court “must make a reasoned judgment and comply with the legal principles and policies appropriate to the particular matter at issue.” Visa, 241 F. Supp. 2d at 1104. Although disqualification of counsel is a “drastic measure,” In re Marvel, 251 B.R. 869, 871 (Bankr. N.D. Cal. 2000), the Court’s “paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar.” Dept. of Corps. v. SpeeDee Oil Change Sys., Inc., 20 Cal. 4th 1135, 1145 (1999) (citing In re CV-90 (06/04)
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Case 2:14-cv-02762-JVS-JC Document 375 Filed 07/31/15 Page 2 of 4 Page ID #:14944
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Date
Case No.
CV 14-02762 JVS (JCx)
Title
Southwest Regional Council of Carpenters v. Michael McCarron
July 31, 2015
Complex Asbestos Litig., 232 Cal. App. 3d 572, 586 (1991)). The right to counsel of one’s choice is a “recognized and important right,” but it “must yield to considerations of ethics that run to the very integrity of our judicial process.” In re Complex Asbestos Litig., 232 Cal. App. 3d at 586. II.
DISCUSSION California Rule of Professional Conduct 3-310(C) provides that: A member shall not, without the informed written consent of each client: (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or (2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict . . . .
However, “[t]here are some matters in which the conflicts are such that written consent may not suffice for non-disciplinary purposes.” Cal. R. Prof’l Conduct 3-310 Discussion; see, e.g., Klemm v. Superior Court, 75 Cal. App. 3d 893, 898-899 (1977) (noting that a “purported consent to dual representation of litigants with adverse interests at a contested hearing would be neither intelligent nor informed”). Here, the conflict of interest is actual, not potential. SWRCC acknowledges that the facts of this case “presented a conflict of interest previously and do so at the present time.” (D&S Resp. OSC 7.) D&S submits declarations from individuals associated with both SWRCC and SWTF to purportedly show that both gave informed, written consent to D&S’s representation of SWTF.1 (Draper Decl. ¶ 5; Conyers Decl. ¶ 14.) However, the Court determines that the conflict here is so egregious that SWTF’s consent does not suffice. D&S’s representation of SWRCC resulted in summary 1
McCarron points out a number of likely deficiencies in the consent. (McCarron Reply at 4-11.) Even if one assumes McCarron’s criticisms are baseless, the analysis here is unchanged. CV-90 (06/04)
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Case 2:14-cv-02762-JVS-JC Document 375 Filed 07/31/15 Page 3 of 4 Page ID #:14945
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Date
Case No.
CV 14-02762 JVS (JCx)
Title
Southwest Regional Council of Carpenters v. Michael McCarron
July 31, 2015
judgment in its favor determining that McCarron, as executive-secretary treasurer of SWRCC, wrongfully remitted its rent revenue to SWTF. (Docket No. 191.) That order is now on appeal. (Docket No. 346.) SWTF’s choice of D&S as counsel to “maintain and pursue . . . the theory that SWRCC did in fact overcharge the SWTF rents . . . .” is neither intelligent nor informed. See Klemm, 75 Cal. App. 3d at 898-899 (1977). Furthermore, the Court finds that D&S’s continued representation of SWTF is fundamentally unfair and would raise serious questions about the integrity of the judicial process should it be permitted to continue. SWRCC intends to continue to have D&S represent it “in any post-judgment matter pertaining to it that may arise such as the pending appeal.” (Draper Decl. ¶ 13.) The Court will not permit the same law firm to argue on appeal that McCarron wrongfully returned rent revenue to SWTF while simultaneously arguing to this Court that McCarron properly reimbursed SWTF for rent overcharges. In addition, should McCarron successfully appeal the Court’s summary judgment order, D&S will be arguing mutually inconsistent positions to this Court. Finally, the Court is obligated to disqualify D&S from representing SWTF in order to preserve the public trust in the scrupulous administration of justice and the integrity of the bar. D&S’s stated intention to use “one [McCarron] story” to show that the rent was wrongfully remitted to SWTF and “another [McCarron] story” to show that SWTF was entitled to reimbursement all along (see D&S Resp. OSC 1) gives the Court the distinct impression that D&S, SWRCC, and SWTF are acting to ensure that McCarron alone will be responsible for over $5 million in rent “reimbursements” and that neither SWRCC nor SWTF will be deprived of the windfall caused by his wrongful conduct. Such a result would not appear just. On the other hand, SWTF’s representation by other counsel will more likely facilitate a just resolution of the dispute among SWRCC, SWTF, and McCarrron. D&S objects that the Court cannot disqualify it because neither SWRCC nor SWTF have moved for disqualification. (D&S Resp. OSC 7.) “As a general rule, courts do not disqualify an attorney on the grounds of conflict of interest unless the former client moves for disqualification.” Kasza v. Browner, 133 F.3d 1159, 1171 (9th Cir. 1998). The Court disagrees. The Court does not read D&S’s authority to limit its inherent power to disqualify counsel sua sponte when an actual conflict between two firm clients in the same case requires the firm to advocate to the Court that a single “fact” is both true and false. The Court can find no authority prohibiting its exercise of its CV-90 (06/04)
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Case 2:14-cv-02762-JVS-JC Document 375 Filed 07/31/15 Page 4 of 4 Page ID #:14946
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Date
Case No.
CV 14-02762 JVS (JCx)
Title
Southwest Regional Council of Carpenters v. Michael McCarron
July 31, 2015
inherent powers in this manner. III.
CONCLUSION
For the foregoing reasons, the Court disqualifies D&S from serving as counsel to SWTF in the present action. SWTF shall appoint new counsel within thirty (30) days. IT IS SO ORDERED.
: Initials of Preparer
CV-90 (06/04)
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