Opinion
B158443.
7-29-2003
FELICIA MacDONALD, Plaintiff, v. ROBERT B. MacDONALD, Defendant and Respondent, MALCOLM G. ELLIS, Objector and Appellant.
Ellis & Kingston and Howard Gertz for Objector and Appellant Malcolm G. Ellis. ONeill, Lysaght & Sun and Ellyn S. Garofalo for Defendant and Respondent.
I. INTRODUCTION
Malcolm G. Ellis, an attorney, appeals from an order disqualifying him from representing a spouse in a marital dissolution action. We conclude that disqualification is not an available sanction under the circumstances of this case. Accordingly, the disqualification order is reversed.
II. BACKGROUND
On August 17,1989, a judgment establishing arrearages was entered in favor of plaintiff, Felicia MacDonald, who is not an attorney, against her former spouse, defendant, Robert B. MacDonald, in the sum of $ 1,495,293.46. On March 29, 2000, an application for renewal of the judgment was entered.
On April 27, 2000, Mr. Ellis, on plaintiffs behalf, secured an ex parte order to seize property held in a private place as permitted by Code of Civil Procedure section 699.030, subdivision (b). The seizure order directed the "levying officer" to enter the premises at 18552 Valley Drive in Villa Park, California and seize the following property: "1. Purdy Shotgun. [P] 2. All other shotguns. [P] 3. Ship models, including the Cutty Sark. [P] 4. All computers." The writ of possession was issued because defendant still owed plaintiff $ 1,524,719.22 in arrearages.
A person identified only as Sergeant Lucio of the Orange County Marshals Office went to the Valley Drive residence to serve the writ of possession. A representative of the marshals office directed Mr. Ellis to come to defendants residence. Sergeant Lucio asked Mr. Ellis to enter the residence so as to assist in identifying the items listed in the seizure order. Mr. Ellis first entered the residence after Sergeant Lucio and a locksmith were "reattaching the alarm system." An unidentified "marshal" asked Mr. Ellis to walk through the residence to assist in locating items listed in the seizure order.
Computer components were located which consisted of two speakers, a surge protector, a monitor, and a tower. The computer was taken out of the Valley Drive residence and placed on the driveway. Sergeant Lucio said he could not take the computer. Therefore, either Mr. Ellis could leave the computer on the driveway or take it with him. In deciding to take possession of the computer, Mr. Ellis relied on Sergeant Lucios directions. Sergeant Lucio was in charge of seizures in Orange County. Sergeant Lucio instructed Mr. Ellis concerning "everything" relating to the seizure, including the documents to be prepared and the costs to be paid. The computer was placed in the trunk of Mr. Elliss car. The computer was then removed to be inventoried and photographed. A deputy marshal then put the computer back in the trunk of Mr. Elliss car.
Mr. Ellis took the computer to his office. He was unable to "hook up" the computer. Therefore, Mr. Ellis gave the computer to his client, plaintiff. Mr. Ellis did not know what plaintiff was going to do with the computer.
Plaintiff hired a technician, identified only as Bruce, who activated the computer. Plaintiff read several letters on files in the computer. At her deposition, plaintiff testified, "I looked at a few of the letters and one of them ordering surveillance on me from [defendants] attorney." After seeing several of the letters, plaintiff was "horrified" and asked the technician to print out certain letters. Plaintiff described their conversation as follows: "I asked him [if it was] possible to make a copy of the whole thing. [P] He did not want to download specific things. He said Ill make you an entire copy . . . . But he said Im not going to download any specific things on this." The technician then copied the entire hard drive on defendants computer. The technician gave plaintiff the "copy" of the hard drive on defendants computer.
After securing a copy of the hard drive, plaintiff took it to a computer school. An unidentified man arranged to have "some of the files" printed. Plaintiff was unable to testify that all of the files had been printed. But the technician who printed off the documents indicated all of the documents on the diskette had been printed. Plaintiff made no effort to have the e-mail file copied or printed. Plaintiff looked at a few of the documents that had been printed out. Plaintiff took the documents back to Mr. Ellis. Mr. Ellis doubted that he had read all of the papers printed from defendants computer. Prior to his January 31, 2001, deposition, Mr. Ellis did not know that a "duplicate hard drive" had been made of the one on defendants computer. Plaintiff placed the copy of the hard drive in a bank safe deposit.
On May 17, 2000, plaintiff and Mr. Ellis were ordered to return the computer to the Orange County Marshal. Further, they were restrained from accessing the computer or the hard drive. Plaintiff put the copy of the hard drive in the bank safety deposit box after she knew the computer was being returned to the Orange County Marshals Office. On September 19, 2000, defendant filed suit against plaintiff and Mr. Ellis as a result of the taking of the computer. Defendant sought return of the documents plus damages for conversion, abuse of process, and privacy invasion. On May 3, 2001, plaintiff and Mr. Ellis were ordered: to return the mirrored hard drive to defense counsel; provide a copy of the mirrored hard drive to the court; to deliver any documents which reflected the contents of the hard drive to defense counsel; and not to use any information gleaned from the hard drive. The May 3, 2001, injunctive order allowed the use of any deposition testimony relating to privileged matters subject to in limine motions.
Ellyn Garofalo, defendants attorney, filed a declaration which indicated on January 29, 2001, Mr. Ellis delivered the entire set of documents on the mirrored hard drive to her. The documents included: correspondence between defendant and various attorneys; matters relating to defendants physical condition; confidential financial information, some of which involved third parties; "proprietary information and trade secrets pertaining to [defendants] professional expertise in money factoring for health care related industries"; and confidential information concerning defendants business. According to Ms. Garofalo, Mr. Ellis and plaintiff provided a complete set of the documents from the mirrored hard drive to an attorney, David Bloom. Mr. Bloom used the documents to file a separate fraudulent conveyance lawsuit against defendant. Mr. Ellis was later disqualified from representing plaintiff in the fraudulent conveyance action. In disqualifying Mr. Ellis in the fraudulent conveyance action, the trial court ruled as follows: "This is a difficult motion. The reasons its difficult is because I am not convinced that this is other than tactical; meaning, I agree with you, Mr. Ellis, that [defendant] would like to see you off this case, but that it is the circumstance whenever theres a motion to disqualify counsel. The moving party, no matter what they say, publicly[,] probably wants the other attorney off the case. [P] I am also very concerned with [plaintiff]. I do want to make sure, as best I can, that she receives appropriate consideration [] by the court. And its difficult to have that occur without competent counsel, but Im obliged to follow the law and preserve the integrity of the judicial process." However, at the same time, the trial court denied without prejudice a similar disqualification motion in a suit brought by defendant against Mr. Ellis and plaintiff for injunctive relief, conversion, abuse of process, and privacy invasion. As to the present family law litigation, the trial court indicated some action on the disqualification issue would have to be taken later.
On November 19, 2001, plaintiff, represented by Mr. Ellis, filed a motion for appointment of a trustee to administer a trust to secure the return of some stock to California. Plaintiff alleged that defendant had transferred some stock to a trust in order to frustrate her efforts to secure satisfaction of the judgment. Further, plaintiff alleged that the trust was created as a sham to evade payment of defendants obligations to her. As a result, plaintiff sought: termination of the trust; appointment of a temporary trustee; an order the shares held by the trust be reissued in defendants name; and issuance of an order of execution on the reissued shares. Before the merits of these requests could be heard, the disqualification motion was filed and granted.
III. DISCUSSION
The facts in this case are undisputed. Therefore, the standard of review is that set forth in People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143-1144, 980 P.2d 371: "Generally, a trial courts decision on a disqualification motion is reviewed for abuse of discretion. [Citations.] If the trial court resolved disputed factual issues, the reviewing court should not substitute its judgment for the trial courts express or implied findings supported by substantial evidence. [Citations.] When substantial evidence supports the trial courts factual findings, the appellate court reviews the conclusions based on those findings for abuse of discretion. [Citation.] However, the trial courts discretion is limited by the applicable legal principles. [Citation.] Thus, where there are no material disputed factual issues, the appellate court reviews the trial courts determination as a question of law. [Citation.] In any event, a disqualification motion involves concerns that justify careful review of the trial courts exercise of discretion. [Citation.]" (Accord, Adams v. Aerojet-General Corp. (2001) 86 Cal.App.4th 1324, 1330-1331.)
The delivery of an adversarys privileged matters by a client to her or his lawyer is not a ground for disqualification under California law. (Neal v. Health Net, Inc. (2002) 100 Cal.App.4th 831, 841-850; Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 302-304, 308-315; In re Complex Asbestos Litigation (1991) 232 Cal. App. 3d 572, 590, 283 Cal. Rptr. 732; Bell v. 20th Century Ins. Co. (1989) 212 Cal. App. 3d 194, 198, 260 Cal. Rptr. 459; Maruman Integrated Circuits, Inc. v. Consortium Co. (1985) 166 Cal. App. 3d 443, 448, 212 Cal. Rptr. 497; Cooke v. Superior Court (1978) 83 Cal. App. 3d 582, 592, 147 Cal. Rptr. 915.) The intellectual predicate of the California rule was explained in the case of In re Complex Asbestos Litigation, supra, 232 Cal. App. 3d at page 590 by then Court of Appeal Associate Justice Ming W. Chin as follows: "Since the purpose of confidentiality is to promote full and open discussions between attorney and client [citation], it would be ironic to protect confidentiality by effectively barring from such discussions an adversarys confidences known to the client. A lay client should not be expected to make such distinctions in what can and cannot be told to the attorney at the risk of losing the attorneys services." (Fn. omitted.) In the omitted footnote, Justice Chin wrote: "We would be reluctant to conclude that free exchange of information between attorney and client constitutes an impropriety threatening the integrity of the judicial process, at least when a nonattorney client is involved. (Compare Bell v. 20th Century Ins. Co., supra, 212 Cal. App. 3d at p. 198, with Hull v. Celanese Corporation (2d Cir. 1975) 513 F.2d 568 [staff attorney for corporation sought to intervene as a plaintiff in discrimination suit against corporation, resulting in plaintiffs counsel being disqualified].)" (In re Complex Asbestos Litigation, supra, 232 Cal. App. 3d at p. 590, fn. 7.) As Mr. Ellis correctly notes, no statute, court rule, or professional rule permits the disqualification of a lawyer when a client discloses to counsel an adversarys privileged matters. So far, the California Supreme Court has only authorized disqualification in cases involving conflict of interest scenarios. (People ex rel. Dept of Corporations v. SpeeDee Oil Change Systems, Inc, supra,. 20 Cal.4th at pp. 1144-1156; Flatt v. Superior Court (1994) 9 Cal.4th 275, 283, 885 P.2d 950; Comden v. Superior Court (1978) 20 Cal.3d 906, 912-916, 145 Cal. Rptr. 9, 576 P.2d 971.) Moreover, no Court of Appeal majority has ever held that when a client discloses privileged information to a lawyer that disqualification may result. No doubt, in federal court litigation, the exposure to attorney-client matters may be a ground for disqualification. (See Hull v. Celanese Corp., supra, 513 F.2d at pp. 569-571; R-T Leasing Corp. v. Ethyl Corp. (S.D.N.Y. 1979) 484 F. Supp. 950, 953, affd. (2d Cir. 1980) 633 F.2d 206.) But California decisional authority is different from federal attorney disqualification decisions. (Neal v. Health Net, Inc., supra, 100 Cal.App.4th at pp. 845-846.)
One final cautionary note is in order. Except in cases where waiver has occurred, any lawyer who comes upon privileged information, from whatever source, must notify the party entitled to claim the privilege of that fact. Our colleague, Presiding Justice Charles S. Vogel, so held in State Comp. Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644, 656-657, a case reversing a monetary sanctions award but not discussing disqualification. His analysis constitutes the ethical "gold standard" to be applied by California lawyers. Except in the conflict of interest context though, the issue of the extent of the judicial power to disqualify is different from questions of ethical duties imposed upon lawyers. Putting ethics aside, Mr. Elliss failure to have notified Mr. MacDonalds counsel as required by State Comp. Ins. Fund has now spawned additional litigation and potential civil liability; something to be ardently eschewed under these circumstances.
IV. DISPOSITION
The disqualification order is reversed. Malcolm G. Ellis shall recover his costs incurred on appeal from defendant, Robert B. MacDonald.
I concur: ARMSTRONG, J.
MOSK, J., Dissenting
I dissent.
This case involves the important issue of whether a trial judge may take appropriate action, including disqualification of an attorney, when that attorney has, according to the trial court judge, "improperly" participated in obtaining and using another partys information protected by the attorney-client privilege and thereby has obtained an advantage in the proceeding. In my opinion, the trial judge must be able to act to preserve the integrity of the judicial process and the fairness of the proceeding. This is not a case of a client simply turning over information to an attorney. When an attorney is involved in obtaining privileged information and the trial court concludes that the unfairness pervades the proceeding, to deny the trial court the power to disqualify the attorney is contrary to the best interests of the judicial system.
A. Relevant Facts
Attorney Malcolm Ellis (Ellis), on behalf of his client Felicia Gordon (Gordon), had been attempting for years to locate and execute upon Robert B. MacDonalds (MacDonald) assets in order to satisfy a dissolution judgment. As part of that effort, on April 27, 2000, Ellis obtained from the trial court an Order Granting Motion To Seize Property Held In Private Place under Code of Civil Procedure section 699.030, subdivision (b). There is no indication in the record that the motion for the order was a noticed motion. MacDonald did not appear. The levying officer was given authority to "seize custody" from a private premises certain specified items of MacDonalds personal property including "all computers." By law, the levying officer who is ordered to take property into custody must remove the property to a place of safekeeping, install a keeper or obtain possession or control of the property. (Code Civ. Proc., § 687.030.)
The levying officer from the Orange County Marshals office requested that Ellis accompany him on the premises to identify the items described in the seizure order. All they found that was authorized to be seized was a computer. The levying officer gave custody of the computer to Ellis to hold pending sale. Ellis said he was not aware he was not entitled to possession of the computer and took the computer because he was concerned that the Marshal would simply leave it in the driveway. Ellis said the house was not being lived in and was for sale; he did not expect that MacDonald would leave information on the computer to which brokers and others would have access. Ellis further said, "I assumed that the computer and its hard drive were one and my client and I believed we could examine and run the computer. Since cords were missing, my client had somebody hook it up and run it." Ellis gave the computer to Gordon and knew she would take it to someone to attempt to have it "connected." With the aid of an expert, she had the entire contents of the computer copied on a duplicate hard drive and printed, made one or more zip drives from the copy of the hard drive, and gave the printed copy to Ellis. Gordon believed that Ellis provided access to the documents to attorney David Bloom, who participated in the preparation of a fraudulent conveyance action on behalf of Gordon against MacDonald. Gordon said the computer was to be returned to the Marshal.
On May 17, 2000, MacDonald obtained from the trial court an ex parte order requiring Gordon and Ellis to return the computer to the levying officer and enjoining them from accessing the computer and the contents of its hard drive until it was returned to the levying officer. The computer was returned to the levying officer. Ellis retained the printout of the hard drive given him by Gordon, and Gordon retained the duplicated hard drive, knowing that the computer had to be returned. Ellis used information from the computer after the court ordered the return of the computer. The court did not hold Gordon or Ellis in contempt for such use because the court order did not specifically enjoin the use of the documents taken from the computer before its return.
On August 14, 2000, Gordon filed an action against MacDonald and others alleging that defendants conspired to convey and conceal MacDonalds assets and thereby defrauded Gordon (Fraudulent Conveyance Action). On September 19, 2000, MacDonald sued Gordon and Ellis for wrongful access, copying and use of the information in the computer (Replevin Action). Those two cases and the dissolution action were assigned to the same judge, but not consolidated. MacDonald brought various motions regarding what he considered the improper acquisition and use of the information on his computer by Ellis.
According to MacDonald, the computer contained attorney-client communications between MacDonald and his lawyers concerning the litigation between MacDonald and Gordon, information about the assets that are the subject of the Fraudulent Conveyance Action, and personal and confidential information, including MacDonalds personal financial information and communications with his physician and confidential and trade secret business information belonging to his former employer and its customers. It appears that Ellis conceded that attorney-client communications were included in the information he reviewed. He also said that the material he examined "talks about hiding assets from my client and stalling any proceedings until the secretion of assets is completed." MacDonald contends that Ellis provided a set of the documents to his co-counsel for use in preparing the Fraudulent Conveyance Action and used them in various court filings.
The trial court granted a preliminary injunction enjoining Gordon and Ellis from using any information obtained from MacDonalds computer and requiring the return of all hard drives, zip drives and printed copies of such information, except one zip drive that was to be surrendered to the court. The trial court, on April 26, 2001, had already disqualified Ellis as counsel in the Fraudulent Conveyance Action, and stayed the Replevin Action pending a final judgment in the Fraudulent Conveyance Action. At that time there was no motion to disqualify Ellis in the dissolution action.
Pursuant to a motion by MacDonald, the court disqualified Ellis from further representation of Gordon in the dissolution proceeding on the ground that attorney had "improperly acquired and thereafter used [MacDonalds] confidential information that had been on MacDonalds computer, under circumstances that placed him on notice that acquisition and use was improper" and that the continued representation would give Gordon an unfair advantage. The court added that Gordon would not suffer unfair consequences because of her involvement in the acquisition of the information and because she is represented by other counsel.
Standard of Review
A trial courts authority to disqualify an attorney comes from its inherent power to "control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto." (Code Civ. Proc., § 128, subd. (a)(5); People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145, 980 P.2d 371 (SpeeDee Oil).) By virtue of this authority, the trial court has discretion to disqualify or not disqualify an attorney.
The Supreme Court stated, "generally, a trial courts decision on a disqualification motion is reviewed for abuse of discretion. [Citations.] If the trial court resolved disputed factual issues, the reviewing court should not substitute its judgment for the trial courts express or implied findings supported by substantial evidence. [Citations.] When substantial evidence supports the trial courts factual findings, the appellate court reviews the conclusions based on those findings for abuse of discretion. [Citation.] However, the trial courts discretion is limited by the applicable legal principles. [Citation.] Thus, where there are no material disputed factual issues, the appellate court reviews the trial courts determination as a question of law. [Citation.] In any event, a disqualification motion involves concerns that justify careful review of the trial courts exercise of discretion. [Citation.]" (SpeeDee Oil, supra, 20 Cal.4th at pp. 1143-1144.) Here, there was a disputed issue of fact-whether what occurred gave Gordon an unfair advantage in this case.
B. Disqualification Principles
There are a number of competing interests involved in an issue of disqualification of an attorney. "Ultimately, disqualification motions involve a conflict between the clients right to counsel of their choice and the need to maintain ethical standards of professional responsibility. . . . The important right to counsel of ones choice must yield to ethical considerations that affect the fundamental principles of our judicial process." (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.) There is, however, always the concern that disqualification motions "can be misused to harass opposing counsel [citation], to delay the litigation [citation], or to intimidate an adversary into accepting settlement on terms that would not otherwise be acceptable. [Citation.] In short, it is widely understood by judges that attorneys now commonly use disqualification motions for purely strategic purposes . . . ." (Gregori v. Bank of America (1989) 207 Cal. App. 3d 291, 301, 254 Cal. Rptr. 853 (Gregori).) The authorities have enunciated a variety of principles in connection with the standards to apply when considering whether to disqualify an attorney.
In Cooke v. Superior Court (1978) 83 Cal. App. 3d 582, 147 Cal. Rptr. 915 (Cooke), another marital dissolution action, the husbands butler transmitted to the wife communications between the husband and his attorney. The wife sent this material to her lawyer. The trial court, after ordering the material be returned, refused to disqualify the wifes lawyer, and the Court of Appeal affirmed. The court said, "we know of no case where disqualification of an attorney or his firm was imposed purely as a punitive or disciplinary measure, and where there was no prior representation or confidential professional relationship between the complaining party and the attorney or law firm sought to be disqualified." (Id. at p. 592.)
In Maruman Integrated Circuits, Inc. v. Consortium Co. (1985) 166 Cal. App. 3d 443, 212 Cal. Rptr. 497, an action was brought by a corporation against its former president. An employee of the corporation obtained copies of letters between the corporation and its attorneys. When that employee left the corporation, she gave them to the attorneys for her new employer-the former president. The Court of Appeal, relying on Cooke, held that the trial court did not abuse its discretion in denying the corporations motion to disqualify the former presidents attorneys.
In Neal v. Health Net, Inc. (2002) 100 Cal.App.4th 831 (Neal), plaintiff, a former employee, brought an employment discrimination action against the employer. The trial court disqualified the plaintiffs counsel because he had begun representing another former employee who had worked for the defendant as a legal secretary and had accessed the litigation file related to plaintiffs case before leaving the defendants employ. The Court of Appeal reversed the order because there was no evidence that the attorney obtained confidential information from the second former employee; disqualification "is inappropriate for mere exposure to information by an attorney to confidential information"; "a party cannot improperly disclose confidential information to ones own counsel in the prosecution of ones own lawsuit"; disqualification is "an ineffective remedy because it would not prevent the party from giving new counsel the information"; an attorney may not be disqualified as a punitive or disciplinary measure; and "client confidences can be protected from unwarranted public disclosure by less drastic measures." (Id. at pp. 843-844.)
In DCH Health Services Corp. v. Waite (2002) 95 Cal.App.4th 829, a plaintiff sought to disqualify a defendants attorney because the latter was married to a former member of one of the plaintiffs board of directors. The court reversed a trial court order disqualifying the attorney on, inter alia, the ground that a mere appearance of impropriety does not itself support disqualification. There was no evidence that confidential information had been disclosed to the attorney.
In Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294 (Fox), the court held that the attorneys for a plaintiff who was a former in-house counsel for the defendant, could not be disqualified for being exposed to defendants confidential information obtained from their client. The court quoted from the similar case of Bell v. 20th Century Ins. Co. (1989) 212 Cal. App. 3d 194, 198, 260 Cal. Rptr. 459 (Bell), that it "could not see how Ms. Bell could have improperly disclosed information to her own counsel in the prosecution of her own lawsuit."
In Chronometrics, Inc. v. Sysgen, Inc. (1980) 110 Cal. App. 3d 597, 168 Cal. Rptr. 196 (Chronometrics), a cross-complainants attorney communicated with a cross-defendant concerning the subject matter of the action, knowing that cross-defendant was represented by counsel. The court held it was not an abuse of discretion for the trial court to disqualify the attorney because of the information the attorney obtained as a result of the communication. The court said, "we detect a common theme in the cases relating to disqualification of attorneys by trial courts. If the status or misconduct which is urged as a ground for disqualification will have a continuing effect on the judicial proceedings which are before the court, it is justified in refusing to permit the lawyer to participate in such proceedings. . . . If, on the other hand, the courts purpose is to punish a transgression which has no substantial continuing effect on the judicial proceedings to occur in the future, neither the courts inherent power to control its proceedings nor Code of Civil Procedure section 128 can be stretched to support the disqualification. [P] In applying this principle to the instant case, we recognize that such information as [the attorney] may have learned from [the party] cannot be unlearned and that, whether [attorney] is or is not disqualified as counsel, he can use this information . . . . Still it cannot be said that the courts order served no useful purpose in exercising proper control of the proceedings before the court. As counsel, [attorney] would have the improperly obtained facts instantly available in his mind in questioning witnesses, making and responding to objections and addressing the court and jury. [Attorney] as counsel would be in quite a different position from a substituted counsel who might acquire such information second hand by discussions with [attorney] before or after court sessions or during recesses. It was not an abuse of the courts discretion to refuse to permit the wrongfully obtained information to be used by [attorney] directly in the proceedings before the court." (Id. at pp. 606-607.)
In Gregori, supra, 207 Cal. App. 3d 291, plaintiffs attorney initiated an undisclosed social relationship with defense counsels legal secretary, who was familiar with the litigation. The trial court refused to disqualify plaintiffs attorney. The Court of Appeal affirmed on the ground that defendants did not establish that plaintiff obtained privileged information that could be used "advantageously" against defendants. The court said, "the case law and the legal literature persuade us that it is relatively unimportant whether the status or misconduct claimed to warrant disqualification is proscribed by a particular ethical norm or disciplinary rule or may be characterized as a failure to avoid the appearance of impropriety. Since the purpose of a disqualification order must be prophylactic, not punitive, the significant question is whether there exists a genuine likelihood that the status or misconduct of the attorney in question will affect the outcome of the proceedings before the court. Thus, disqualification is proper where, as a result of a prior representation or through improper means, there is a reasonable probability counsel has obtained information the court believes would likely be used advantageously against an adverse party during the course of the litigation. Though such information cannot be unlearned, and the lawyer who obtained it cannot be prevented from giving it to others, disqualification still serves the useful purpose of eliminating from the case the attorney who could most effectively exploit the unfair advantage. [Citation.] Disqualification is inappropriate, however, simply to punish a dereliction that will likely have no substantial continuing effect on future judicial proceedings. [Citation.] There are other sanctions which in that situation must suffice, including imposition of attorneys fees and costs incurred by the other side as a result of the misconduct [citation] and reporting of the misconduct to the State Bar of California so that it may determine whether disciplinary action is appropriate, in which case the attorney should be notified that this has been done. [Citation.]" (Id. at pp. 308-309.)
In In re Complex Asbestos Litigation (1991) 232 Cal. App. 3d 572, 283 Cal. Rptr. 732 (Complex Asbestos Litigation), the court held that a law firm should be disqualified because an employee of the firm possessed attorney-client confidences from previous employment by opposing counsel in the litigation. The court said that, as recognized by the Supreme Court in Comden v. Superior Court (1978) 20 Cal.3d 906, 915, "the issue ultimately involves a conflict between the clients right to counsel of their choice and the need to maintain ethical standards of professional responsibility. The paramount concern, though, must be the preservation of public trust in the scrupulous administration of justice and the integrity of the bar. The recognized and important right to counsel of ones choosing must yield to considerations of ethics that run to the very integrity of our judicial process." The court noted that its "analysis does not mean there is or should be any broad duty owed by an attorney to an opposing party to maintain that partys confidences in the absence of a prior attorney-client relationship." (Complex Asbestos Litigation, supra, 232 Cal. App. 3d at pp. 586-588.) But it added, "we deal here with a prophylactic rule necessary to protect the confidentiality of the attorney-client relationship and the integrity of the judicial system, and with the appropriate scope of the remedy supporting such a rule." (Id. at p. 588.)
The court in Complex Asbestos Litigation distinguished Cooke and Maruman by stating, "if the disclosure is made by the attorneys own client, disqualification is neither justified nor an effective remedy." (Complex Asbestos Litigation, supra, 232 Cal. App. 3d at p. 591.) The court disagreed with the rule formulated in Gregori that "focuses attention on the end result of the challenged conduct without including the paramount concern of preserving public trust in the scrupulous administration of justice and the integrity of judicial proceedings." (Id. at p. 592.) The court justified disqualification "not because of an attorneys affirmative misconduct, but because errors of omission and insensitivity to ethical dictates allowed the employees misconduct to taint the firm with a violation of attorney-client confidentiality." (Ibid.)
In State Comp. Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644 (State Comp. Ins. Fund), the court held that the inadvertent disclosure of privileged documents did not constitute a waiver of the attorney-client privilege but reversed a sanction against the attorney who received the documents inadvertently disclosed because the duties of the attorney under California law were not then clear. The court said that for "future application," if an attorney "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 should 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." (Id. at pp. 656-657.) The court quoted from Complex Asbestos Litigation, supra, 232 Cal. App. 3d at page 589 that "mere exposure to the confidences of an adversary does not, standing alone, warrant disqualification." (State Comp. Ins. Fund, supra, 70 Cal.App.4th at p. 657.) But the court said, "we do not rule out the possibility that in an appropriate case, disqualification might be justified if an attorney inadvertently receives confidential materials and fails to conduct himself or herself in the manner specified above, assuming other factors compel disqualification. (Id. at p. 657; see 5 Mallen and Smith, Legal Malpractice (5th ed. 2000) § 33.29, p. 184 ["Information that is obtained or used improperly can result in a reversal of a verdict, suppression of information and disqualification"].)
Finally, the Supreme Court has said that the trial courts discretion to disqualify an attorney comes from its inherent authority "to control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto," that "the paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar;" and that "the important right to counsel of ones choice must yield to ethical considerations that affect the fundamental principles of our judicial process." (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.)
Although the judicial statements are not in perfect synchronization, I distill the proposition that the trial court has discretion to disqualify an attorney if the attorney is involved in improperly obtaining and reviewing non-waived confidential information, and thereby has some continuing advantage in the litigation.
The trial court had discretion to disqualify Ellis
It is understandable that Ellis and Gordon, after a long struggle to find McDonalds assets to satisfy an aged judgment, would be tempted to gain access to his computer that a marshal improperly delivered to them. Nevertheless, Ellis had fair warning from the court in State Comp. Ins. Fund, supra, 70 Cal.App.4th at pages 656-657, that should he come into possession of non-waived privileged and confidential documents belonging to another party, "he should refrain from examining the materials any more than is essential to ascertain if the materials are privileged, and should immediately notify the sender that he . . . possesses material that appears to be privileged."
Here, unlike State Comp. Ins. Fund, supra, 70 Cal.App.4th 644, the privileged information was not received from the adversary by inadvertence. Any requirement for information inadvertently obtained should apply a fortiori to information improperly obtained. The point of the admonition in State Comp. Ins. Fund was to deal with a situation in which an attorney obtains documents containing privileged or confidential information and the privilege and confidentiality had not knowingly been waived. There was no evidence of a waiver by MacDonald with respect to the privilege or confidentiality of the information.
Neither Ellis nor Gordon was entitled to possession of the computer or the information contained in it. By law, and the order of the court, it is the levying officer that is to take custody of the debtors property-not the creditor or its attorney. (Code Civ. Proc., § 699.030, subd. (b); see Code Civ. Proc., § 699.060.) But Ellis is not being disqualified for improper acquisition of the computer. Although the way Ellis obtained the information is relevant, he is being disqualified for viewing and using information that he knew was privileged and confidential and that he knew or should have known he should not review and use and thereby gaining an advantage in the proceeding.
Cases that indicate that disqualification may depend on whether the attorney obtains the confidential information properly (Bell, supra, 212 Cal. App. 3d 194; Fox, supra, 89 Cal.App.4th 294) are not applicable here because the trial court found that Ellis obtained the confidential information improperly and that finding is supported by substantial evidence. (See discussion, post.) Those cases that hold that the attorneys mere access to confidential information without evidence of actual disclosure do not justify disqualification (see, e.g. Neal, supra, 100 Cal.App.4th 831) are not applicable here because Ellis admittedly reviewed the information, and there is evidence he used it.
Regardless of the suggestion in cases that an attorney who obtains confidential information from the client should not be disqualified no matter how the client obtains the information (e.g., Cooke, supra, 83 Cal. App. 3d 582)-a proposition I find questionable-here, there is a question that Ellis actually participated in the acquisition of the confidential information. Even if disqualification of an attorney depends upon the impact on the case of the disclosure of the confidential information to the attorney (Chronometics, supra, 110 Cal. App. 3d 597; Gregori, supra, 207 Cal. App. 3d at p. 309), here the trial court specifically found that Ellis has an advantage by virtue of the improper acquisition of the privileged and confidential information.
It is true that many disqualification cases involve conflicts of interest because of the necessity to insure "the attorneys obligation of loyalty." (SpeeDee Oil, supra, 20 Cal.4th at p. 1146.) But those cases involve another "primary concern [which] is whether and to what extent the attorney acquired confidential information." (Id. at p. 1148.) Thus, disqualification is a means to protect confidential communications. Such a purpose should be applicable in any type of situation-whether it be when there is a conflict or when the attorney obtains the confidential information in some other improper manner.
When there is evidence that a lawyer participates in improperly receiving and using information that he or she knows to be non-waived, privileged and confidential, the trial court may conclude that there is "a likelihood that the status or misconduct of the attorney in question will affect the outcome of the proceedings before the court" (Gregori, supra, 207 Cal. App. 3d at p. 309) and adversely affect the "public trust in the scrupulous administration of justice and the integrity of the bar." (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.) Thus, the trial court does have discretion to disqualify the attorney under the circumstances in this case.
C. There was substantial evidence to support the trial courts conclusions
There is evidence that Ellis knew or should have known that neither he nor Gordon should have had custody of the computer and therefore could not obtain information from it. (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 766 ["It has long been held that counsel is presumed to know the law"].) As noted above, under the law he was not entitled to possession of the computer. And the unauthorized use of materials taken from a computer is illegal. (Pen. Code, § 502, subd. (c)(2).) He tried to operate the computer. It is reasonable to infer that when Gordon took the computer, Ellis knew she would try to retrieve information from it, and he should have known that there was a possibility that the computer contained confidential information. When he saw the material from the computer, he knew it contained privileged and confidential information directly relevant to this case. He made no contact with MacDonalds counsel about it.
Elliss claim that he had all the important information from other sources is based solely on his generalized statement to this effect. There is no evidence or analysis to support this assertion. To the contrary, there is evidence from which one could reasonably infer that he used the confidential information. Although Gordon could have bought the computer at an asset sale, he still would have been faced with the requirements applicable to privileged information inadvertently disclosed.
The trial court could reasonably have concluded that Elliss review of the actual documents would give him an advantage in the litigation that a successor lawyer would not have. A successor attorney would have to rely only on accounts by others of what was in the materials.
Thus, I believe there is sufficient evidence to support the trial courts conclusions that Ellis improperly obtained and used privileged and confidential information that was relevant and useful in this case and that such use gave Gordon an unfair advantage in this case.
D. There was no abuse of discretion
The trial court concluded that Ellis acquired and used MacDonalds confidential information improperly and that as a result his continued representation would afford Gordon an unfair advantage. The trial court discounted any hardship Gordon might suffer as a result of a disqualification because of her involvement in the improper acquisition and use of the confidential information. In view of these conclusions and the circumstances, the trial court did not abuse its discretion in disqualifying Ellis, and therefore I would affirm the trial courts order of disqualification.
CONCLUSION
Although, I do not support widespread disqualification of counsel, I believe that trial courts should have the power, including, if necessary such disqualification, to deal with the preservation of the integrity of the system and fairness in the proceeding. It was reported in 1968 that Chief Justice Warren in a speech said that, "too many lawyers . . . have turned to victory rather than justice and a fee rather than truth." (47 Harv.L.Rec. 1, 10.) Now is not the time for the bar or the bench to fail to deal with this problem.