Opinion
Review Granted May 13, 1993.
Review Granted Previously published at: 18 Cal.App.4th 346, 12 Cal.App.4th 1543 [Copyrighted Material Omitted] COUNSEL
[15 Cal.Rptr.2d 899] Robin B. Johansen, Joseph Remcho, Karen A. Getman, Philip C. Monrad, Remcho, Johansen & Purcell, San Francisco, for defendant/cross-complainant and appellant, Steven Woodside and for defendant and appellant, County of Santa Clara.
Kevin M. Fong, San Francisco, Edward P. Davis, J. Donald Best, Pillsbury, Madison & Sutro, San Jose, for plaintiff/cross-defendant and respondent, Santa Clara County Counsel Attorneys Assn.
OPINION
COTTLE, Acting Presiding Justice.
In a wage dispute between the County of Santa Clara and an employee association whose members are employed by the county counsel's office as attorneys for the county, the association filed this action seeking a declaration permitting an action against the county to enforce its collective bargaining rights. The trial court found in favor of the association and the county appeals. Because an attorney's professional ethical obligations preclude him or her from filing a lawsuit against a current client, we reverse.
Statement of Facts
Steven Woodside is county counsel for the County of Santa Clara. Mr. Woodside supervises an office of 40 attorneys whose primary responsibility is to represent the county and its various departments and officials. The Santa Clara County Attorney's Association (Association) is a recognized bargaining unit under the Meyers-Milias-Brown Act (the MMBA). Its membership consists solely of attorneys in the County Counsel's Office.
The MMBA is codified at Government Code sections 3500 et seq.
In 1969, the attorneys in the County Counsel's Office were designated confidential employees pursuant to Santa Clara County Ordinance Code section A25-340. This section defines a confidential employee as " an employee who is privy to decisions of county management affecting employee relations." Certain restrictions apply to confidential employees who are members of an employee organization which includes nonconfidential employees as members. They may not serve as officers of the employee organization or on committees addressing issues within the scope of [15 Cal.Rptr.2d 900] representation. In addition, they cannot represent the employee organization before management.
In 1973, the Santa Clara County Criminal Attorneys Association, which included deputy district attorneys and deputy public defenders, filed a petition to establish an attorney bargaining unit. The County of Santa Clara Board of Supervisors (the Board) subsequently placed the deputy county counsel attorneys in the same unit with the deputy district attorneys and the deputy public defenders. The County Director of Personnel then removed the deputy county counsel attorneys from confidential status.
On September 26, 1974, the deputy county counsels filed a petition for unit modification to allow them to form a separate bargaining unit. The hearing officer concluded: " Whether the role of the attorneys in the Office of County Counsel is cast in terms of ‘ confidentiality’ with department heads, the County Executive, the Board of Supervisors, etc., in terms of their being an integral part of County management, or in terms of attorney-client relationship with County management, the result is the same. No such comparable role is played by attorneys in the District Attorney and Public Defender Offices. The Hearing Officer believes that the interests of all parties concerned ... will be best served by granting a separate representation unit to attorneys in the Office of County Counsel." Thus, Association was established.
In 1984, Association filed a lawsuit against the county in conjunction with the deputy district attorneys and deputy public defenders unit. The lawsuit followed a breakdown in negotiations between the county and Association regarding the Board's alleged failure to set rates of pay pursuant to section 709 of the County Charter. Section 709 requires the Board to set rates of pay " which are commensurate with those prevailing throughout the county for comparable work." The litigation also involved allegations that the Board was not bargaining in good faith in violation of the County Charter and the MMBA. The lawsuit was eventually settled.
In 1989, the employment agreement between Association and the county expired. The deputy county counsels refused to accept the wage package already accepted by the deputy district attorneys and the deputy public defenders. To support their position that they were entitled to higher salaries, Association submitted to the Board a survey of attorney compensation in the private sector.
On August 17, 1989, Association requested that the Board schedule a hearing to set a salary pursuant to section 709. The Board did not schedule a hearing. On September 1, 1989, Association proposed that the rate of pay be set by binding arbitration. There was no response to this proposal. In November 1989, the county notified Association that it intended to give to the deputy county counsels the first phase increase of the agreement reached with the other government attorneys. The County also offered to meet and confer with Association over that intended course of action. On December 8, 1989, Association proposed nonbinding fact-finding by a neutral third party or any other type of reasonable procedure to assist the parties in determining a prevailing wage.
On December 12, 1989, the Board enacted a 4 percent wage increase for the deputy county counsels. Association then notified the county of its intent to file a petition for writ of mandate to enforce its members' rights under the MMBA and the County Charter.
On December 18, 1989, when Mr. Woodside learned that Association intended to sue the county over the wage dispute, he expressed concern to Denis O'Neal, Association president, about the ethical implications of a suit. Mr. Woodside also sought advice from the State Bar, but was unable to obtain any definitive response. On December 21, 1989, Mr. Woodside distributed a memorandum to all attorneys in the County Counsel's Office, setting forth his concerns and requiring the members of Association to seek his approval before participating in confidential meetings with high-level County management. He also informed the attorneys that " litigation [15 Cal.Rptr.2d 901] against the County on these [salary] issues may not be maintained by lawyers employed by the County unless the lawyers cease employment in the County Counsel's Office or the County consents."
On December 29, 1989, Association requested that the county waive the conflict of interest or submit the controversy to a court without the filing of a formal action. (Code of Civ. Procedure, § 1138.) On January 9, 1990, Association filed an action for declaratory and injunctive relief against Mr. Woodside and the county. Association sought a declaration that its proposed lawsuit did not violate its members' ethical obligations. Association also sought an injunction to prevent the county from disciplining or terminating its members if they filed suit against the county.
Code of Civil Procedure section 1138 provides as follows: " Parties to a question in difference, which might be the subject of a civil action, may, without action, agree upon a case containing the facts upon which the controversy depends, and present a submission of the same to any Court which would have jurisdiction if an action had been brought; but it must appear, by affidavit, that the controversy is real and the proceedings in good faith, to determine the rights of the parties. The Court must thereupon hear and determine the case, and render judgment thereon, as if an action were depending."
On April 3, 1990, Mr. Woodside filed a cross-complaint seeking to enjoin Association from filing its suit or, alternatively, seeking a declaration that Association must show that it had a strong likelihood of succeeding on the merits and that the harm to the county would be minimal before it could bring suit.
Following a court trial, judgment was entered in favor of Association. It stated in relevant part: " (1) Defendant Steven Woodside is permanently enjoined and restrained from terminating members of the Santa Clara County Counsel Attorneys Association from their employment in the County Counsel's Office solely because Association files or intends to file a petition for writ of mandate to resolve its salary dispute with the County. [¶ ] (2) The members of the Santa Clara County Counsel Attorneys Association need not resign prior to filing a petition for writ of mandate to resolve their salary dispute with the County. [¶ ] (3) The filing of a petition for writ of mandate by the Santa Clara County Counsel Attorneys Association does not create a conflict of interest violation of the attorneys' ethical code." Pending appeal, the trial court stayed the judgment and ordered that the preliminary injunction remain in effect. The preliminary injunction prohibited Mr. Woodside from terminating Association members due to their intent to file suit.
Discussion
An attorney in private practice may not sue his or her client without first withdrawing from representation. As the court stated in Grievance Com. of Bar of Hartford County v. Rottner (1964) 152 Conn. 59, 203 A.2d 82, 85, " The almost complete absence of authority governing the situation where, as in the present case, the lawyer is still representing the client whom he sues clearly indicates to us that the common understanding and the common conscience of the bar is in accord with our holding that such a suit constitutes a reprehensible breach of loyalty and a violation of the preamble to the Canons of Professional Ethics." This principle was recently reaffirmed by the Nevada Supreme Court in Clark v. State (1992) 108 Nev. 324, 831 P.2d 1374. In Clark, the court held that an attorney's conflict of interest constituted per se ineffective assistance of counsel when the attorney sued his client for attorney's fees while representing him in a murder trial. Recognizing that the attorney had placed himself in " ‘ a situation conducive to divided loyalties,’ " the court concluded that " the appearance of impropriety and potential for adverse consequences were so great here, that the conflict could not be condoned." (Id., 831 P.2d at p. 1376.) The issue before us is whether a government attorney who represents his or her employer is similarly restricted.
While there is no Rule of Professional Conduct or California judicial opinion specifically prohibiting government attorneys from suing their clients while still [15 Cal.Rptr.2d 902] continuing to represent them, an attorney, including a government attorney, must refrain from any conduct that compromises his or her undivided loyalty to a client. The model rules of the American Bar Association refer to this duty: " The professional judgment of a lawyer should be exercised, ... solely for the benefit of his client and free of compromising influences and loyalties. Neither his personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute his loyalty to his client." (ABA Model Code Prof. Responsibility, EC 5-1, fn. omitted.)
Courts in California have also focused on an attorney's duty of loyalty to his or her client. " It is ... an attorney's duty to protect his client in every possible way, and it is a violation of that duty for him to assume a position adverse or antagonistic to his client without the latter's free and intelligent consent.... By virtue of this rule an attorney is precluded from assuming any relation which would prevent him from devoting his entire energies to his client's interests." (Anderson v. Eaton (1930) 211 Cal. 113, 116, 293 P. 788.) " The principle precluding representing an interest adverse to those of a current client is based not on any concern with the confidential relationship between attorney and client but rather on the need to assure the attorney's undivided loyalty and commitment to the client." (Civil Service Com. v. Superior Court (1984) 163 Cal.App.3d 70, 78, fn. 1, 209 Cal.Rptr. 159.)
This duty of loyalty serves not only to ensure the quality of the attorney's representation, but also to protect the client's trust and confidence in his or her attorney. " Professional responsibility rules seek the objective of public confidence, as well as internal integrity. A lay client is likely to doubt the loyalty of a lawyer who undertakes to oppose him in an unrelated matter. Hence the decisions condemn acceptance of employment adverse to a client even though the employment is unrelated to the existing representation. [The basis] of the condemnation is the client's loss of confidence, not the attorney's inner conflicts." (Jeffry v. Pounds (1977) 67 Cal.App.3d 6, 10-11, 136 Cal.Rptr. 373, fns. omitted.) While the Rules of Professional Conduct do not expressly address the circumstances of the instant case, rules 3-300 and 3-310 provide some guidance as to the Association member's professional duties. Rule 3-300 provides in relevant part: " A member shall not enter into a business transaction with a client; or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, unless [certain] requirements have been satisfied...." These requirements are as follows: the terms of the business transaction must be fair and reasonable to the client; the client must be advised in writing of his or her right to the advice of an independent attorney; and the client must consent in writing. In filing a lawsuit against the county to resolve a wage dispute, the members of Association are attempting to acquire a " pecuniary interest adverse to a client."
Rule 3-310 provides in relevant part: " (B) A member shall not concurrently represent clients whose interests conflict, except with their informed written consent. [¶ ] (D) A member shall not accept employment adverse to a client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment except with the informed written consent of the client or former client." Here although the members of Association are not representing either Association or the county in the instant action, the purpose of Rule 3-310 is to insure the attorney's loyalty to the client. As stated by the court in Truck Insurance Exchange v. Fireman's Fund Insurance Co. (1992) 6 Cal.App.4th 1050, 1056, 8 Cal.Rptr.2d 228, " ‘ [t]he principle precluding representing an interest adverse to those of a current client is based not on any concern with the confidential relationship between attorney and client but rather on the need to assure the attorney's undivided loyalty and commitment to the client. [Citations.]’ "
We next examine the case law involving the duty of loyalty in the context of in-house attorneys since they are involved in [15 Cal.Rptr.2d 903] an employment relationship which is similar to that of Association members. These attorney-employees may not sue client-employers unless the attorney-client relationship is first severed. Even where there is a federal statutory right to sue, courts have permitted the employer to terminate an attorney who sues. In Jones v. Flagship Intern. (5th Cir.1986) 793 F.2d 714, an in-house attorney, whose duties consisted of investigating discrimination charges and representing her employer in defending against such charges, filed a claim with the Equal Employment Opportunity Commission, alleging discrimination in pay and sexual harassment. She also solicited other employees to join in a class action suit. Shortly thereafter, her employment was terminated. The court held that although she had presented a prima facie case of unlawful retaliation, the employer successfully rebutted her case by establishing that her conduct harmed the employer's position in defending discrimination suits.
Where there exists a statutory right to sue, courts have either limited the circumstances under which a former attorney-employee may sue or prohibited suit entirely. In Breckinridge v. Bristol-Myers Co. (S.D.Ind.1985) 624 F.Supp. 79, an in-house attorney brought an age discrimination suit following his retirement. The court rejected the employer's contention that dismissal of the case was warranted due to a breach of confidentiality in violation of the attorney-client relationship. However, the court did restrict the use of documents to protect the employer's confidential information. The case does not mention reinstatement as a possibly remedy, suggesting that none of the parties viewed it as an available remedy.
Other cases have held that even a former attorney is barred from bringing suit. In Housler v. First Nat. Bank of East Islip (E.D.N.Y.1980) 484 F.Supp. 1321, 1323, a former general counsel could not ally himself with the plaintiffs in a shareholder derivative suit. In Taylor v. Hoboken Bd. of Educ. (A.D.1983) 187 N.J.Super. 546, 455 A.2d 552, 559, the court held that despite a legislative intent to include attorneys in a veteran's tenure law, the rule that a client may discharge an attorney for any reason controls.
Courts have also declined to expand common law torts to permit suit by attorneys against their former client-employers based on the ground that ethical considerations outweigh an attorney's personal interests. In Balla v. Gambro, Inc. (1991) 145 Ill.2d 492, 164 Ill.Dec. 892, 584 N.E.2d 104, an in-house attorney told his employer to reject a shipment of medical equipment because it did not meet Food and Drug Administration (FDA) regulations. After the shipment was accepted and the attorney informed his employer he would do whatever was necessary to stop the sale of the equipment, his employment was terminated. The FDA then seized the equipment following the attorney's report of the matter. The court held that the attorney was not allowed the remedy of a retaliatory discharge action. Observing that the attorney had no choice but to report the illegal and unethical conduct of his employer, the court, nevertheless, concluded that extending the tort of retaliatory discharge to an in-house attorney would not serve the public policy of encouraging clients to seek their attorneys' advice. " [A]ppellee, in addition to being an employee at Gambro, is first and foremost an attorney bound by the Rules of Professional Conduct. These Rules ... hope to articulate in a concrete fashion certain values and goals such as defending the integrity of the judicial system, promoting the administration of justice and protecting the integrity of the legal profession. [Citation.] An attorney's obligation to follow these Rules of Professional Conduct should not be the foundation for a claim of retaliatory discharge." (Id., 164 Ill.Dec. at p. 898, 584 N.E.2d at p. 110.)
Similarly, in Herbster v. North American Co. (2 Dist.1986) 150 Ill.App.3d 21, 103 Ill.Dec. 322, 327, 501 N.E.2d 343, 348, the court held that an in-house attorney may not bring a wrongful discharge action. Thus, the case law is uniform in establishing that an attorney may not sue a client while continuing to represent him or her and that there are severe restrictions or a [15 Cal.Rptr.2d 904] complete prohibition in suing former clients.
Association does not question the importance of a government attorney's duty of loyalty to a client. However, it claims this duty is outweighed by the attorney's right to enforcement of collective bargaining rights. We disagree.
The MMBA governs the collective bargaining rights of all public employees in California. (Gov.Code, § 3500.) Under the MMBA public employees are guaranteed " the right to form, join, and participate in the activities of employee organizations of their own choosing for the purpose of representation on all matters of employer-employee relations." (§ 3502.) The MMBA also contemplates that employee organizations will be formed for " professional employees," which are defined as " employees engaged in work requiring specialized knowledge and skills attained through completion of a recognized course of instruction, including, but not limited to, attorneys...." (§ 3507.3.) Section 3517 imposes an obligation on public employers to " meet and confer in good faith regarding wages, hours and other terms and conditions of employment with representatives of recognized employee organizations...."
All further statutory references are to the Government Code unless otherwise noted.
However, it does not follow that because the MMBA allows government attorneys to organize, they also have a statutory right to sue their client. The MMBA does not specify the manner in which an employee organization may seek to enforce the rights of its members. As one commentator observed, " Mutual agreement is recognized as a proper goal of the meet-and-confer process, but the statute is unclear as to whether agreements, once approved by the governing body, become enforceable. The entire subject of strikes and impasse resolution procedures is avoided, except for the declaration that the parties may elect to engage a mediator. What emerges is a rather general legislative blessing for collective bargaining at the local governmental level without clear delineation of policy or means for its implementation. The courts have, on the whole, done an admirable job of exegesis, but their decisions cannot help but reflect the underlying weakness of the text." (Grodin, Public Employee Bargaining in California: The Meyers-Milias-Brown Act in the Courts (1972) 23 Hastings L.J. 719, 761.) Thus, under certain circumstances, courts have recognized that a petition for writ of mandate was the appropriate means to seek enforcement of collective bargaining rights. (Vernon Fire Fighters v. City of Vernon (1980) 107 Cal.App.3d 802, 165 Cal.Rptr. 908; San Leandro Police Officers Assn. v. City of San Leandro (1976) 55 Cal.App.3d 553, 127 Cal.Rptr. 856.) However, no court has interpreted the MMBA as authorizing an employee organization whose members include deputy county counsels to file suit against a client.
Given that the statute does not expressly outline the remedies available to employee organizations under the instant circumstances, we turn to a situation in which public employees have sought the right to strike as a means of enforcing collective bargaining rights. In City of Santa Ana v. Santa Ana Police Benevolent Assn. (1989) 207 Cal.App.3d 1568, 255 Cal.Rptr. 688, the court recognized that public employees may engage in strikes or work slowdowns as a means of achieving impasse resolution under the MMBA. However, it held that police officers are prohibited from engaging in a strike or work slowdown due to the potential threat to public safety. (Id. at p. 1572, 255 Cal.Rptr. 688.) In reaching its holding the court refused to employ a balancing test. (Ibid.) Association members concede that the option of a strike is not available to them. Similarly here this court must consider the nature of the work performed by the Association members to determine the extent of their enforcement rights under the MMBA. Thus, where courts have unanimously held that an attorney's professional obligations must take precedence over personal interests, we can only conclude the MMBA does not authorize Association to bring suit against the county.
[15 Cal.Rptr.2d 905] This conclusion is also supported by opinions rendered by bar associations which have found that although a government attorney may become a member of an employee organization, he or she cannot ignore fundamental rules governing professional ethics. In 1966, the American Bar Association (ABA) concluded that a government attorney's participation in a labor organization would be contrary to the attorney's duty of undivided loyalty to the client. (ABA Informal Opinion No. 917 (1966).) This position was revised the following year when the ABA permitted membership in a labor organization by government attorneys employed by a single client. (ABA Informal Opinion No. 986 (1967).) The ABA Committee reasoned that " [t]he relationship of a lawyer who is employed by a corporation or by a governmental agency to his client in terms of compensation is different from that of the lawyer who represents in his daily practice, either directly or indirectly, a number of different clients." The committee also noted that government attorneys have only one client and their compensation is unrelated to a particular assignment for that client. However, the ABA cautioned that " [s]uch a lawyer would not have the right to strike, to withhold services for any reasons, to divulge confidences or engage in any other activities as a member of such a union which would violate any Canon." (Ibid.; see also ABA Informal Opinion No. 1325 (1975).)
The ABA rules on ethics are not binding on members of the California bar, but " can be looked to for guidance or support for conduct...." (State Bar of Cal. Formal Opn. No. 1983-71.)
These principles have also been applied to government attorneys in California. The Los Angeles Bar Committee concluded that deputy city attorneys may properly join an employee organization under the MMBA. (L.A. County Bar Assoc. Formal Opinions No. 337 (1973).) However, the committee emphasized that " individual members in all of their conduct [must] scrupulously observe and be bound by the Rules and Canons." (Ibid.) Thus, the government attorney's duty of loyalty to his or her client is paramount over the right to bring a lawsuit under the present circumstances.
Nor are we persuaded that this duty of loyalty is outweighed by Association members' constitutional rights. Association contends the First Amendment right to petition the government for the redress of grievances protects the act of filing a lawsuit against a governmental entity. There is no merit to this contention. While the right to file a lawsuit is included within the right to petition (City of Long Beach v. Bozek (1982) 31 Cal.3d 527, 183 Cal.Rptr. 86, 645 P.2d 137), there are numerous procedural and substantive requirements (e.g., statutes of limitation, sanctions) which not only limit this right, but also prohibit entire classes of potential plaintiffs. Similarly here the government attorney's duty toward a client clearly outweighs his or her First Amendment right to petition the government.
Nor do we find merit in Association's contention that the right to bargain collectively is a fundamental right. It is not a constitutional right, but rather a statutory right under either the National Labor Relations Act or the MMBA. (See Railroad Trainmen v. Virginia Bar (1964) 377 U.S. 1, 5-6, 84 S.Ct. 1113, 1116-17, 12 L.Ed.2d 89.) " It has long been settled that absent specific statutory authorization, public employees have no right to bargain collectively." (Sacramento County Employees Organization v. County of Sacramento (1988) 201 Cal.App.3d 845, 854, 247 Cal.Rptr. 333.) Moreover, the issue here is not whether Association members have been denied their right to bargain collectively, but what methods they may employ to enforce these statutory rights.
We understand that as a result of our decision Association members may be left without an effective bargaining remedy to enforce their statutory collective bargaining rights. Such a result is, however, unavoidable if attorneys are to be held to the highest standards of professional conduct.
[15 Cal.Rptr.2d 906] Disposition
The judgment is reversed.
ELIA and BAMATTRE-MANOUKIAN, JJ., concur.