Preview
1 JACKSON LEWIS P.C.
MARK S. ASKANAS (Bar #122745)
2 RILEY R. MOYER (Bar #306790)
ELECTRONICALLY
50 California Street, 9th Floor
3 San Francisco, California 94111 F I L E D
Telephone: (415) 394-9400 Superior Court of California,
County of San Francisco
4 Facsimile: (415) 394-9401
E-mail: Mark.Askanas@jacksonlewis.com 07/07/2020
5 E-mail: Riley.Moyer@jacksonlewis.com Clerk of the Court
BY: EDNALEEN ALEGRE
Deputy Clerk
6 Attorneys for Defendants GREENSPAN ADJUSTERS
INTERNATIONAL, INC., ADJUSTERS INTERNATIONAL
7 PACIFIC NORTHWEST, INC., GORDON SCOTT, III; STEVE
SEVERAID, PAUL MIGDAL, JAMES WARREN, CLAY
8 GIBSON, DREW LUCURELL, and CHRIS LUCURELL
9 SHARTSIS FRIESE LLP
FRANK A. CIALONE (Bar #172816)
10 One Maritime Plaza, Eighteenth Floor
San Francisco, CA 94111-3598
11 Telephone: (415) 421-6500
Facsimile: (415) 421-2922
12 Email: fcialone@sflaw.com
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 Attorneys for Defendants GREENSPAN ADJUSTERS
INTERNATIONAL, INC.; ADJUSTERS INTERNATIONAL
14 PACIFIC NORTHWEST, INC.
15
SUPERIOR COURT OF THE STATE OF CALIFORNIA
16
COUNTY OF SAN FRANCISCO
17
18 GARY JOHNSON, individually and Case No. CGC-20-583239
derivatively on behalf of GREENSPAN
19 ADJUSTERS INTERNATIONAL, INC., a REPLY IN SUPPORT OF MOTION TO
corporation, and ADJUSTERS DISQUALIFY PERETZ &
20 INTERNATIONAL PACIFIC NORTHWEST, ASSOCIATES AS COUNSEL FOR
INC., a corporation, PLAINTIFF GARY JOHNSON
21
Plaintiff, Date: July 14, 2020
22 Time: 9:30 a.m.
v. Dept.: 302
23 Judge: Hon. Ethan P. Schulman
GREENSPAN ADJUSTERS
24 INTERNATIONAL, INC.; ADJUSTERS Complaint Filed: February 26, 2020
INTERNATIONAL PACIFIC NORTHWEST, Trial Date: None Set
25 INC.; GORDON SCOTT, III; STEVE
SEVERAID; PAUL MIGDAL; JAMES
26 WARREN; CLAY GIBSON; DREW
LUCURELL; CHRIS LUCURELL; and DOES
27 1 through 20, inclusive,
28 Defendants.
-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 I. INTRODUCTION
2 Defendants’ Motion to Disqualify arises out of Peretz & Associates’ (“Peretz”) knowledge
3 and use of Greenspan’s privileged and confidential information. Peretz acquired this information
4 from Masood Khan (“Khan”), a former Greenspan in-house attorney, who Peretz also represents
5 in a separate action that is also pending the San Francisco Superior Court following remand from
6 the United States District Court for the Northern District of California. Peretz’s improper use of
7 Greenspan’s privileged and confidential information in drafting both Khan’s and Plaintiff’s
8 Complaints are grounds for Peretz’s disqualification.
9 II. SUPPLEMENTAL FACTUAL BACKGROUND
10 A. Khan’s Role As An In-House Attorney At Greenspan.
11 Plaintiff and Khan go to great lengths to disguise and downplay Khan’s role as an in-
12 house attorney. Plaintiff describes Khan’s work as mostly nonlegal, public adjustor work. (MPA
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
in Opposition to Motion to Disqualify (“Opp.”), at 6). Similarly, Khan’s First Amended
EIGHTEENTH FLOOR
13
14 Complaint describes Khan as a “public adjuster” and former “Vice President” of Greenspan, and
15 refers only in passing to the fact that he is an attorney who held the title of Greenspan’s Assistant
16 General Counsel. (Khan First Amended Complaint (“KFAC”), ¶¶ 2, 68, 75, 98-99; Johnson
17 Request for Judicial Notice, Ex. B). In his Opposition to the instant Motion, Plaintiff claims that
18 Khan’s role as an attorney was essentially limited to being a witness in one lawsuit. (Opp. at 7).
19 The reality is quite different. Throughout his employment at Greenspan, Khan acted as
20 one of two in-house attorneys, as well as a public adjuster. (June 5, 2020 Declaration of Frank
21 Cialone (“Cialone Dec.”), Ex. C, ¶ 2). His public adjusting duties were specific and limited,
22 involving only negotiating for and effecting the settlement of clients’ insurance claims. (Id., Ex.
23 C, ¶ 4). These adjusting duties did not involve advising Greenspan, much less advising
24 Greenspan as to the legality of Greenspan’s or its employees’ conduct. (Id.). Those were his
25 duties as an attorney—duties which also included researching and interpreting legal authority,
26 interpreting insurance policies, and providing legal advice, guidance, and direction to Greenspan
27 internally. (Id.). As an in-house attorney, moreover, Khan was consulted by other Greenspan
28 employees for legal advice—including Mark Fratkin (the subject of many allegations in both
-1-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 Plaintiff’s and Khan’s Complaints), who consulted Khan for legal advice regarding Fratkin’s
2 work at Greenspan and the effect of his criminal conviction. (Cialone Dec. Ex. D, ¶ 2).
3 B. Pertinent Allegations Of Khan’s First Amended Complaint And Plaintiff’s
Complaints.
4
5 As Greenspan identified in its Memorandum in support of its Motion to Disqualify, the
6 allegations of Khan’s Complaint purport to disclose confidential and privileged communications
7 belonging to Greenspan that Khan obtained while he was Greenspan’s attorney. (KFAC, ¶¶ 6,
8 51, 61, 125). The subjects of these communications, that certain conduct of Greenspan and its
9 employees was purportedly illegal, that Greenspan purportedly submitted false and fraudulent
10 applications for public adjustor licenses or renewals, and that Greenspan purportedly allowed
11 Mark Fratkin to illegally engage in insurance-related transactions, are also at issue in Plaintiff’s
12 suit. (Id.; Complaint ¶¶ 44-48; Plaintiff’s First Amended Complaint (“FAC”) ¶¶ 48-52).
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 Khan’s allegations in his First Amended Complaint, if true, plainly concern attorney-client
14 consultations with him and legal advice that he gave, including advice he claims to have given
15 regarding Mark Fratkin and the legality of his work for Greenspan. This Court should disregard
16 Khan’s self-serving statement, repeated by Plaintiff, that “Khan never gave Greenspan legal
17 advice concerning the illegality of Fratkin’s conduct or the implications of his employment by the
18 company.” (Opp. at 7). The nature of the alleged communications speak for themselves, and
19 Peretz’s recitations of the alleged communications in Khan’s First Amended Complaint confirms
20 its knowledge of those purported communications. Plaintiff does not show (or even claim) that
21 Khan ever informed Greenspan that he was acting in some other capacity when consulted about
22 legal matters or when providing legal advice. Greenspan was entitled to expect that
23 communications with its Assistant General Counsel about legal matters was privileged, and that
24 those communications would not be used to aid another party in suing Greenspan.
25 Although Plaintiff devotes considerable attention to other background information and
26 details regarding his suit against Greenspan as well as Khan’s separate suit against Greenspan,
27 those details are not relevant to the instant motion and Greenspan does not address them here.
28
-2-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 III. ARGUMENT
2 A. Khan’s First Amended Complaint, If True Purports To Disclose Privileged
Communications.
3
4 Plaintiff admits that Khan was in an attorney-client relationship with Greenspan during
5 Khan’s employment with Greenspan. (Opp. at 6, Declaration of Masood Khan (“Khan Dec.”) ¶ 2;
6 see also Cialone Dec. Ex. B, ¶ 8, Ex. A). This relationship existed throughout Khan’s
7 employment with Greenspan. (Cialone Dec. Ex. B, ¶¶ 5-10; Ex. C, ¶¶ 2, 4). By virtue of this
8 relationship, Khan’s communications with Greenspan are presumed to be privileged and
9 protected from disclosure—especially where those communications, as alleged by Khan,
10 concerned legal issues. Costco Wholesale Corp. v. Super. Ct., 47 Cal. 4th 725, 732-33 (2009).
11 Khan’s allegations, if true, disclose Greenspan’s privileged attorney-client communications.
12 Such allegations include those in which Khan alleges that he “complained” or “expressed
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
concern” about Greenspan engaging in illegal conduct. (KFAC ¶¶ 3, 6, 51, 53, 61). On their
EIGHTEENTH FLOOR
13
14 face, these allegations articulate legal advice provided by an in-house attorney to his client-
15 employer. (Id.).
16 Plaintiff’s argument that most of Khan’s duties at Greenspan were as a public adjuster,
17 and thus the communications at issue were “not made as part of his job duties at Greenspan” and
18 were not privileged attorney-client communications, is unavailing. (Opp. at 7). Where a
19 communication with one’s attorney involves “secur[ing] or render[ing] legal service or advice,”
20 the attorney-client privilege applies, even if the attorney also has non-legal duties. Montebello
21 Rose Co. v. Agric. Labor Relations Bd., 119 Cal. App. 3d 1, 32-33, (1981). Neither Plaintiff nor
22 Khan get to decide—particularly now—whether or not Khan’s communications with his client
23 were in his capacity as in-house counsel. Whether someone is acting as a client’s attorney is a
24 question of fact, and an attorney’s actions are within the scope of an attorney-client relationship if
25 the client reasonably believed that the attorney was acting as its attorney at the time of the
26 conduct at issue. Gonzalez v. Kalu, 140 Cal. App. 4th 21, 31 (2006); Moss v. Stockdale, Peckham
27 & Werner, 47 Cal. App. 4th 494, 504 (1996); Fox v. Pollack, 181 Cal. App. 3d 954, 959 (1986).
28 It was reasonable for Greenspan to conclude that Khan was acting as its attorney when he
-3-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 communicated legal concerns to the company.
2 Because Greenspan establishes preliminary facts to support its exercise, the burden of
3 proving that communications were not privileged fall on Plaintiff as the opponent of Greenspan’s
4 claim of privilege (see Costco, 47 Cal. 4th at 733) and Plaintiff has not met that burden. Khan’s
5 non-legal role as a public adjuster did not require him to advise on internal Greenspan legal
6 matters. As a public adjuster, Khan was not expected to advise or “express[] concern” to
7 Greenspan about the potential legal ramifications of its conduct, including its employment of Mr.
8 Fratkin. Khan had two roles at Greenspan—public adjuster and in-house counsel—but only the
9 latter role involved advising and commenting upon legal matters relating to the company.
10 (Cialone Dec. Ex. B, ¶¶ 6-9, Ex. A; Cialone Dec. Ex. C, ¶¶ 2, 4). The communications
11 highlighted by Greenspan, if true, were privileged attorney-client communications that Khan was
12 not, and is not, entitled to disclose.
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 Plaintiff’s argument that the crime-fraud exception defeats the privilege attached to
14 Khan’s communications to Greenspan regarding legal matters is unavailing. A party who seeks
15 to invoke the crime-fraud exception must provide evidence beyond “mere allegation[s]” “to make
16 a prima facie showing that [it] was the client’s purpose” to seek legal services to enable or aid in
17 the planning or commission of a crime or fraud. Dickerson v. Super. Ct., 135 Cal. App. 3d 93,
18 100 (1982). Plaintiff has not provided this Court with any such evidence to establish that
19 exception here. Absent any actual evidence, Plaintiff fails to establish the applicability of the
20 crime-fraud exception. Id.
21 Even if evidence existed to support the applicability of the crime-fraud exception, Khan,
22 as Greenspan’s former attorney, is barred from providing Plaintiff with such evidence, by Khan’s
23 duties of loyalty and confidentiality to Greenspan. See Cal. Bus. & Prof. Code § 6068(e). Those
24 duties survive the termination of the attorney-client relationship and preclude Khan from
25 providing Plaintiff with evidence to show that Greenspan consulted Khan for an improper
26 purpose. Cal. Bus. & Prof. Code § 6068(e)(1). An attorney can only disclose attorney-client
27 communications on his own initiative when the attorney “reasonably believes the disclosure is
28 necessary to prevent a criminal act that the attorney reasonably believes is likely to result in death
-4-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 of, or substantial bodily harm to, an individual.” Cal. Bus. & Prof. Code § 6068(e)(2); Cal. R. of
2 Prof’l Conduct 1.6(b). No such situation exists here.
3 Plaintiff also mischaracterizes the crime-fraud exception itself. The exception provides
4 that the attorney-client privilege does not apply where a client solicits legal advice for the purpose
5 of furthering a crime or fraud. Cal. Evid. Code § 956. Plaintiff does not allege that Greenspan
6 solicited Khan’s advice, or that Greenspan did so for any particular purpose; to the contrary, he
7 admits that Khan offered unsolicited advice, which he alleges Greenspan ignored. (KFAC ¶ 51;
8 Opp. at 6). The crime-fraud exception does not apply.
9 Plaintiff also misapplies the exception set forth in Cal. Evid. Code § 958. This narrow
10 exception to the attorney-client privilege exists solely to “protect[] the attorney’s own rights” in
11 cases such as malpractice suits or fee disputes brought by clients where the privilege would
12 otherwise inhibit attorneys’ abilities to defend themselves. Travelers Ins. Companies v. Super.
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 Ct., 143 Cal. App. 3d 436, 445 (1983) Carlson, Collins, Gordon & Bold v. Banducci, 257
14 Cal.App.2d 212, 228 (1967). This exception does not apply, as Plaintiff argues, where an in-
15 house attorney like Khan claims his employer required him to violate the law as a condition of his
16 employment. Cal. Evid. Code § 958 does not apply here.
17 Although Plaintiff argues that the attorney-client privilege does not protect certain facts,
18 he concedes that the attorney-client privilege attaches to legal opinions rendered by attorneys.
19 (Opp. at 14). The allegations made by Khan that are at issue in this Motion purport to be just that
20 - opinions rendered by Greenspan’s attorney on the legality of certain conduct. (KFAC ¶¶ 6, 51,
21 61, 125). Thus, by Plaintiff’s own admission, Khan’s allegations purport to disclose Khan’s legal
22 opinions in violation of Greenspan’s attorney-client privilege.
23 Although no exception to the attorney-client privilege applies to Khan’s purportedly
24 privileged communications with Greenspan, such an exception would only make evidence
25 admissible in a court proceeding, subject to a court determining that such evidence is admissible,
26 with the burden on the proponent of such evidence to establish its admissibility. The hypothetical
27 application of an exception to one of Khan’s statements does not give Khan the right to
28 unilaterally decide, as he did here, that he could share purportedly privileged communications and
-5-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 information, through common counsel, who also represents another client that is also suing
2 Khan’s former client.
3 B. Defendants’ Argument That This Court Should Disqualify Peretz Is Based On
Evidence, Not Conclusory Allegations.
4
5 Defendants’ Motion is properly based on evidence in Plaintiff’s and Khan’s Complaints
6 and supporting declarations of Greenspan employees, not “conclusory allegations,” as Plaintiff
7 suggests. On their face, the allegations of Khan’s First Amended Complaint purport to
8 improperly disclose privileged communications. (KFAC ¶¶ 6, 51, 61, 125). Although Plaintiff
9 argues that Defendants failed to state with any degree of specificity what privileged information
10 Khan purportedly disclosed, Defendants cross-referenced Khan’s disclosures at issue, described
11 those disclosures, and explained how those disclosures, if true, plainly describe attorney-client
12 privileged communications. (Defendants’ Memorandum in Support of Their Motion to
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 Disqualify (“Def. MPA”) at 2-3). Defendants also described how those disclosures relate to the
14 allegations of Plaintiff’s Complaint, as they concern the same subject matter of several of
15 Plaintiff’s allegations. (Def. MPA at 3).
16 Defendants’ identification of the purportedly privileged communications and confidential
17 information disclosed by Khan and Plaintiff alone rises above the level of “conclusory
18 statements” used to support Defendants’ Motion to Disqualify. Yet, Defendants offer additional
19 evidence in support of their motion. Defendants provided two declarations of Greenspan’s
20 Executive Vice President and General Counsel, Paul Migdal, as well as a declaration of Mark
21 Fratkin, about whom both Plaintiff and Khan make allegations in their respective Complaints.
22 (Cialone Dec. Exs. B-D). Although the allegations of Khan’s First Amended Complaint at issue
23 here appear privileged on their face, the declarations of Messrs. Migdal and Fratkin provide
24 additional evidentiary support for Defendants’ position that Greenspan reasonably believed its
25 communications with Khan were privileged. (Id.). Thus, Plaintiff’s argument that Defendants
26 relied on nothing more than conclusory allegations to support their Motion to Disqualify is
27 unavailing and should be disregarded.
28
-6-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 C. Peretz’s Knowledge Of Greenspan’s Privileged Communications Alone
Justifies Disqualification Of Peretz.
2
3 Plaintiff mischaracterizes O’Gara Coach Co., LLC v. Ra, 30 Cal. App. 5th 1115 (2019)
4 when he argues that its holding is limited to situations in which an attorney-employee leaves a
5 company to join a law firm that then represents a client adverse to the company, and the attorney-
6 employee is not screened from the matter. Instead, O’Gara holds broadly that “if the holder of
7 the attorney-client privilege has not waived the privilege, lawyers representing an adverse party
8 who have received such information knowing it is privileged have an ethical duty not to use it. It
9 does not matter whether the information has been provided deliberately or inadvertently.” Id. at
10 1128. O’Gara further holds that when opposing counsel has privileged information belonging to
11 an adversary, itis not necessary “for the party seeking to protect its privileged information to
12 make an affirmative showing of existing injury from the misuse of the privileged information; the
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
threat of such use is sufficient to justify disqualification.” Id. at 1129.
EIGHTEENTH FLOOR
13
14 While, in some situations, courts may be reluctant to disqualify attorneys who receive
15 confidential information about the opposing party from their own clients, the holding in Neal v.
16 Health Net, Inc., 100 Cal. App. 4th 831, 844 (2002) that “disclosure to one’s own attorney of
17 confidential information does not justify disqualification” is not without limitation. In Acacia
18 Patent Acquisition, LLC v. Superior Court, 234 Cal. App. 4th 1091 (2015), the Court of Appeal
19 held that Neal was inapplicable where it was undisputed that attorneys obtained an adversary’s
20 privileged information through their representation of the adversary’s former attorneys, thus
21 disqualification was appropriate. Id. at 1105, n.6, 1108. And Neal has no application to the
22 situation here, where Greenspan’s former attorney, Khan, is providing privileged information to
23 Plaintiff through the lawyers that represent them both, to be used by Plaintiff against Greenspan
24 There can be no dispute that Peretz acquired knowledge of Greenspan’s privileged
25 communications through its representation of Khan, Greenspan’s former attorney. Khan’s
26 purportedly privileged communications with Greenspan are apparent on the face of the First
27 Amended Complaint Peretz drafted for Khan. Under O’Gara and Acacia Patent Acquisition,
28 LLC, the threat that Peretz could use such privileged communications to Greenspan’s detriment is
-7-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 sufficient to justify Peretz’s disqualification. This rule exists to prevent exactly what Peretz did -
2 improperly disclose an adversary’s privileged and confidential information. (KFAC ¶¶ 3, 6, 51,
3 53, 61, 125). Because Peretz did not screen the attorneys who improperly disclosed Greenspan’s
4 privileged information in the Khan lawsuit from this action, this Court should disqualify the entire
5 Peretz firm. O’Gara Coach Co., LLC, 30 Cal. App. 5th at 1131-32.
6 D. Grounds For Disqualification Exist Because Peretz Used And Publicly
Disclosed Greenspan’s Purportedly Privileged Communications.
7
8 Plaintiff’s comparison of this case to Fox Searchlight Pictures, Inc. v. Paladino, 89 Cal.
9 App. 4th 294 (2001) (hereinafter “Fox”), is also inapposite. In Fox, the court affirmed a trial
10 court order denying Fox’s motion to disqualify the attorneys who represented Paladino, one of
11 Fox’s former in-house attorneys, in a suit by Paladino against Fox. Id. at 304. In Fox, however,
12 Paladino never filed suit against Fox, nor did she have an opportunity to use or publicly disclose
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 Fox’s privileged information. Instead, Fox filed suit first, suing Paladino for disclosing
14 privileged information to her attorneys, then moved to disqualify those attorneys. Id. at 299-300.
15 Plaintiff and Khan, in contrast initiated their suits against Greenspan, and their attorneys, Peretz,
16 used and publicly disclosed that information before Greenspan moved to disqualify Peretz.
17 Plaintiff’s summary of Fox also omits a key holding that distinguishes that case from this
18 one. While the Fox court confirmed that there is no ban on litigation from a former in-house
19 attorney against that attorney’s former employer, the court added the important caveat that the
20 former in-house attorney may only bring such a suit “so long as she does not publicly disclose
21 information the employer is entitled to keep secret.” Id. at 304. Despite this prohibition, both
22 Plaintiff’s and Khan’s Complaints contain allegations that purport to disclose Greenspan’s
23 confidential and privileged communications and information (Complaint ¶¶ 44-48; FAC ¶¶ 48-
24 62; KFAC, ¶¶ 3, 6, 51, 53, 61, 125). Thus, as Greenspan noted in its Memorandum in Support of
25 its Motion to Disqualify, Peretz’s use and public disclosure of Greenspan’s privileged information
26 in two lawsuits against Greenspan justifies Peretz’s disqualification from this case. Fox at 304;
27 Rico v. Mitsubishi Motors Corp., 42 Cal. 4th 807, 819 (2007).
28
-8-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 E. Since Peretz’s Client, Khan, Had A Prior Attorney-Client Relationship With
Greenspan, Disqualification Of Peretz is Appropriate.
2
3 Plaintiff incorrectly argues, citing Maruman Integrated Circuits, Inc. v. Consortium Co.,
4 166 Cal. App. 3d 443 (1985) (hereinafter, “Maruman”), that disqualification of attorneys is
5 inappropriate unless there has been an attorney-client relationship between the complaining party
6 and the attorneys at issue. (Opp. at 9). In Maruman, the defendant corporation employed one of
7 plaintiff Maruman’s former non-attorney employees (G. Tipton Canty), an assistant to
8 Maruman’s corporate secretaries. Maruman, 166 Cal. App. 3d at 446. Maruman argued that the
9 defendant corporation’s attorneys should be disqualified because Canty communicated with
10 Maruman’s attorney while employed by Maruman and, after joining the defendant corporation,
11 Canty discussed those interactions with the defendant corporation’s attorneys. Id.
12 The Maruman court contrasted the facts of its case with the facts of Hull v. Celanese
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
Corp., 513 F.2d 568 (2d Cir. 1975). In Hull, an attorney (Hull) for Celanese left the employ of
EIGHTEENTH FLOOR
13
14 Celanese and sought to assert a sex discrimination suit against Celanese. Maruman, 166 Cal.
15 App. 3d at 446 (citing Celanese, 513 F.2d at 569). The Hull court held that Hull’s counsel was
16 disqualified because, as Maruman describes it,“the court reasoned there was a possibility that
17 confidential information imparted by a defendant corporation to a former member of its legal staff
18 would be divulged.” Id. at 449 (citing Celanese, 513 F.2d at 572) (emphasis in original). The
19 Maruman court, however, declined to reach the same conclusion as Hull in its case because Canty
20 was not a former attorney for Maruman, thus “the facts critical to the Hull court’s decision [were]
21 absent in [Maruman].” Id.
22 This case is analogous to Hull rather than Maruman, as the facts critical to the Hull court’s
23 decision that were absent in Maruman are present here. As in Hull, one of Greenspan’s former
24 attorneys left its employ to assert various claims, including discrimination claims, against
25 Greenspan. In addition, the result feared in Hull, that privileged information imparted by a
26 defendant corporation (here, Greenspan) to a former member of its legal staff (here, Khan) would
27 be divulged, has occurred here. Indeed, both the allegations of Plaintiff’s and Khan’s complaints
28 purport to disclose Greenspan’s privileged communications and information. (Complaint ¶¶ 44-
-9-
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 48; FAC ¶¶ 48-62; KFAC, ¶¶ 3, 6, 51, 53, 61, 125). Peretz, through Greenspan’s former counsel,
2 has purportedly acquired and publicly disclosed Greenspan’s attorney-client privileged
3 communications and confidential information. Thus, just as the Hull court disqualified the
4 plaintiff’s attorneys despite the lack of a prior attorney-client relationship between those attorneys
5 and the defendant, so too should this court disqualify Peretz from representing Plaintiff.
6 F. Plaintiff’s Right To Choose His Attorneys Must Yield To Greenspan’s Right
To Preserve The Confidentiality Of Attorney-Client Privileged
7 Communications.
8 While client’s right to counsel of their choice is implicated when disqualification is at
9 issue, this right “must yield to consideration of ethics that run to the very integrity of our judicial
10 process.” In Re complex Asbestos Litigation, 232 Cal. App. 3d 572, 586 (1991). “Preserving
11 confidentiality of communications between attorney and client is fundamental to our legal
12 system.” Id. That Johnson claims he has independent knowledge of the facts underlying each of
SAN FRANCISCO, CA 94111-3598
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 Khan’s purportedly privileged communications with Greenspan executives does not change the
14 fact that Peretz acquired knowledge of Greenspan’s privileged communications from Greenspan’s
15 former in-house attorney, nor does it change the fact that Peretz improperly disclosed such
16 purported communications and confidential information in two separate suits. As the preceding
17 sections outline, Johnson’s selection of Peretz as his counsel must yield to the fundamental ethical
18 consideration that Greenspan’s attorney-client privilege must be preserved. Johnson and Khan
19 cannot satisfy this consideration by waiving their conflicts with each other. Only Greenspan can
20 waive its attorney-client privilege, and it has not done so.
21 There is no evidence that Defendants are engaging in any tactical abuse by bringing their
22 Motion to Disqualify. As set forth in their Memorandum in Support of the Motion to Disqualify,
23 Defendants’ Motion to Disqualify is based on applicable legal principles. Likewise, it is not
24 tactical abuse to compel arbitration as to claims that are subject to an arbitration agreement, nor is
25 tactical abuse to threaten to bring a demurrer against a party, like Plaintiff, who files a deficient
26 Complaint. Peretz cannot use its representation of Greenspan’s former in-house attorney to
27 acquire and publicly disclose purportedly privileged communications on behalf of its clients,
28 including Johnson. Because Peretz has violated this rule, their disqualification is appropriate.
- 10 -
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
1 IV. CONCLUSION
2 For the foregoing reasons, Defendants respectfully request that this Court grant their
3 Motion to Disqualify Peretz & Associates as Counsel for Plaintiff Gary Johnson.
4 Dated: July 7, 2020 JACKSON LEWIS P.C.
5
/s/ Riley R. Moyer
6 By: RILEY R. MOYER
7 Attorneys for Defendants GREENSPAN
ADJUSTERS INTERNATIONAL, INC.,
8 ADJUSTERS INTERNATIONAL PACIFIC
NORTHWEST, INC., GORDON SCOTT, III;
9 STEVE SEVERAID, PAUL MIGDAL, JAMES
WARREN, CLAY GIBSON, DREW
10 LUCURELL, and CHRIS LUCURELL
11 Dated: July 7, 2020 SHARTSIS FRIESE LLP
12
SAN FRANCISCO, CA 94111-3598
/s/ Frank A. Cialone
SHARTSIS FRIESE LLP
ONE MARITIME PLAZA
EIGHTEENTH FLOOR
13 By: FRANK A. CIALONE
14 Attorneys for Defendants GREENSPAN
ADJUSTERS INTERNATIONAL, INC.;
15 ADJUSTERS INTERNATIONAL PACIFIC
NORTHWEST, INC.
16 8721561
17
18
19
20
21
22
23
24
25
26
27
28
- 11 -
Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES
CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON
Preview
1 JACKSON LEWIS P.C. MARK S. ASKANAS (Bar #122745) 2 RILEY R. MOYER (Bar #306790) ELECTRONICALLY 50 California Street, 9th Floor 3 San Francisco, California 94111 F I L E D Telephone: (415) 394-9400 Superior Court of California, County of San Francisco 4 Facsimile: (415) 394-9401 E-mail: Mark.Askanas@jacksonlewis.com 07/07/2020 5 E-mail: Riley.Moyer@jacksonlewis.com Clerk of the Court BY: EDNALEEN ALEGRE Deputy Clerk 6 Attorneys for Defendants GREENSPAN ADJUSTERS INTERNATIONAL, INC., ADJUSTERS INTERNATIONAL 7 PACIFIC NORTHWEST, INC., GORDON SCOTT, III; STEVE SEVERAID, PAUL MIGDAL, JAMES WARREN, CLAY 8 GIBSON, DREW LUCURELL, and CHRIS LUCURELL 9 SHARTSIS FRIESE LLP FRANK A. CIALONE (Bar #172816) 10 One Maritime Plaza, Eighteenth Floor San Francisco, CA 94111-3598 11 Telephone: (415) 421-6500 Facsimile: (415) 421-2922 12 Email: fcialone@sflaw.com SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Attorneys for Defendants GREENSPAN ADJUSTERS INTERNATIONAL, INC.; ADJUSTERS INTERNATIONAL 14 PACIFIC NORTHWEST, INC. 15 SUPERIOR COURT OF THE STATE OF CALIFORNIA 16 COUNTY OF SAN FRANCISCO 17 18 GARY JOHNSON, individually and Case No. CGC-20-583239 derivatively on behalf of GREENSPAN 19 ADJUSTERS INTERNATIONAL, INC., a REPLY IN SUPPORT OF MOTION TO corporation, and ADJUSTERS DISQUALIFY PERETZ & 20 INTERNATIONAL PACIFIC NORTHWEST, ASSOCIATES AS COUNSEL FOR INC., a corporation, PLAINTIFF GARY JOHNSON 21 Plaintiff, Date: July 14, 2020 22 Time: 9:30 a.m. v. Dept.: 302 23 Judge: Hon. Ethan P. Schulman GREENSPAN ADJUSTERS 24 INTERNATIONAL, INC.; ADJUSTERS Complaint Filed: February 26, 2020 INTERNATIONAL PACIFIC NORTHWEST, Trial Date: None Set 25 INC.; GORDON SCOTT, III; STEVE SEVERAID; PAUL MIGDAL; JAMES 26 WARREN; CLAY GIBSON; DREW LUCURELL; CHRIS LUCURELL; and DOES 27 1 through 20, inclusive, 28 Defendants. - Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 I. INTRODUCTION 2 Defendants’ Motion to Disqualify arises out of Peretz & Associates’ (“Peretz”) knowledge 3 and use of Greenspan’s privileged and confidential information. Peretz acquired this information 4 from Masood Khan (“Khan”), a former Greenspan in-house attorney, who Peretz also represents 5 in a separate action that is also pending the San Francisco Superior Court following remand from 6 the United States District Court for the Northern District of California. Peretz’s improper use of 7 Greenspan’s privileged and confidential information in drafting both Khan’s and Plaintiff’s 8 Complaints are grounds for Peretz’s disqualification. 9 II. SUPPLEMENTAL FACTUAL BACKGROUND 10 A. Khan’s Role As An In-House Attorney At Greenspan. 11 Plaintiff and Khan go to great lengths to disguise and downplay Khan’s role as an in- 12 house attorney. Plaintiff describes Khan’s work as mostly nonlegal, public adjustor work. (MPA SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA in Opposition to Motion to Disqualify (“Opp.”), at 6). Similarly, Khan’s First Amended EIGHTEENTH FLOOR 13 14 Complaint describes Khan as a “public adjuster” and former “Vice President” of Greenspan, and 15 refers only in passing to the fact that he is an attorney who held the title of Greenspan’s Assistant 16 General Counsel. (Khan First Amended Complaint (“KFAC”), ¶¶ 2, 68, 75, 98-99; Johnson 17 Request for Judicial Notice, Ex. B). In his Opposition to the instant Motion, Plaintiff claims that 18 Khan’s role as an attorney was essentially limited to being a witness in one lawsuit. (Opp. at 7). 19 The reality is quite different. Throughout his employment at Greenspan, Khan acted as 20 one of two in-house attorneys, as well as a public adjuster. (June 5, 2020 Declaration of Frank 21 Cialone (“Cialone Dec.”), Ex. C, ¶ 2). His public adjusting duties were specific and limited, 22 involving only negotiating for and effecting the settlement of clients’ insurance claims. (Id., Ex. 23 C, ¶ 4). These adjusting duties did not involve advising Greenspan, much less advising 24 Greenspan as to the legality of Greenspan’s or its employees’ conduct. (Id.). Those were his 25 duties as an attorney—duties which also included researching and interpreting legal authority, 26 interpreting insurance policies, and providing legal advice, guidance, and direction to Greenspan 27 internally. (Id.). As an in-house attorney, moreover, Khan was consulted by other Greenspan 28 employees for legal advice—including Mark Fratkin (the subject of many allegations in both -1- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 Plaintiff’s and Khan’s Complaints), who consulted Khan for legal advice regarding Fratkin’s 2 work at Greenspan and the effect of his criminal conviction. (Cialone Dec. Ex. D, ¶ 2). 3 B. Pertinent Allegations Of Khan’s First Amended Complaint And Plaintiff’s Complaints. 4 5 As Greenspan identified in its Memorandum in support of its Motion to Disqualify, the 6 allegations of Khan’s Complaint purport to disclose confidential and privileged communications 7 belonging to Greenspan that Khan obtained while he was Greenspan’s attorney. (KFAC, ¶¶ 6, 8 51, 61, 125). The subjects of these communications, that certain conduct of Greenspan and its 9 employees was purportedly illegal, that Greenspan purportedly submitted false and fraudulent 10 applications for public adjustor licenses or renewals, and that Greenspan purportedly allowed 11 Mark Fratkin to illegally engage in insurance-related transactions, are also at issue in Plaintiff’s 12 suit. (Id.; Complaint ¶¶ 44-48; Plaintiff’s First Amended Complaint (“FAC”) ¶¶ 48-52). SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Khan’s allegations in his First Amended Complaint, if true, plainly concern attorney-client 14 consultations with him and legal advice that he gave, including advice he claims to have given 15 regarding Mark Fratkin and the legality of his work for Greenspan. This Court should disregard 16 Khan’s self-serving statement, repeated by Plaintiff, that “Khan never gave Greenspan legal 17 advice concerning the illegality of Fratkin’s conduct or the implications of his employment by the 18 company.” (Opp. at 7). The nature of the alleged communications speak for themselves, and 19 Peretz’s recitations of the alleged communications in Khan’s First Amended Complaint confirms 20 its knowledge of those purported communications. Plaintiff does not show (or even claim) that 21 Khan ever informed Greenspan that he was acting in some other capacity when consulted about 22 legal matters or when providing legal advice. Greenspan was entitled to expect that 23 communications with its Assistant General Counsel about legal matters was privileged, and that 24 those communications would not be used to aid another party in suing Greenspan. 25 Although Plaintiff devotes considerable attention to other background information and 26 details regarding his suit against Greenspan as well as Khan’s separate suit against Greenspan, 27 those details are not relevant to the instant motion and Greenspan does not address them here. 28 -2- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 III. ARGUMENT 2 A. Khan’s First Amended Complaint, If True Purports To Disclose Privileged Communications. 3 4 Plaintiff admits that Khan was in an attorney-client relationship with Greenspan during 5 Khan’s employment with Greenspan. (Opp. at 6, Declaration of Masood Khan (“Khan Dec.”) ¶ 2; 6 see also Cialone Dec. Ex. B, ¶ 8, Ex. A). This relationship existed throughout Khan’s 7 employment with Greenspan. (Cialone Dec. Ex. B, ¶¶ 5-10; Ex. C, ¶¶ 2, 4). By virtue of this 8 relationship, Khan’s communications with Greenspan are presumed to be privileged and 9 protected from disclosure—especially where those communications, as alleged by Khan, 10 concerned legal issues. Costco Wholesale Corp. v. Super. Ct., 47 Cal. 4th 725, 732-33 (2009). 11 Khan’s allegations, if true, disclose Greenspan’s privileged attorney-client communications. 12 Such allegations include those in which Khan alleges that he “complained” or “expressed SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA concern” about Greenspan engaging in illegal conduct. (KFAC ¶¶ 3, 6, 51, 53, 61). On their EIGHTEENTH FLOOR 13 14 face, these allegations articulate legal advice provided by an in-house attorney to his client- 15 employer. (Id.). 16 Plaintiff’s argument that most of Khan’s duties at Greenspan were as a public adjuster, 17 and thus the communications at issue were “not made as part of his job duties at Greenspan” and 18 were not privileged attorney-client communications, is unavailing. (Opp. at 7). Where a 19 communication with one’s attorney involves “secur[ing] or render[ing] legal service or advice,” 20 the attorney-client privilege applies, even if the attorney also has non-legal duties. Montebello 21 Rose Co. v. Agric. Labor Relations Bd., 119 Cal. App. 3d 1, 32-33, (1981). Neither Plaintiff nor 22 Khan get to decide—particularly now—whether or not Khan’s communications with his client 23 were in his capacity as in-house counsel. Whether someone is acting as a client’s attorney is a 24 question of fact, and an attorney’s actions are within the scope of an attorney-client relationship if 25 the client reasonably believed that the attorney was acting as its attorney at the time of the 26 conduct at issue. Gonzalez v. Kalu, 140 Cal. App. 4th 21, 31 (2006); Moss v. Stockdale, Peckham 27 & Werner, 47 Cal. App. 4th 494, 504 (1996); Fox v. Pollack, 181 Cal. App. 3d 954, 959 (1986). 28 It was reasonable for Greenspan to conclude that Khan was acting as its attorney when he -3- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 communicated legal concerns to the company. 2 Because Greenspan establishes preliminary facts to support its exercise, the burden of 3 proving that communications were not privileged fall on Plaintiff as the opponent of Greenspan’s 4 claim of privilege (see Costco, 47 Cal. 4th at 733) and Plaintiff has not met that burden. Khan’s 5 non-legal role as a public adjuster did not require him to advise on internal Greenspan legal 6 matters. As a public adjuster, Khan was not expected to advise or “express[] concern” to 7 Greenspan about the potential legal ramifications of its conduct, including its employment of Mr. 8 Fratkin. Khan had two roles at Greenspan—public adjuster and in-house counsel—but only the 9 latter role involved advising and commenting upon legal matters relating to the company. 10 (Cialone Dec. Ex. B, ¶¶ 6-9, Ex. A; Cialone Dec. Ex. C, ¶¶ 2, 4). The communications 11 highlighted by Greenspan, if true, were privileged attorney-client communications that Khan was 12 not, and is not, entitled to disclose. SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Plaintiff’s argument that the crime-fraud exception defeats the privilege attached to 14 Khan’s communications to Greenspan regarding legal matters is unavailing. A party who seeks 15 to invoke the crime-fraud exception must provide evidence beyond “mere allegation[s]” “to make 16 a prima facie showing that [it] was the client’s purpose” to seek legal services to enable or aid in 17 the planning or commission of a crime or fraud. Dickerson v. Super. Ct., 135 Cal. App. 3d 93, 18 100 (1982). Plaintiff has not provided this Court with any such evidence to establish that 19 exception here. Absent any actual evidence, Plaintiff fails to establish the applicability of the 20 crime-fraud exception. Id. 21 Even if evidence existed to support the applicability of the crime-fraud exception, Khan, 22 as Greenspan’s former attorney, is barred from providing Plaintiff with such evidence, by Khan’s 23 duties of loyalty and confidentiality to Greenspan. See Cal. Bus. & Prof. Code § 6068(e). Those 24 duties survive the termination of the attorney-client relationship and preclude Khan from 25 providing Plaintiff with evidence to show that Greenspan consulted Khan for an improper 26 purpose. Cal. Bus. & Prof. Code § 6068(e)(1). An attorney can only disclose attorney-client 27 communications on his own initiative when the attorney “reasonably believes the disclosure is 28 necessary to prevent a criminal act that the attorney reasonably believes is likely to result in death -4- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 of, or substantial bodily harm to, an individual.” Cal. Bus. & Prof. Code § 6068(e)(2); Cal. R. of 2 Prof’l Conduct 1.6(b). No such situation exists here. 3 Plaintiff also mischaracterizes the crime-fraud exception itself. The exception provides 4 that the attorney-client privilege does not apply where a client solicits legal advice for the purpose 5 of furthering a crime or fraud. Cal. Evid. Code § 956. Plaintiff does not allege that Greenspan 6 solicited Khan’s advice, or that Greenspan did so for any particular purpose; to the contrary, he 7 admits that Khan offered unsolicited advice, which he alleges Greenspan ignored. (KFAC ¶ 51; 8 Opp. at 6). The crime-fraud exception does not apply. 9 Plaintiff also misapplies the exception set forth in Cal. Evid. Code § 958. This narrow 10 exception to the attorney-client privilege exists solely to “protect[] the attorney’s own rights” in 11 cases such as malpractice suits or fee disputes brought by clients where the privilege would 12 otherwise inhibit attorneys’ abilities to defend themselves. Travelers Ins. Companies v. Super. SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Ct., 143 Cal. App. 3d 436, 445 (1983) Carlson, Collins, Gordon & Bold v. Banducci, 257 14 Cal.App.2d 212, 228 (1967). This exception does not apply, as Plaintiff argues, where an in- 15 house attorney like Khan claims his employer required him to violate the law as a condition of his 16 employment. Cal. Evid. Code § 958 does not apply here. 17 Although Plaintiff argues that the attorney-client privilege does not protect certain facts, 18 he concedes that the attorney-client privilege attaches to legal opinions rendered by attorneys. 19 (Opp. at 14). The allegations made by Khan that are at issue in this Motion purport to be just that 20 - opinions rendered by Greenspan’s attorney on the legality of certain conduct. (KFAC ¶¶ 6, 51, 21 61, 125). Thus, by Plaintiff’s own admission, Khan’s allegations purport to disclose Khan’s legal 22 opinions in violation of Greenspan’s attorney-client privilege. 23 Although no exception to the attorney-client privilege applies to Khan’s purportedly 24 privileged communications with Greenspan, such an exception would only make evidence 25 admissible in a court proceeding, subject to a court determining that such evidence is admissible, 26 with the burden on the proponent of such evidence to establish its admissibility. The hypothetical 27 application of an exception to one of Khan’s statements does not give Khan the right to 28 unilaterally decide, as he did here, that he could share purportedly privileged communications and -5- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 information, through common counsel, who also represents another client that is also suing 2 Khan’s former client. 3 B. Defendants’ Argument That This Court Should Disqualify Peretz Is Based On Evidence, Not Conclusory Allegations. 4 5 Defendants’ Motion is properly based on evidence in Plaintiff’s and Khan’s Complaints 6 and supporting declarations of Greenspan employees, not “conclusory allegations,” as Plaintiff 7 suggests. On their face, the allegations of Khan’s First Amended Complaint purport to 8 improperly disclose privileged communications. (KFAC ¶¶ 6, 51, 61, 125). Although Plaintiff 9 argues that Defendants failed to state with any degree of specificity what privileged information 10 Khan purportedly disclosed, Defendants cross-referenced Khan’s disclosures at issue, described 11 those disclosures, and explained how those disclosures, if true, plainly describe attorney-client 12 privileged communications. (Defendants’ Memorandum in Support of Their Motion to SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Disqualify (“Def. MPA”) at 2-3). Defendants also described how those disclosures relate to the 14 allegations of Plaintiff’s Complaint, as they concern the same subject matter of several of 15 Plaintiff’s allegations. (Def. MPA at 3). 16 Defendants’ identification of the purportedly privileged communications and confidential 17 information disclosed by Khan and Plaintiff alone rises above the level of “conclusory 18 statements” used to support Defendants’ Motion to Disqualify. Yet, Defendants offer additional 19 evidence in support of their motion. Defendants provided two declarations of Greenspan’s 20 Executive Vice President and General Counsel, Paul Migdal, as well as a declaration of Mark 21 Fratkin, about whom both Plaintiff and Khan make allegations in their respective Complaints. 22 (Cialone Dec. Exs. B-D). Although the allegations of Khan’s First Amended Complaint at issue 23 here appear privileged on their face, the declarations of Messrs. Migdal and Fratkin provide 24 additional evidentiary support for Defendants’ position that Greenspan reasonably believed its 25 communications with Khan were privileged. (Id.). Thus, Plaintiff’s argument that Defendants 26 relied on nothing more than conclusory allegations to support their Motion to Disqualify is 27 unavailing and should be disregarded. 28 -6- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 C. Peretz’s Knowledge Of Greenspan’s Privileged Communications Alone Justifies Disqualification Of Peretz. 2 3 Plaintiff mischaracterizes O’Gara Coach Co., LLC v. Ra, 30 Cal. App. 5th 1115 (2019) 4 when he argues that its holding is limited to situations in which an attorney-employee leaves a 5 company to join a law firm that then represents a client adverse to the company, and the attorney- 6 employee is not screened from the matter. Instead, O’Gara holds broadly that “if the holder of 7 the attorney-client privilege has not waived the privilege, lawyers representing an adverse party 8 who have received such information knowing it is privileged have an ethical duty not to use it. It 9 does not matter whether the information has been provided deliberately or inadvertently.” Id. at 10 1128. O’Gara further holds that when opposing counsel has privileged information belonging to 11 an adversary, itis not necessary “for the party seeking to protect its privileged information to 12 make an affirmative showing of existing injury from the misuse of the privileged information; the SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA threat of such use is sufficient to justify disqualification.” Id. at 1129. EIGHTEENTH FLOOR 13 14 While, in some situations, courts may be reluctant to disqualify attorneys who receive 15 confidential information about the opposing party from their own clients, the holding in Neal v. 16 Health Net, Inc., 100 Cal. App. 4th 831, 844 (2002) that “disclosure to one’s own attorney of 17 confidential information does not justify disqualification” is not without limitation. In Acacia 18 Patent Acquisition, LLC v. Superior Court, 234 Cal. App. 4th 1091 (2015), the Court of Appeal 19 held that Neal was inapplicable where it was undisputed that attorneys obtained an adversary’s 20 privileged information through their representation of the adversary’s former attorneys, thus 21 disqualification was appropriate. Id. at 1105, n.6, 1108. And Neal has no application to the 22 situation here, where Greenspan’s former attorney, Khan, is providing privileged information to 23 Plaintiff through the lawyers that represent them both, to be used by Plaintiff against Greenspan 24 There can be no dispute that Peretz acquired knowledge of Greenspan’s privileged 25 communications through its representation of Khan, Greenspan’s former attorney. Khan’s 26 purportedly privileged communications with Greenspan are apparent on the face of the First 27 Amended Complaint Peretz drafted for Khan. Under O’Gara and Acacia Patent Acquisition, 28 LLC, the threat that Peretz could use such privileged communications to Greenspan’s detriment is -7- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 sufficient to justify Peretz’s disqualification. This rule exists to prevent exactly what Peretz did - 2 improperly disclose an adversary’s privileged and confidential information. (KFAC ¶¶ 3, 6, 51, 3 53, 61, 125). Because Peretz did not screen the attorneys who improperly disclosed Greenspan’s 4 privileged information in the Khan lawsuit from this action, this Court should disqualify the entire 5 Peretz firm. O’Gara Coach Co., LLC, 30 Cal. App. 5th at 1131-32. 6 D. Grounds For Disqualification Exist Because Peretz Used And Publicly Disclosed Greenspan’s Purportedly Privileged Communications. 7 8 Plaintiff’s comparison of this case to Fox Searchlight Pictures, Inc. v. Paladino, 89 Cal. 9 App. 4th 294 (2001) (hereinafter “Fox”), is also inapposite. In Fox, the court affirmed a trial 10 court order denying Fox’s motion to disqualify the attorneys who represented Paladino, one of 11 Fox’s former in-house attorneys, in a suit by Paladino against Fox. Id. at 304. In Fox, however, 12 Paladino never filed suit against Fox, nor did she have an opportunity to use or publicly disclose SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Fox’s privileged information. Instead, Fox filed suit first, suing Paladino for disclosing 14 privileged information to her attorneys, then moved to disqualify those attorneys. Id. at 299-300. 15 Plaintiff and Khan, in contrast initiated their suits against Greenspan, and their attorneys, Peretz, 16 used and publicly disclosed that information before Greenspan moved to disqualify Peretz. 17 Plaintiff’s summary of Fox also omits a key holding that distinguishes that case from this 18 one. While the Fox court confirmed that there is no ban on litigation from a former in-house 19 attorney against that attorney’s former employer, the court added the important caveat that the 20 former in-house attorney may only bring such a suit “so long as she does not publicly disclose 21 information the employer is entitled to keep secret.” Id. at 304. Despite this prohibition, both 22 Plaintiff’s and Khan’s Complaints contain allegations that purport to disclose Greenspan’s 23 confidential and privileged communications and information (Complaint ¶¶ 44-48; FAC ¶¶ 48- 24 62; KFAC, ¶¶ 3, 6, 51, 53, 61, 125). Thus, as Greenspan noted in its Memorandum in Support of 25 its Motion to Disqualify, Peretz’s use and public disclosure of Greenspan’s privileged information 26 in two lawsuits against Greenspan justifies Peretz’s disqualification from this case. Fox at 304; 27 Rico v. Mitsubishi Motors Corp., 42 Cal. 4th 807, 819 (2007). 28 -8- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 E. Since Peretz’s Client, Khan, Had A Prior Attorney-Client Relationship With Greenspan, Disqualification Of Peretz is Appropriate. 2 3 Plaintiff incorrectly argues, citing Maruman Integrated Circuits, Inc. v. Consortium Co., 4 166 Cal. App. 3d 443 (1985) (hereinafter, “Maruman”), that disqualification of attorneys is 5 inappropriate unless there has been an attorney-client relationship between the complaining party 6 and the attorneys at issue. (Opp. at 9). In Maruman, the defendant corporation employed one of 7 plaintiff Maruman’s former non-attorney employees (G. Tipton Canty), an assistant to 8 Maruman’s corporate secretaries. Maruman, 166 Cal. App. 3d at 446. Maruman argued that the 9 defendant corporation’s attorneys should be disqualified because Canty communicated with 10 Maruman’s attorney while employed by Maruman and, after joining the defendant corporation, 11 Canty discussed those interactions with the defendant corporation’s attorneys. Id. 12 The Maruman court contrasted the facts of its case with the facts of Hull v. Celanese SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA Corp., 513 F.2d 568 (2d Cir. 1975). In Hull, an attorney (Hull) for Celanese left the employ of EIGHTEENTH FLOOR 13 14 Celanese and sought to assert a sex discrimination suit against Celanese. Maruman, 166 Cal. 15 App. 3d at 446 (citing Celanese, 513 F.2d at 569). The Hull court held that Hull’s counsel was 16 disqualified because, as Maruman describes it,“the court reasoned there was a possibility that 17 confidential information imparted by a defendant corporation to a former member of its legal staff 18 would be divulged.” Id. at 449 (citing Celanese, 513 F.2d at 572) (emphasis in original). The 19 Maruman court, however, declined to reach the same conclusion as Hull in its case because Canty 20 was not a former attorney for Maruman, thus “the facts critical to the Hull court’s decision [were] 21 absent in [Maruman].” Id. 22 This case is analogous to Hull rather than Maruman, as the facts critical to the Hull court’s 23 decision that were absent in Maruman are present here. As in Hull, one of Greenspan’s former 24 attorneys left its employ to assert various claims, including discrimination claims, against 25 Greenspan. In addition, the result feared in Hull, that privileged information imparted by a 26 defendant corporation (here, Greenspan) to a former member of its legal staff (here, Khan) would 27 be divulged, has occurred here. Indeed, both the allegations of Plaintiff’s and Khan’s complaints 28 purport to disclose Greenspan’s privileged communications and information. (Complaint ¶¶ 44- -9- Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 48; FAC ¶¶ 48-62; KFAC, ¶¶ 3, 6, 51, 53, 61, 125). Peretz, through Greenspan’s former counsel, 2 has purportedly acquired and publicly disclosed Greenspan’s attorney-client privileged 3 communications and confidential information. Thus, just as the Hull court disqualified the 4 plaintiff’s attorneys despite the lack of a prior attorney-client relationship between those attorneys 5 and the defendant, so too should this court disqualify Peretz from representing Plaintiff. 6 F. Plaintiff’s Right To Choose His Attorneys Must Yield To Greenspan’s Right To Preserve The Confidentiality Of Attorney-Client Privileged 7 Communications. 8 While client’s right to counsel of their choice is implicated when disqualification is at 9 issue, this right “must yield to consideration of ethics that run to the very integrity of our judicial 10 process.” In Re complex Asbestos Litigation, 232 Cal. App. 3d 572, 586 (1991). “Preserving 11 confidentiality of communications between attorney and client is fundamental to our legal 12 system.” Id. That Johnson claims he has independent knowledge of the facts underlying each of SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Khan’s purportedly privileged communications with Greenspan executives does not change the 14 fact that Peretz acquired knowledge of Greenspan’s privileged communications from Greenspan’s 15 former in-house attorney, nor does it change the fact that Peretz improperly disclosed such 16 purported communications and confidential information in two separate suits. As the preceding 17 sections outline, Johnson’s selection of Peretz as his counsel must yield to the fundamental ethical 18 consideration that Greenspan’s attorney-client privilege must be preserved. Johnson and Khan 19 cannot satisfy this consideration by waiving their conflicts with each other. Only Greenspan can 20 waive its attorney-client privilege, and it has not done so. 21 There is no evidence that Defendants are engaging in any tactical abuse by bringing their 22 Motion to Disqualify. As set forth in their Memorandum in Support of the Motion to Disqualify, 23 Defendants’ Motion to Disqualify is based on applicable legal principles. Likewise, it is not 24 tactical abuse to compel arbitration as to claims that are subject to an arbitration agreement, nor is 25 tactical abuse to threaten to bring a demurrer against a party, like Plaintiff, who files a deficient 26 Complaint. Peretz cannot use its representation of Greenspan’s former in-house attorney to 27 acquire and publicly disclose purportedly privileged communications on behalf of its clients, 28 including Johnson. Because Peretz has violated this rule, their disqualification is appropriate. - 10 - Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON 1 IV. CONCLUSION 2 For the foregoing reasons, Defendants respectfully request that this Court grant their 3 Motion to Disqualify Peretz & Associates as Counsel for Plaintiff Gary Johnson. 4 Dated: July 7, 2020 JACKSON LEWIS P.C. 5 /s/ Riley R. Moyer 6 By: RILEY R. MOYER 7 Attorneys for Defendants GREENSPAN ADJUSTERS INTERNATIONAL, INC., 8 ADJUSTERS INTERNATIONAL PACIFIC NORTHWEST, INC., GORDON SCOTT, III; 9 STEVE SEVERAID, PAUL MIGDAL, JAMES WARREN, CLAY GIBSON, DREW 10 LUCURELL, and CHRIS LUCURELL 11 Dated: July 7, 2020 SHARTSIS FRIESE LLP 12 SAN FRANCISCO, CA 94111-3598 /s/ Frank A. Cialone SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 By: FRANK A. CIALONE 14 Attorneys for Defendants GREENSPAN ADJUSTERS INTERNATIONAL, INC.; 15 ADJUSTERS INTERNATIONAL PACIFIC NORTHWEST, INC. 16 8721561 17 18 19 20 21 22 23 24 25 26 27 28 - 11 - Case No. REPLY ISO MTN TO DISQUALIFY PERETZ & ASSOCIATES CGC-20-583239 AS COUNSEL FOR PLAINTIFF GARY JOHNSON