DEAN D. PREGERSON, District Judge.
Plaintiff j2 Global Communications, Inc. has filed a Motion to Disqualify Counsel Perkins Coie and to Compel Discovery ("Motion") in three patent infringement cases ("the Three Current Cases") pending before this court. (Dkt. No. 77.)
In reaching its decision, the court has considered j2's in camera evidence, which includes billing records of the Attorney's work for j2, and various emails that the Attorney sent and received in the course of his j2 representation. (In Camera Evidence of Billing Records and Emails ("In Camera Evidence").)
The Attorney worked at Kenyon & Kenyon ("Kenyon") from 2002 to 2005, and began representing j2 as part of a team of attorneys in 2004. (Bernstein Decl. ¶¶ 4-5, Dkt. No. 77-2.) Crowell maintains that assigning the Attorney to Open Text was appropriate in part because he was only "a junior associate" when he represented j2. (Sacks Decl. Ex. F at 16, Dkt. No. 77-3.) Although the Attorney was an associate in 2004, by the end of that year he had many years of experience as a software engineer, studied graduate-level Computer Science, graduated cum laude from a reputable law school (where he served as Managing Editor of the Law Review), edited a publication about the International Trade Commission, co-authored another about patent litigation, and delivered a speech about international patent licensing. (Johnson Decl. Ex. 14, Dkt. No. 113.)
Crowell also asserts that the Attorney cleared its conflicts check because he allegedly told Crowell that "he did not recall having access to any confidential information," and his representation of j2 "involved primarily the review of publicly available patent documents." (Sacks Decl. Ex. B. at 6, Dkt. No. 77.)
The records before that court indicate that from 2004 until 2005 the Attorney represented j2 in patent litigation, and he billed j2 for 234.7 hours of work. (Id. ¶¶ 5-6; In Camera Evidence.) Based on the court's knowledge of law firm practices, 234.7 hours probably represents about ten percent of his billing over the roughly fifteen months that he worked on j2 matters. Specifically, the Attorney billed j2 69.8 hours for his work on j2 Global Communications, Inc. v. Venali, Inc. ("Venali"), 84.6 hours for j2 Global Communications, Inc. v. Call Wave, Inc. ("Call Wave") (collectively "the Prior Cases"), and 56 hours for "Bobo" patent analysis. (Bernstein Decl. ¶¶ 2, 6-7.)
In the Venali and Callwave actions, j2 alleged infringement of U.S. Patent Nos. 6,208,638 ("'638 Patent") and 6,350,066 ("'066 Patent"), and it also alleged infringement of U.S. Patent No. 6,597,688 ("'688 Patent") in the Venali case. (Bernstein Decl. ¶ 2.) A number of patents comprise the Bobo patents, and the '066 Patent is one of them. (Bernstein Decl. ¶ 7.) j2 alleges that the '638 and '688 Patents were infringed in each of the Three Current
The Attorney's billing records from Kenyon indicate he was involved in the following tasks on behalf of j2: "reviewing claim charts, performing infringement analyses, searching for and analyzing prior art, drafting a validity opinion, analyzing documents for a settlement conference, reviewing and commenting on draft pleading, discussing discovery strategies, drafting discovery requests and responses, and drafting j2's opposition to a summary judgment motion in the Venali action." (Bernstein Decl. ¶ 6; In Camera Evidence.) The Attorney sent, received (sometimes directly, sometimes by forwarding), or was copied on over 120 emails to or from j2's General Counsel. (Bernstein Decl. ¶ 9; In Camera Evidence.) These emails were sent to about seven or eight individuals, and sometimes involved evaluations of j2's cases. (In Camera Evidence.) One email the Attorney received analyzed possible infringement defenses. (Bernstein Decl. ¶ 12; In Camera Evidence.) That email discussed Dr. David Farber ("Dr. Farber"), and whether his activities are relevant to an on-sale bar defense.
j2 filed two of the Three Current Cases on June 26, 2008, and the other on May 17, 2011.
The Attorney is now Counsel at Crowell. (Johnson Decl. Ex. 14.) In 2011, Open Text began searching for an in-house attorney to work on "intellectual property and patent matters," but was "unable to fill the role even as Open Text's intellectual property and patent needs grew." (Davies Decl. ¶ 6.) It asked Crowell to provide an attorney who could temporarily assume this position until a permanent candidate was selected. (Id.) As discussed, Crowell assigned the Attorney to fill this role, even though it knew that he previously represented j2 (Id. ¶ 9; Sacks Decl. Ex. B at 6.)
j2 was never asked to sign a conflict waiver, allowing the Attorney to work for Open Text. (Bernstein Decl. ¶ 13.) Perkins likewise knew nothing about the Attorney's prior involvement with j2. (See Parker Decl. ¶ 4, Dkt. No. 103; Carroll Decl. ¶ 24.)
The Attorney told Open Text's General Counsel that while he was at Kenyon he "performed a public art search relating to a Bobo patent," and the General Counsel states that he "did not understand this to mean that [the Attorney] had worked for j2." (Parker Decl. ¶ 4.)
In his role with Open Text, the Attorney met with Perkins on a number of occasions. (Id. ¶ 6.) Crowell has described the Attorney's work for Open Text as follows:
(Sacks Decl. Ex. F. at 16, Dkt. No. 77.) j2 learned of the Attorney's role at Open Text on July 27, 2012, during the deposition of Dr. Farber, when he introduced himself as Open Text's "outside in-house counsel" to one of j2's attorneys at Kenyon (Bernstein Decl. ¶ 13.) At the Farber deposition, j2's attorney announced that the Attorney used to be an associate at Kenyon, and that he would check whether the Attorney worked on j2 patent matters. (Carroll Decl. ¶ 30.) The next week, j2's attorney informed Perkins and Open Text that the Attorney had worked for j2. (Id.)
Two events followed the Farber deposition, but it is unclear which occurred first. The Attorney met with EasyLink's counsel of record at the time, King & Spaulding, "where we [King & Spalding] presented to [the Attorney] our evaluation of the litigation." (Sacks Decl. Ex. J at 32.)
There are five issues: (1) Whether California law governs; (2) Whether the court should presume the Attorney learned confidential
Regarding the first issue, California law governs. In re County of Los Angeles, 223 F.3d 990, 995 (9th Cir.2000). As to the second through fifth, the California Supreme Court has stated the following:
City & County of San Francisco v. Cobra Solutions, Inc., 38 Cal.4th 839, 847-48, 43 Cal.Rptr.3d 771, 135 P.3d 20 (2006) (internal citations and quotation marks omitted). The facts in this Motion are not typical of disqualification motions generally because the Attorney worked as Open Text's outside in-house counsel, not as a Perkins attorney. However, the court holds the above-quoted rule applies here. The Attorney's prior representation involved three of the four patents at issue in the Three Current Cases, as well as an on-sale bar defense related to Dr. Farber's activities. The prior representation is, thus, substantially similar to the Three Current Cases. Because the Attorney was outside in-house counsel for Open Text on IP matters, and because of his contact with Perkins, Perkins must be disqualified.
Defendants argue that while federal courts in California look to California law in deciding a disqualification motion, state law does not bind them in the way that a diversity case would, because federal courts are governed by their own rules of professional conduct. (Defendant's Opposition to Plaintiffs' Motion to Disqualify ("Opp'n") at 12:26-13:7, Dkt. No. 97.) The Ninth Circuit, however, has made clear that a federal court in California must apply California law in a disqualification motion. In re County of Los Angeles, 223 F.3d at 995 ("[W]e apply state law in determining matters of disqualification.").
Defendants' argument relies principally on a footnote from an unpublished Northern
It is presumed that an attorney has relevant confidential information about a client if there is a substantial relationship between the prior representation and the current one. Cobra Solutions, 38 Cal.4th at 847, 43 Cal.Rptr.3d 771, 135 P.3d 20. In determining whether there is substantial relationship, the court should first analyze whether there was a direct relationship between an attorney and the former client, and whether that relationship touched issues related to the present litigation. Id. Courts emphasize shared communications in determining whether there was a direct relationship. See e.g. Farhang v. Indian Inst. of Tech., No. C-08-02658RMW, 2009 WL 3459455, at *2 (N.D.Cal. Oct. 27, 2009). During the Attorney's time representing j2, he and j2's General Counsel were part of a group of about seven or eight attorneys that regularly sent emails to each other. (Bernstein Decl. ¶ 9; In Camera Evidence.) In total the Attorney and j2's General Counsel were parties to over 120 emails. (Id.) One email concerned Dr. Farber, and his relevance to an on-sale bar defense, which is also at issue in the Three Current cases. (In Camera Evidence.) Many of these emails focused on the Prior Cases, where three of the four patents currently at issue were litigated. (Id.) Some of the emails relating to the Prior Cases shared drafts of papers that would later be filed with the court, and others assessed the strength of j2's cases. (Id.) In light of these exchanges, the court finds that a direct relationship between the Attorney and the client existed.
When an attorney had direct contact with a client, a substantial relationship exists if "the subject of the prior representation put the attorney in a position in which confidences material to the current representation would normally have been imparted to counsel." Cobra Solutions, 38 Cal.4th at 847, 43 Cal.Rptr.3d 771, 135 P.3d 20. The substantial relationship test is "necessarily fact-dependant." UMG Recordings, Inc. v. MySpace, Inc., 526 F.Supp.2d 1046, 1060 (C.D.Cal.2007). Courts look to the degree of overlap in "subject-matters, facts or issues" to determine whether there is a substantial relationship. See id. (quoting H.F. Ahmanson & Co. v. Salomon Brothers, Inc., 229 Cal.App.3d 1445, 1453, 280 Cal.Rptr. 614 (1991)). Subject matter similarity is the most important. Jessen v. Hartford Cas. Ins. Co., 111 Cal.App.4th 698, 711, 3 Cal.Rptr.3d 877 (2003) (suggesting that the California Supreme Court has decided that "a `substantial relationship' exists whenever the `subjects' of the prior and the current representations are linked in some rational manner") (citing Flatt v. Superior Court, 9 Cal.4th 275, 283, 36 Cal.Rptr.2d 537, 885 P.2d 950 (1994)). A "subject" is "broader ... than the discrete legal and factual issues involved in the compared representations," as it includes "information material to the evaluation, prosecution,
Defendants argue that there is no substantial relationship because the Three Current Cases "involve different defendants, claims and evidence," and they emphasize that "[i]n the intervening years between [the Attorney's j2 representation and his representation of Open Text], the patents have been reexamined by the PTO and their claims have been substantially altered." (Opp'n at 22:7-10.) It is true that the patents have been altered, but to different degrees. (See Opp'n 10:13-21 (claiming the reexamination process required "extensive changes to the '066 patent" and "significant changes to the '638 patent," but not noting any level of change in the '688 patent); see also Carmody Decl. ¶¶ 16-18 (describing the changes similarly).)
More importantly, nothing requires the court to extensively analyze the patents' modifications, nor to do an in-depth comparison of the products. To the contrary, a rational link between the subject matter of the two cases will suffice. Jessen, 111 Cal.App.4th at 711, 3 Cal.Rptr.3d 877 (2003); Knight v. Ferguson, 149 Cal.App.4th 1207, 1213, 57 Cal.Rptr.3d 823 (2007).
Additionally, the on-sale bar defense was at issue in the cases the Attorney worked on as j2's attorney, and as j2's attorney he received an email evaluating Dr. Farber's relevance to this defense. (In Camera Evidence.) Dr. Farber's activities are relevant to a possible on-sale bar defense in the Three Current Cases, as well. (See Answer at 10:24-15:5.) In fact, j2 learned of the Attorney's work with Open Text in the Three Current Cases, when he attended Dr. Farber's deposition. (Bernstein Decl. ¶ 13.) In disputing Dr. Farber's importance to the disqualification analysis, Defendants argue that they knew about him, along with his import to an on-sale bar defense, before the Attorney became involved with Open Text. (Opp'n at 8:6-11; Carmody Decl. ¶¶ 9-12; Bellows Decl. ¶ 2, Dkt. No. 104.) However, the Attorney still could have provided additional useful to Perkins concerning Dr. Farber. Because the Prior Cases are substantially related to the Three Current Cases the court presumes that the Attorney possessed confidential information. See Cobra Solutions, 38 Cal.4th at 847-48, 43 Cal.Rptr.3d 771, 135 P.3d 20.
At times, Defendants refer to the Attorney as a "junior associate," and assert that there is a "lack of evidence" about both the "nature of the work" he did for j2 and whether he acquired confidential information about j2. (Defendants' Supplemental Brief in Support of Defendant's Opposition to j2's Motion to Disqualify Perkins Coie and Compel Discovery ("Supp. Opp'n.") at 10:22-11:5, Dkt. No.
Regardless, both the Attorney's professional experience and the extent of his work for j2 were significant. At the time he was representing j2, he had authored and edited publications about intellectual property, done graduate work in computer science, and worked for many years as a software engineer. (Johnson Decl. Ex. 14). Additionally, in camera evidence shows that his work in the Prior Cases included: "reviewing claim charts, performing infringement analyses, [reviewing] prior art ... analyzing documents for a settlement conference, reviewing and commenting on draft pleading, discussing discovery strategies, drafting discovery requests and responses, and drafting j2's opposition to a summary judgment motion..." (Bernstein Decl. ¶ 6; In Camera Evidence.) In some of this work, such as discussing discovery strategies and participating in the creation and editing of motions and pleadings, the likelihood that he learned confidential information is readily apparent. In others, such as reviewing prior art, the risk may seem less likely. However, confidential information may guide prior art reviews — such as an instruction from a partner or client about the weaknesses of certain features.
The general rule is that presuming an attorney possesses confidential information requires presuming the same for his law firm ("the Vicarious Presumption Rule"). See People ex rel. Dept. of Corporations v. SpeeDee Oil Change Sys., Inc., 20 Cal.4th 1135, 1146, 86 Cal.Rptr.2d 816, 980 P.2d 371 (1999) (ruling that "a presumption that an attorney has access to privileged and confidential matters relevant to a subsequent representation extends the attorney's disqualification vicariously to the attorney's entire firm"); see id. at 1153-54, 86 Cal.Rptr.2d 816, 980 P.2d 371 (explaining that, "[t]he vicarious disqualification rule recognizes the everyday reality that attorneys, working together and practicing law in a professional association, share each other's, and their clients', confidential information"). The Attorney, however, does not work at Perkins. Rather, he was outside in-house counsel for Open Text on intellectual property matters. (Davies Decl. ¶¶ 6, 9; Bernstein Decl. ¶ 13.) This court is not aware of any case analyzing whether the Vicarious Presumption Rule applies to such a situation. However, some cases have analyzed whether presuming an attorney at one law firm has confidential information requires making the same presumption about another firm that is co-counsel with the tainted attorney. These cases come out different ways, but the cases applying the Vicarious Presumption Rule to co-counsel have the better argument.
Three Northern District of California cases suggest that presuming co-counsel possesses confidential information is inappropriate. In re Airport Car Rental Antitrust Litig., 470 F.Supp. 495, 506 (N.D.Cal. 1979); see also Canatella v. Krieg, Keller, Sloan, Reilley & Roman LLP, No. C 11-05535 WHA, 2012 WL 847493, at *2 (N.D.Cal. Mar. 13, 2012) (making no mention of a presumption, and relying on Airport Car Rental to suggest that a multi-factor analysis is required to determine whether co-counsel has confidential information); Oracle Am., Inc. v. Innovative Tech. Distributors, LLC, No. 11-CV-01043-LHK,
This court concludes that the Vicarious Presumption Rule should be applied here (i.e., that it should be presumed that Perkins has relevant confidential information about j2.) The three Northern District cases that did not apply the Vicarious Presumption Rule to co-counsel are not persuasive. They do not consider applicable California law. Oracle and Canatella rely heavily on Airport Car, which was decided in 1979. Canatella, 2012 WL 847493, at *2, Oracle, 2011 WL 2940313, at *5. It seems neither Oracle nor Canatella considered Pound, a California appellate case that presumed co-counsel possessed the tainted attorney's confidential information. Pound, 135 Cal.App.4th 70, 77, 36 Cal.Rptr.3d 922 (2005). And Pound does not appear to have been briefed in either case. (Johnson Decl. Exs. 6-11.) Canatella even incorrectly declares that on "the issue of disqualification of co-counsel ... no California ... cases [are] directly on point." Canatella, 2012 WL 847493, at *2. Additionally, California courts have generally ignored these three cases. Airport Car is the only one cited in any California opinion, and a single case from 1980 is the only one that cites its holding approvingly. Chadwick v. Superior Court, 106 Cal.App.3d 108, 117 n. 9, 164 Cal.Rptr. 864 (1980).
More importantly, the reasoning behind the Vicarious Presumption Rule indicates that it should also be applied against Perkins: "Normally, an attorney's conflict is imputed to the law firm as a whole on the rationale that attorneys, working together and practicing law in a professional association, share each other's, and their clients', confidential information." Cobra Solutions, 38 Cal.4th at 847-48, 43 Cal.Rptr.3d 771, 135 P.3d 20. (internal quotation marks omitted.) The Attorney served as Open Text's outside in-house counsel for intellectual property matters, and the Three Current Cases are high-stakes, complex patent matters. The importance of in-house counsel effectively cooperating, coordinating, and communicating with their company's attorneys is self-evident.
Defendants' argument that the Attorney "played a limited role" in the Three Current Cases is unavailing. (Carroll Decl. ¶ 25.) It is probably a stretch to characterize Open Text's outside in-house counsel for intellectual property matters — an experienced attorney who was also Counsel at Crowell — as playing an inconsequential role in three major patent cases. Leaving that concern aside, though, cases do not analyze how much work a tainted attorney performed in the cases for which disqualification is sought. See Pound, 135 Cal. App.4th at 74, 36 Cal.Rptr.3d 922 (disqualifying plaintiff's firm after it and the tainted outside counsel "briefly discussed the case" and met with plaintiffs "a few times.") Under the Vicarious Presumption Rule, once an attorney is presumed to have confidential information, her law firm is presumed to have it, too. Cobra Solutions,
Once there is a presumption that a firm possesses confidential information, generally that presumption is irrebutable and disqualification is compelled. As the California Supreme Court has said:
Flatt, 9 Cal.4th at 283, 36 Cal.Rptr.2d 537, 885 P.2d 950 (emphasis in original); see generally Pound, 135 Cal.App.4th 70, 36 Cal.Rptr.3d 922 (applying mandatory disqualification rule to law firm with tainted co-counsel); In re County of Los Angeles, 223 F.3d at 995 (noting that "[t]he [California] courts of appeal developed a general rule that the presumption is not rebuttable").
However, in one case the California Supreme Court held that it "need not consider whether an attorney can rebut a presumption of shared confidences, and avoid disqualification, by establishing that the firm imposed effective screening procedures." SpeeDee Oil, 20 Cal.4th at 1151, 86 Cal.Rptr.2d 816, 980 P.2d 371; see also In re County of Los Angeles, 223 F.3d at 997 (interpreting SpeeDee Oil as suggesting that the California Supreme Court "may be inclined" to allow law firms to erect ethical walls to avoid disqualification); but see Beltran, 867 F.Supp.2d 1068, 1083 (C.D.Cal.2012) (doubting that ethical screening can prevent disqualification); MySpace, 526 F.Supp.2d at 1061 (questioning the same). At least one California appellate court has decided that a law firm's ethical screening permitted it to attempt rebutting the presumption. Kirk v. First Am. Title Ins. Co., 183 Cal.App.4th 776, 801, 108 Cal.Rptr.3d 620 (2010) (holding that disqualification is the "general rule," and that courts "should presume knowledge is imputed to all members of a tainted attorney's law firm," but that "in the proper circumstances, the presumption is a rebuttable one, which can be refuted by evidence that ethical screening will effectively prevent the sharing of confidences in a particular case") (emphasis in original).
In the Three Current Cases, the Attorney was not screened until after Dr. Farber's deposition, approximately eight months after he began serving as Open Text's outside in-house counsel. (See Parker Decl. ¶¶ 4-5.) Since Perkins was unaware of the Attorney's conflict, it did not initiate a timely screen. See Kirk, 183 Cal.App.4th at 810 n. 31, 108 Cal.Rptr.3d 620 (suggesting that the ethical wall must
Defendants argue that the court should fashion a remedy less drastic than disqualification. (Supp. Opp'n at 8:17-10:10, Dkt. No. 122.) The leading case on point for this issue held:
MySpace, Inc., 526 F.Supp.2d at 1063 (citation omitted). MySpace, however, involved very different facts. That case concerned a law firm that obtained a conflict waiver from its former client, enacted an ethical wall around the attorneys who worked for the prior client before engaging in work for the current client, and whose current client waived the affirmative defense that triggered the conflict — an affirmative defense that was "collateral to what this case is about." Id. at 1063-65. None of these factors are present here.
Perkins is disqualified. The court denies the request for further discovery, because the order disqualifies Perkins, screens Open Text's General Counsel, Douglas Parker, and screens all in-house attorneys who substantively discussed the Three Current Cases with the Attorney. (See Parker Decl. ¶ 6 (attesting to having been "a participant in many of the instances in which [the Attorney] had an opportunity to communicate with and interact with attorneys from Perkins Coie")).
The court finds that none of Perkins' attorneys had knowledge of the Attorney's prior j2 representation. Indeed, during oral argument the court characterized Perkins as a victim of Crowell's inexplicable decision to approve the Attorney to work for Open Text. The court affirms Perkins' innocence in this matter, and appreciate the professionalism its attorneys have exhibited. Perkins' innocence though, does not prevent its disqualification. Motions to disqualify are not about punishing guilty parties. Kirk, 183 Cal. App.4th at 815, 108 Cal.Rptr.3d 620. They are primarily about "preserv[ing] public trust in the scrupulous administration of justice and the integrity of the bar." SpeeDee Oil, 20 Cal.4th at 1145, 86 Cal.Rptr.2d 816, 980 P.2d 371.
The Motion is GRANTED as to disqualifying Perkins, but is DENIED as to compelling discovery. Accordingly, IT IS HEREBY ORDERED:
1) Perkins is disqualified from representing Defendants in this litigation. Defendants shall have until January 11, 2013, to retain successor counsel and have such counsel appear in the action.
2) In connection with the transition to new counsel, Perkins shall have no further
3) Defendants shall immediately screen from further participation in this action Douglas Parker. Any other internal counsel or external counsel need not be screened, provided they submit a declaration signed under penalty of perjury, attesting that they have not had substantive communications with the Attorney or with any one else whom they reasonably believe may have received information from the Attorney concerning this action. By January 11, 2013, Defendants shall provide j2 and the court with both a list identifying all persons in addition to Mr. Parker who have been screened and the required affidavits.
4) Successor counsel shall not communicate with Crowell, Perkins, Douglas Parker, the Attorney, any screened person, or any other person, who had communications with the Attorney about any matter related to this action.
5) Defendants shall reimburse j2's reasonable attorneys' fees and costs incurred in connection with the Motion. By January 11, 2013, j2 shall submit to Defendants a statement identifying the amount of such fees, together with a breakdown, by attorney, of the amount of time spent on such matters. The parties shall make every effort to resolve any fee dispute without court action.
Nothing contained herein is intended to prevent any party, person, or firm from communicating about ministerial or logistical issues required to transition to new counsel. Nothing contained herein is intended to preclude the parties or attorneys from stipulating to additional exceptions to this order in connection with any collateral dispute.
IT IS SO ORDERED.