ORDER DENYING MOTION FOR RECONSIDERATION AND DISCUSSING DISQUALIFICATION

Andrew J. Guilford, United States District Judge.

This matter concerns whether a lawyer can represent — at the same time, in the same litigation, in the same courthouse — a criminal and his victim.

Being a defendant — particularly a criminal one — can be lonely. As a society, we don't require a defendant's friends to stand by the defendant. We don't require a defendant's parents to stand by the defendant. We don't require a defendant's children to stand by the defendant. We don't even require a defendant's spouse to stand by the defendant, though that spouse is often someone who took an oath to do so.

But a lawyer is different. Representing a client creates an unshakable loyalty that can still persist when bonds of friendship and family fail. There's a practical reason for this. A lawyer needs to know the worst facts to give clients the best advice. Clients can't feel comfortable providing such candor unless they know their lawyer is absolutely committed to advancing the clients' interests and advocating against the conflicting interests of others. Though the rest of the world may be united against them, clients need to know that at least their lawyer will reliably remain in their corner, even in the face of great temptation.

The importance and impact of loyalty in the attorney-client relationship extends beyond the client and counsel, to courts too. Judges are often confronted with important issues and difficult disputes. Under our system of law, judges rely on adversarial advocates to help ensure that courts reach the right results in these situations. Adversarial advocacy assumes that lawyers are fiercely loyal in representing their clients. If that loyalty doesn't exist, the engine of our legal system can't run. Justice can't be administered.

And the importance and impact of loyalty in the attorney-client relationship extends even further — beyond clients, beyond counsel, beyond courts — to our country itself. We live in a nation governed by the rule of law. We've constructed a powerful government to administer that law — a government that can deprive a person of property, liberty, and even life. But unlike governments of men, which depend on might, our government of law ultimately depends on the consent of the governed for its continued existence. The public must trust that the government and the legal system that undergirds it are fair and just. Lawyers serve as both stewards and servants of that trust. Since well before the law was an industry, our society looked to the profession to safeguard a complex system that keeps our country going. When the loyalty of a lawyer to a lawyers' clients comes into question, the public can lose faith in both the justice system and the bar that purportedly protects it. So while maintaining private confidences, a lawyer must sustain the public's confidence. In this way a lawyer leads two lives, both bound by loyalty.

Given all this, it's easy to see why a lawyer's duty of loyalty is a duty recognized in the common law of every jurisdiction of the United States. It's easy to see why a lawyer's duty of loyalty is codified in every significant American code of legal ethics ever promulgated. It's easy to see why a lawyer's duty of loyalty is the most fundamental of all duties a lawyer owes a client. And it's easy to see why so much is endangered when a lawyer lets opportunity affect that loyalty.

This matter presents a uniquely complex situation that requires the extensive review that follows. That review conclusively reaffirms what might otherwise be considered a commonsense proposition. That is, the duty of loyalty is improperly and impermissibly compromised when one law firm represents — at the same time, in the same litigation, in the same courthouse — a criminal and his victim. That's what happened here, and if the Court had allowed it to continue, loyalty would have been lost in ways that the client would not — and sometimes could not — understand until after harm had been done. Thus, there could be no informed waiver.

1. INTRODUCTION

Defendants stand accused of conspiring to defraud plaintiff State Compensation Insurance Fund ("SCIF") by submitting fraudulent insurance bills and providing or receiving illegal kickbacks. The litigation arising out of this purported scheme involves dozens of defendants, two civil suits and a criminal suit, and well over a thousand filings spanning three years and three dockets.

The most recent round of motion practice focused on the question already posed about whether here a law firm could represent a criminal and his victim. Since the answer was no, on March 22, 2016, the Court granted a motion for disqualification ("Motion for Disqualification") filed by defendants Lokesh Tantuwaya and Dr. Lokesh Tantuwaya, M.D., Inc. (collectively, "Tantuwaya"). The Court disqualified the law firm of Hueston Hennigan LLP from representing SCIF (the alleged victim) in this litigation given its concurrent representation of Paul Randall (an admitted criminal perpetrator). SCIF filed a motion for reconsideration ("Motion for Reconsideration").

The Court DENIES the Motion for Reconsideration. The previous disqualification remains, and the previous tentative opinion is expanded here to further explain why disqualification is required.

2. BACKGROUND

A review of the relevant law is, of course, necessary and helpful. But before discussing the applicable legal standards, it's important to understand that this litigation is uniquely complex in ways that may limit the applicability of some case law, particularly since one client here has the Sixth Amendment right to counsel for those facing criminal charges. Cases like this are reassuringly rare. Here's a summary.

2.1 The Civil Side of this Litigation

SCIF provides California employers with workers' compensation insurance policies. Under those policies, SCIF reimburses medical providers that treat employees who get sick or injured on the job. According to SCIF, various medical providers — including doctors, clinics, and marketers — schemed to defraud SCIF by submitting fraudulent insurance bills for medical services, medical hardware, and medications. There were several components to the alleged scheme. Medical providers allegedly entered into contracts to inflate the costs of medical procedures and medications. Medical providers allegedly paid kickbacks to doctors for referring patients to preferred facilities or for using preferred products or medications. Medical providers allegedly entered into illegal fee-sharing agreements. And medical providers allegedly overbilled SCIF for medical services.

In June 2013, SCIF filed a lawsuit ("SCIF 1") against a key architect of the alleged scheme, Michael D. Drobot Sr., as well as other alleged co-conspirators. In March 2015, those defendants filed a third-party complaint seeking indemnity from other medical providers, including various doctors and their associated entities. In July 2015, the Court granted SCIF leave to file an amended complaint that named as defendants the parties who were already named as third-party defendants in the third-party complaint. Accordingly, in its third amended complaint ("TAC"), SCIF added twenty-eight of the third-party defendants. But notably, SCIF didn't add Randall, even though Randall was named as a third-party defendant in the third-party complaint.

In August 2015, SCIF filed another lawsuit ("SCIF 2") raising similar allegations against other medical providers that the Court didn't allow SCIF to add in SCIF 1. Again, notably, SCIF didn't add Randall as a defendant.

Let's summarize. By the end of August 2015, there were two operative complaints — the TAC in SCIF 1 and the complaint in SCIF 2. In SCIF 1, there was also an amended action for equitable indemnity ("CC/FATPC") between the cross-defendants and four other third-party defendants not named in the TAC. Notably, Randall is a defendant in the CC/FATPC.

In November 2015, the Court heard motions to dismiss the TAC and CC/FATPC in SCIF 1, a motion for summary judgment in SCIF 2, and motions to dismiss the complaint in SCIF 2. In December 2015, the Court denied those motions.

2.2 The Criminal Side of this Litigation

Federal prosecutors were also involved in the litigation arising out of the alleged fraudulent scheme, even before they filed motions to intervene in SCIF 1 and SCIF 2. In April 2014, Drobot Sr. pled guilty to workers' compensation fraud against SCIF and others. In November 2015, the U.S. Department of Justice announced that the government had charged five other individuals in the same kickback scheme. According to the government's press release, all five criminal defendants were cooperating in the government's ongoing investigation of the scheme, dubbed "Operational Spinal Cap." The government's press release stated that

Randall was charged for his involvement in that scheme. As the government's press release states,

Randall hasn't been sentenced yet.

In January 2016, the United States moved to intervene in SCIF 1 and SCIF 2 to modify several subpoenas and restrict discovery requests. The Court granted the motions with modifications, noting the three cases' overlap and the "countless ways" certain civil discovery requests could thwart the government's ongoing criminal investigation into the fraud. The Court was also persuaded that some of the information defendants sought was protected by the law enforcement privilege.

2.3 The First Motion to Disqualify

Back in July 2014, the Court denied a motion to disqualify Plaintiff's counsel — at the time, the law firm Irell & Manella LLP — filed by pharmacy defendants. Between May 2010 and June 2011, an Irell & Manella partner exchanged over a hundred emails with Michael R. Drobot Jr., a current defendant. The partner had advised Drobot Jr. about buying three pharmacy defendants from Drobot Sr., who is his father and a current defendant. In June 2013 — two years after the partner left Irell & Manella — Irell & Manella agreed to represent the current plaintiff, SCIF. The firm did not have knowledge of the former partner's emails or the conflict. In a nine-teen page order, the Court denied the motion to disqualify Irell & Manella because there wasn't enough evidence to show that confidential information was conveyed to the firm. The Court stated that the motion posed a "close question," but ultimately held that disqualification was inappropriate.

2.4 The Second Motion to Disqualify

The most recent motion to disqualify also sought to disqualify Plaintiff's counsel — at the time, Hueston Hennigan LLP. Although the firm name had changed, SCIF's attorneys hadn't. In January 2015, John Hueston and Brian Hennigan, along with thirty or so other lawyers, left Irell & Manella to form Hueston Hennigan. There Hueston and other lawyers continued to represent SCIF. During a December 2015 mediation session, Tantuwaya's counsel learned that Hennigan represented Randall, one of the third-party defendants in SCIF 1, perhaps beginning as early as 2010 or 2011. This conflict only came to light after Judge Staton unsealed Randall's criminal case in late November 2015. Hennigan has maintained that he only represented Randall in his criminal case, and not in the civil cases before this Court. According to Hennigan, attorney Anthony Graham of Graham & Martin LLP has been representing Randall in the civil cases.

Tantuwaya filed the most recent motion for disqualification based on Hueston Hennigan's concurrent representation of Randall and SCIF. Before filing the motion, Tantuwaya and SCIF met and conferred through each party's counsel. During that meeting, SCIF threatened to seek sanctions against Tantuwaya's counsel for filing the motion. SCIF did not mention that it had gotten conflict waivers from both Randall and SCIF. A few defendants joined the motion. Many other defendants represented by larger law firms did not.

The gist of Tantuwaya's motion was straightforward. He pointed out that Hueston Hennigan was representing SCIF, the victim of a fraud, and Randall, a perpetrator of that fraud, at the same time in the same litigation arising out of the same fraud. He argued that this representation created conflicts of interest that required the Court to disqualify Hueston Hennigan from representing SCIF.

The Court considered everything the parties submitted, including not only the motion, opposition, and reply, but also surreplies, sur-sur-replies, supplemental declarations, and other typically-disallowed documents that the Court allowed the parties to file. Based on those filings and before the hearing on the motion for disqualification, the Court issued a detailed, nineteen page tentative opinion for the parties' benefit. The Court then provided the parties more than ninety minutes of oral argument to address the tentative. SCIF argued for much, and perhaps a majority, of that time.

After reviewing all that, the Court issued a short order granting the motion to disqualify. Stating the obvious, this inherently meant that the Court denied SCIF's request for sanctions against Tantuwaya's counsel. The Court promised the parties that it would issue a longer opinion further explaining the decision to disqualify. This is that opinion.

2.5 The Motion for Reconsideration

SCIF then filed the Motion for Reconsideration, which precipitated another round of papers and another lengthy hearing, this one spilling over from the morning into the afternoon.

That brings us to the present. After considering about a thousand pages of documents and more than four hours of oral argument on this disqualification issue, the Court confirms that disqualification was appropriate and necessary here, while finding no grounds for the Motion for Reconsideration.

3. THE SECOND MOTION TO DISQUALIFY

3.1 Legal Standard

"The authority of a trial court to disqualify an attorney derives from the power inherent in every court to control in furtherance of justice, the conduct of its ministerial officers." City & Cty. of San Francisco v. Cobra Sols., Inc., 38 Cal.4th 839, 846, 43 Cal.Rptr.3d 771, 135 P.3d 20 (2006) (alteration and internal quotation marks omitted) (quoting People ex rel. Dep't of Corps. v. SpeeDee Oil Change Sys., Inc., 20 Cal.4th 1135, 1139, 86 Cal.Rptr.2d 816, 980 P.2d 371 (1999)). California's ethical rules, including applicable California state court decisions and the Rules of Professional Conduct of the State Bar of California, provide guidance about when courts should disqualify attorneys. See L.R. 83-3.1.2. But "it is relatively unimportant whether the status or misconduct claimed to warrant disqualification is proscribed by a particular ethical norm or disciplinary rule or may be characterized [instead] as a failure to avoid the appearance of impropriety." Gregori v. Bank of Am., 207 Cal.App.3d 291, 308, 254 Cal.Rptr. 853 (1989), modified (Feb. 17, 1989).

Although there are competing interests to consider when disqualification is at issue, one interest arises above all others. "[D]isqualification motions involve a conflict between the clients' right to counsel of their choice and the need to maintain ethical standards of professional responsibility." SpeeDee Oil, 20 Cal.4th at 1145, 86 Cal.Rptr.2d 816, 980 P.2d 371. But "[t]he paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar." Id. Accordingly, "[t]he important right to counsel of one's choice must yield to ethical considerations that affect the fundamental principles of our judicial process." Id.

3.2 Analysis

This Court must exercise its inherent power in furtherance of justice in part to protect important duties like loyalty, and to avoid the appearance of impropriety.

As noted, loyalty means a lot for litigants, their lawyers and the law generally. "Attorneys have a duty to maintain undivided loyalty to their clients to avoid undermining public confidence in the legal profession and the judicial process. The effective functioning of the fiduciary relationship between attorney and client depends on the client's trust and confidence in counsel." Id. at 1146, 86 Cal.Rptr.2d 816, 980 P.2d 371 (citation omitted).

So it's not surprising that a lawyer's unfaithfulness is unacceptable. California's ethics rules generally bar an attorney from representing clients with adverse interests. See Cal. Rules of Prof'l Conduct 3-310(C). That general rule is true regardless of whether there's an actual or merely potential conflict between the clients. See id.

Loyalty is a particularly important consideration when a lawyer is thinking of concurrently representing clients with adverse interests. Concurrent representation of clients with adverse interests raises different, and arguably more serious, ethics concerns than successive representation. See Ontiveros v. Constable, 245 Cal.App.4th 686, 700, 199 Cal.Rptr.3d 836 (2016).

This is true even when the attorney is concurrently representing the clients in unrelated matters. That's why the California Supreme Court held in Flatt v. Superior Court that

Flatt v. Superior Court, 9 Cal.4th 275, 284, 36 Cal.Rptr.2d 537, 885 P.2d 950 (1994) (footnote omitted). "[R]epresentation adverse to a present client must be measured not so much against the similarities in litigation, as against the duty of undivided loyalty which an attorney owes to each of his clients." Unified Sewerage Agency of Wash. Cty., Or. v. Jelco Inc., 646 F.2d 1339, 1345 (9th Cir.1981) (discussing concurrent representation under the old ABA Code of Professional Responsibility).

But if the representations do happen to have something in common, concurrent representation is even less appropriate. In another case, the California Supreme Court remarked that

SpeeDee Oil, 20 Cal.4th at 1147, 86 Cal.Rptr.2d 816, 980 P.2d 371 (citing Flatt, 9 Cal.4th at 284 n. 3, 36 Cal.Rptr.2d 537, 885 P.2d 950). It is "patently improper" for "attorneys in the same firm to represent adverse parties in the same litigation." Id. at 1139, 86 Cal.Rptr.2d 816, 980 P.2d 371 (citing Flatt, 9 Cal.4th at 284 n. 3, 36 Cal.Rptr.2d 537, 885 P.2d 950). In these situations, courts don't typically analyze whether the representations are substantially related, as disqualification is automatic for a concurrent conflict of interest even on "wholly unrelated" matters. See Flatt, 9 Cal.4th at 283, 36 Cal.Rptr.2d 537, 885 P.2d 950.

With these considerations in mind, the Court analyzed how this actual, adverse, concurrent representation conflict interfered with the Court's ability to ensure both the actuality and appearance of justice.

3.2.1 Standing

First, there was a question about standing. "As a general rule, courts do not disqualify an attorney on the grounds of conflict of interest unless the former client moves for disqualification." Kasza v. Browner, 133 F.3d 1159, 1171 (9th Cir. 1998) (internal quotation marks omitted) (quoting United States v. Rogers, 9 F.3d 1025, 1031 (2d Cir.1993)). Preliminarily, the reference here to "former client" suggests successive representation. Indeed, requiring a client or former client to complain would limit the ethical review of concurrent representations, since the parties remain aligned with their counsel. SCIF argued that all of the moving defendants lacked standing to bring the motion for disqualification since none had ever been clients of Hueston Hennigan.

But the courts in this state and the parties in this litigation — including SCIF — have acknowledged that there are exceptions to the general rule. When there is an ethical breach "so severe that it `obstructs the orderly administration of justice,' the party who finds his claims obstructed has standing" to bring a motion to disqualify. Colyer v. Smith, 50 F.Supp.2d 966, 972 (C.D.Cal.1999). Put differently, "where the ethical breach so infects the litigation ... that it impacts the moving party's interest in a just and lawful determination of her claims," the moving party can have standing to bring a motion to disqualify. Id. Thus, it's not surprising for the California Court of Appeal to observe that "[c]ase law abounds with examples of orders disqualifying counsel that have not been the product of motions by present or former clients." Kennedy v. Eldridge, 201 Cal.App.4th 1197, 1204, 135 Cal.Rptr.3d 545 (2011).

This was just one more example of the exception. Tantuwaya and the other defendants who joined his motion had standing to disqualify Hueston Hennigan because Hueston Hennigan's breach so infected this litigation that it impacted Tantuwaya's and the other defendants' ability to defend themselves against SCIF's allegations in so many ways.

First, there was discovery. Hueston Hennigan's conflict of interest had already affected Tantuwaya's and other moving defendants' efforts to get discovery from Randall. Tantuwaya stated that discovery on Randall's connection to the scheme was crucial to his defense. Several defendants, including Tantuwaya, tried to depose Randall. During Randall's deposition with Tantuwaya's counsel, Randall inconsistently invoked his Fifth Amendment privilege against self-incrimination. Although Hennigan didn't attend the deposition, it seems likely that Hennigan counseled Randall about the risks involved in talking about his participation in the scheme, and about the importance of asserting the Fifth when asked about the scheme. Of course, the attorney-client privilege protected Hennigan's communications with Randall and thus hindered the Court's ability to tease out the full effects of Hennigan's advice on Tantuwaya's discovery efforts.

The conflict had already impacted discovery in other ways too. SCIF responded to interrogatories for documents by invoking the law enforcement privilege, without identifying who held that privilege. But the law enforcement privilege didn't necessarily extend to SCIF. So was Hueston Hennigan invoking Randall's privilege on behalf of Randall's adversary? Tantuwaya suggested that was the only plausible explanation why SCIF would invoke the law enforcement privilege.

Second, there was the risk of victory lost. Tantuwaya and the other moving defendants could have been robbed of a hard-fought win in this years-long litigation because of the conflict. If the third-party plaintiffs had gotten a judgment against Randall in the civil cases, Randall might have successfully moved to have that judgment set aside because he was represented elsewhere by a conflicted attorney. Similarly, if a judgment against SCIF had been obtained in the civil cases, SCIF might have successfully moved to have that judgment set aside because it was represented by conflicted attorneys. And in the criminal case, Randall could have argued that he should be allowed to change his guilty plea because his lawyer's conflict of interest deprived him of his Sixth Amendment right to counsel.

These and the other concrete, particularized harms discussed elsewhere in this opinion persuaded the Court that Tantuwaya and the other moving defendants had sufficient personal stake to bring the motion for disqualification. Tantuwaya and these defendants therefore satisfied the "irreducible constitutional minimum" of Article III standing. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

And even if they somehow didn't, standing still wouldn't have presented an issue here. District courts have an "inherent obligation to manage the conduct of attorneys who appear before [them] and to ensure the fair administration of justice." Colyer, 50 F.Supp.2d at 972 (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43-44, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)); see also SpeeDee Oil, 20 Cal.4th at 1145, 86 Cal.Rptr.2d 816, 980 P.2d 371 (discussing a trial court's inherent authority to disqualify an attorney). This obligation overrides any "prudential barrier to litigating the rights and claims of third parties," like standing. Colyer, 50 F.Supp.2d at 972; cf. Woods v. Superior Court, 149 Cal.App.3d 931, 936, 197 Cal.Rptr. 185 (1983) (emphases removed) ("[D]isqualification should be ordered not only where it is clear that the attorney will be adverse to his former client but also where it appears that he might."). The Court would have honored that obligation by raising the disqualification issue on its own when it found out about the conflict, as it inevitably would have. See, e.g., People v. Peoples, 51 Cal.App.4th 1592, 60 Cal.Rptr.2d 173 (1997) (affirming the ability of a trial court to disqualify counsel on the court's motion). One way or another, standing wasn't a problem here. With standing satisfied, the analysis turns to the actuality and adversity of the conflict in the concurrent representation.

3.2.2 The Actual, Adverse, Concurrent Representation Conflict

Here, there was an actual, adverse, concurrent representation conflict, despite SCIF's arguments to the contrary. For starters, it was undisputed that Hueston Hennigan represented Randall and SCIF at the same time. It was also evident that Randall interests were and are actually adverse to SCIF's interests, for many reasons.

For example, the existence of an actual, adverse conflict uniquely explained otherwise-puzzling past events in this litigation. The Court found it curious that Hueston Hennigan didn't file any response to the government's motion to intervene and modify subpoenas. That makes sense now, because responding to the motion could have furthered either Randall's or SCIF's interests, while undermining the other's interests.

The existence of an actual, adverse conflict also explained Randall's involvement in some, but not all, parts of the litigation. The Court found it curious that SCIF didn't name Randall in the TAC, even though he was named in the third-party complaint and SCIF sued virtually all of the other third-party defendants. When the Court asked Hueston Hennigan why SCIF didn't sue Randall, a Hueston Hennigan attorney responded that "for Randall's case, he is the one that they know for sure is judgment proof that they already have a judgment against." Hennigan agreed.

The Court isn't convinced that Randall is judgment proof. So what would have caused SCIF to think he was? Many reasons are troubling. For example, did SCIF think Randall was judgment proof because Hennigan knew Randall wasn't paying his legal bills, as Hennigan's statement at the hearing that "[t]his is a case, in fact, where we have reason personally to believe that Mr. Randall is judgment proof" may have suggested? Or did SCIF think Randall was judgment proof because Hennigan or another Hueston Hennigan attorney had access to Randall's financial information and shared it with the team of attorneys doing work for SCIF? These and many other possible explanations would suggest the attorneys working for Randall were breaching their duty of loyalty and sharing information with the attorneys working for SCIF in a way that improperly benefitted SCIF. The conflict had already put Hueston Hennigan in an untenable position regarding disclosure of information. On one hand, the duty of loyalty (likely including the duty to inform) dictated that the firm use the information available to it to help its clients. On the other hand, the duty of loyalty (and, as discussed later, a few of the waivers in this case) dictated that Hueston Hennigan protect their clients' confidential information. The bottom line is Hueston Hennigan was in what the California Supreme Court called "a form of zero sum game" — Hueston Hennigan attorneys had and would continue to have had knowledge that could help one client at the expense of another. Flatt, 9 Cal.4th at 289, 36 Cal.Rptr.2d 537, 885 P.2d 950.

And of course, maybe it's not Randall's purported inability to satisfy a judgment that caused SCIF to leave Randall out of the TAC. There's lots of evidence that Randall isn't judgment proof. Tantuwaya's counsel did an impressive job hunting down seemingly hidden assets and other evidence that suggest Randall has significant assets, despite assertions to the contrary.

So if not because he's judgment-proof, why leave Randall out? The conflict offered many potential explanations. Maybe Hueston Hennigan thought it was clear of ethics rules so long as it didn't directly sue Randall. Or perhaps Hueston Hennigan was trying to benefit a still-solvent Randall at SCIF's expense by keeping him less involved in the civil suit. Another moving defendant, Randy Rosen, offered his own theory as to why Randall wasn't named.

It appears there are two more cross-defendants who didn't make it from the CC/FATPC to the TAC, Samuel Vidauretta and what is presumably his associated corporate entity, Prospice Group, Inc. Neither of these defendants have appeared in the case. Their existence doesn't do much to diminish the viability of Rosen's theory.

The Court could keep going with examples of the existence of the conflict in the civil side of the litigation, like Randall's recent deposition. At that deposition, a Hueston Hennigan attorney representing SCIF sought to find incriminating evidence against Randall in this litigation by asking Randall pointed questions about his connection to the fraudulent scheme. Among other things, the attorney asked whether a document reflected "thousands of payments from PSPM to Defendant entities, doctors, and to Paul Randall" and whether Randall attended meetings where payments for referring patients were discussed. Hueston Hennigan's questions supported SCIF's interests in proving up the fraud, while at the same time directly undermining Randall's interests in protecting himself from further criminal or civil liability.

Randall was particularly vulnerable to Hueston Hennigan's attacks at the deposition because there was no criminal counsel in his corner advising him. No Hueston Hennigan attorney appeared at the deposition on Randall's behalf. That's perhaps because Hueston Hennigan recognized how obvious the conflict would become when it had attorneys both eliciting incriminating testimony from a deponent and advising that deponent about the impact of that testimony on his criminal case. Randall was left to inconsistently invoke his Fifth Amendment privilege against self-incrimination. Hueston Hennigan's failure to protect Randall was obvious even then. According to Tantuwaya's counsel, during Randall's deposition, "Mr. Randall's [civil] counsel stated that he probably should have had Mr. Randall's criminal counsel attend the deposition, based on [the civil] counsel's lack of familiarity with the manner in which the right against self-incrimination should be invoked."

The deposition was a preview of the sort of conflicts that would have come up at trial and elsewhere. Tantuwaya submitted emails from SCIF's current counsel stating that SCIF may use Randall as a witness during settlement negotiations and even at trial. It's easy to envision SCIF needing Randall to testify but Randall needing to assert the Fifth. What would Hueston Hennigan have done then?

Difficulties arising from the conflict kept cropping up even in unexpected places. There was recently a motion for approving a settlement under California Code of Civil Procedure sections 877 and 877.6. The issue was whether a settlement between SCIF and a co-conspirator in this litigation was made in good faith so that the settling co-conspirator would be protected from indemnity actions from other co-conspirators under California law. This would include Randall, so the Court had to address the issue about whether he was adequately represented. To receive the settlement money, SCIF's interests were to establish that it was a good faith settlement. But to protect his rights, Randall's interests were to argue it was not a good faith settlement. A Hueston Hennigan attorney found it appropriate to submit a declaration on behalf of SCIF, but that declaration was contrary to the interests of one of Hueston Hennigan's other clients, Randall.

All this conflict existed even ignoring the more important criminal side of this litigation, where among other things the Sixth Amendment right to counsel was implicated. SCIF repeatedly argued that its interests and Randall's interests were aligned because Randall had plead guilty and his plea agreement required him to cooperate. But under the terms of that agreement, Randall is required to cooperate with the government, not necessarily with SCIF. And even setting that aside, criminal defendants sometimes fail to fully satisfy their obligations to the government and sometimes are dishonest. This possibility for dishonesty is so significant that the model Ninth Circuit jury instructions tells jurors they "should examine the testimony of [cooperating witnesses] with greater caution than that of other witnesses." Model Criminal Jury Instructions for the District Courts of the Ninth Circuit 4.9.

The plea agreement may have already been breached here. As noted, Rosen is another one of the moving defendants. He argued that a declaration submitted by an expert witness retained by Randall, Albert Luna, showed that Randall had breached his plea agreement. Luna's declaration asserted that Randall and his girlfriend Christina Hernandez extorted $400,000 from another defendant, Faustino Bernadett, as "hush money," in violation of Randall's plea agreement. The Court need not decide whether these allegations are true — they already illustrate the conflict issues in this case. Would Hueston Hennigan have argued that Randall hadn't violated his plea agreement? Or would they have taken a victim's stance, and vigorously investigated whether Randall did violate the plea agreement?

There's also sentencing — perhaps the most important moment for a defendant who has pled guilty. Here, the conflict arose in many areas, denying the Court the comfort that comes from adversaries arguing issues, and most importantly, denying adequate protection to a criminal defendant facing the force of the government working to take his freedom. Several relevant things occur at a sentencing hearing.

First, the Court must calculate the guideline range. See U.S. Sentencing Guidelines Manual § 1B1.1 (U.S. Sentencing Comm'n 2015). Determining the applicable offense level is perhaps the most important calculation in this process. Here it is determined largely by the amount of the loss involved. See id. § 2B1.1. The offense level in white collar crimes like this is often very difficult to calculate. Among the questions involved are whether the defendant's conduct cause monetary harm to others, and if so, who and how much. The range of potential answers to that question here may be somewhat limited by Randall's plea agreement. But within that range, Randall's counsel should be unhampered by conflicting loyalties. He wasn't.

Then there's the important issue at sentencing of whether the offense level should be reduced because of assistance provided by the defendant to the government. Under section 5K1.1 of the United States Sentencing Guidelines, a federal prosecutor can file a motion asking a court to depart from the guideline range if a defendant provides "substantial assistance in the investigation or prosecution" of someone else. Id. § 5K1.1. In evaluating the defendant's provided assistance, knowledge of the underlying facts in the civil case would likely be helpful, underscoring the relatedness of Hueston Hennigan's representations of SCIF and Randall. And while the government and the defendant might argue for a lower sentence, victims of criminal conduct sometimes question whether the criminal defendant has assisted as much as possible and argue for higher sentences. On whose side would Hueston Hennigan have placed itself?

Another issue with sentencing is determining whether a fine against the defendant is appropriate. See id. § 5E1.2. That requires understanding the defendant's financial condition A defendant's financial condition is often not adequately presented in the papers submitted, and thus the Court engages in further inquiry. In this inquiry, would Hueston Hennigan have assisted the Court in finding undisclosed assets or excessive spending by the defendant, thus helping its client SCIF, or would it have argued that its client Randall fully and adequately disclosed assets and acted properly?

Yet another issue in sentencing is restitution. This is extremely important to this Court as it focuses on making victims whole and evidences a defendant's acceptance of responsibility for activity that harmed others. Calculating the amount of restitution in a white collar crime is related to calculating the amount of loss in determining offense level, and both are challenging. See id. § 5E1.1. It is the Court's statutory obligation to determine the amount of restitution See id. § 5E1.1(a). Would Hueston Hennigan have been arguing for a large amount of restitution benefitting its client SCIF, or a small amount of restitution benefitting its criminal defendant client Randall, who is facing decisions that will potentially affect the rest of his life? SCIF argued that none of this was important because Randall has filed for bankruptcy. But these debts likely would not be dischargeable in bankruptcy, especially as part of a criminal sentence.

That brings the discussion back to Randall's assets and highlights how this was an actual, not potential conflict. Defendants in cases like this often declare bankruptcy. Their creditors often are very skeptical of their financial condition and investigate their assets. As noted, that's what happened here. Tantuwaya, a potential creditor of Randall's, investigated Randall's assets. The results of that investigation suggest that at sentencing, serious scrutiny is necessary to determine the cooperation provided, the fine, and the restitution order. Typically, lawyers help the Court get these tough questions right. But here the Court couldn't count on counsel to make that happen.

Many of the other iterations of this crisis of loyalty implicated Hueston Hennigan's duty to inform. If Randall sought advice from Hennigan on whether he should volunteer information to the government about a particular issue that the government didn't explicitly ask about, did Hueston Hennigan have to pass that information on to SCIF? If Randall sought advice from Hennigan about the potential impact of an inheritance or other asset coming his way, did Hueston Hennigan have to pass that information on to SCIF? This is an issue that the Court dealt with as recently as this week in another case. The Court gave Hueston Hennigan repeated opportunities to provide adequate answers to these critical questions. The firm didn't.

Trying to represent a criminal defendant while representing his victim seems to present obstacles so obvious and numerous as to defy complete delineation. The Court could go on for pages more. But the Court didn't even need to look at any of this — it was evident that Randall's interests were and are directly and actually adverse to SCIF's interests because Hueston Hennigan admitted as much. A conflict waiver Hueston Hennigan very recently sent to SCIF stated

3.2.3 Waivability

SCIF argued that all of this conflict could be cured by waivers Randall and SCIF signed. That raised two questions: was this conflict even waivable, and if so, did the waivers here show informed consent to the conflict by both parties?

First, waivability.

SCIF's argument that Hueston Hennigan's concurrent representation conflict is waivable stemmed in part from Klemm v. Superior Court. In that case, the California Court of Appeal explained that an attorney couldn't engage in "[concurrent] representation of conflicting interests if that representation is in conjunction with a trial or hearing where there is an actual, present, existing conflict and the discharge of duty to one client conflicts with the duty to another," regardless of whether there was informed consent. Klemm v. Superior Court, 75 Cal.App.3d 893, 898, 142 Cal.Rptr. 509 (1977). The court noted that it hadn't been able to find a single case with a contrary holding. Id. The court continued on to state that

Id. SCIF argued that this language means that the only unwaivable concurrent representation conflicts are in situations where an attorney is representing actually adverse parties at a single contested trial or hearing.

There was a necessary/sufficient fallacy in SCIF's argument. It's true that Klemm says attorneys can't concurrently represent actually adverse clients at a contested trial or hearing, regardless of whether there's a conflict waiver. But it's also true that Klemm doesn't say that this limitation on concurrent representation is limited to contested trials or hearings. SCIF seems to have confused a sufficient condition for unwaivable disqualification — a single contested trial or hearing — with a necessary condition of unwaivable disqualification. Put differently, SCIF seems to have confused the Klemm court carefully addressing its discussion to the facts in front of it with the Klemm court limiting its discussion to just those facts. It's not surprising (and likely appropriate) that a straightforward 1977 case involving a single lawyer representing a couple in an uncontested divorce didn't address its discussion to a concurrent representation conflict in a complex, twenty-first century, multi-defendant, multi-case, multi-year litigation involving many of Orange County's finest lawyers and law firms.

SCIF's interpretation of Klemm made no practical sense either. SCIF seemingly read Klemm to allow concurrent representation of adverse parties by attorneys at all non-trial, non-hearing contested proceedings. Depositions perhaps offer the best example, but other discovery disputes, motion practice, pre-litigation communications, and all sorts of other proceedings could also absurdly escape the purported Klemm concurrent representation rule under SCIF's logic. SCIF appeared to acknowledge as much at oral argument on the disqualification issue, when the Court asked whether concurrent representation at a deposition was permissible under Klemm.

In other contexts, this might highlight an interesting question. Some commentators, including some in this case, have couched the issue of waivability as turning on whether the actual, adverse, concurrent representation barred by Klemm occurs in the same "lawsuit." Some have couched waivability as turning on whether the representation occurs in the same "litigation." And some have couched waivability as turning on whether the representation occurs in the same "matter." Are there meaningful distinctions between these and related terms when it comes to waivability? Neither the parties nor the Court found appropriate authority addressing this, even though the Court explicitly asked this question in an order it issued before briefing had been finished and the hearing had been held on the Motion for Reconsideration.

Here, the Court didn't need to delineate the precise answer to this complicated question. The two civil cases and the criminal case were and are effectively the same case for the purposes of this analysis for many reasons. Some reasons have already been discussed. Here are three more.

First, the cases would, under other circumstances, almost certainly all be part of the same case. The only apparent reason the criminal case is at all separated from the civil cases is because of the criminal-civil distinction. If the criminal case were another civil case instead, it would have been consolidated with the existing civil cases. The claims for civil RICO conspiracy show how the civil/criminal divide is rarely clean-cut. That divide is especially blurry here. Indeed, the recently unsealed criminal information explicitly refers to SCIF as one insurance carrier that received fraudulent bills as part of Randall's conspiracy. See United States v. Randall, SA CR 12-023-JLS, Dkt. No. 1. The civil cases are similarly related. The Court has repeatedly had to examine close calls regarding consolidation of the two civil cases, first through a motion to amend and then through (an-eventually-withdrawn) motion to consolidate. Then, the issues were difficult largely due to SCIF's decision to delay adding new parties. But the civil cases and criminal cases are the same litigation for all relevant purposes here.

Second, the Department of Justice's press release supports that these cases are the same litigation. Three of the defendants mentioned in the press release — Mitchell Cohen, Alan Ivar, and Philip Sobol — were also named as defendants in the TAC. The press release also referred to the entity defendants named in the TAC, including Pacific Hospital of Long Beach, Pacific Specialty Physician Management, California Pharmacy Management, and Industrial Pharmacy Management.

Third, the government's motion to intervene supports that these cases are the same litigation. For that motion, it was obvious to all parties involved and the Court that the government was investigating the same fraudulent scheme that SCIF alleged existed in its civil complaints. Indeed, in its moving papers, the government explicitly referred to SCIF as one victim of the $580 million healthcare fraud perpetrated by various medical providers. The government also explicitly referred to its criminal action against Randall to support its motion, stating that "[t]he criminal investigation [was] also entitled to administrative deference because it long preceded the civil actions."

Any argument that this isn't one litigation for the purpose of a waivability analysis at best adopts form over substance, and at worst invites legal shenanigans that threaten the integrity of our justice system. If an attorney represents one side in a case, can the attorney also represent the other side in the same dispute, if the attorney can finagle the rules of mandatory joinder enough to maintain a separate lawsuit? In other words, is a separate case number the cure-all for concurrent representation conflicts? Of course not — courts would rightfully admonish attorneys engaged in this behavior, and the public would rightfully question a system that allowed these things. See SpeeDee Oil, 20 Cal.4th at 1144, 86 Cal.Rptr.2d 816, 980 P.2d 371 ("[J]udges must examine [disqualification] motions carefully to ensure that literalism does not deny the parties substantial justice.")

And even if, despite all indications to the contrary, this somehow wasn't a single litigation for waivability purposes, SCIF's reasoning still might fall flat. Or rather, Flatt. It's not clear that SCIF's broad waiver reading of the Court of Appeal's decision in Klemm, limiting circumstances of unwaivability, survives the California Supreme Court's decision years later. In Flatt, the California Supreme Court emphasized the difficulties of concurrent representation, stating that "[e]ven though the [concurrent] representations may have nothing in common, and there is no risk that confidences to which counsel is a party in the one case have any relation to the other matter, disqualification may nevertheless be required." Flatt, 9 Cal.4th at 284, 36 Cal.Rptr.2d 537, 885 P.2d 950. The court noted the possibility of waiver, but stated that the class of cases where waiver of a concurrent representation conflict was acceptable was "a rare circumstance, typically involving corporate clients." Id. at 285 n. 4, 36 Cal.Rptr.2d 537, 885 P.2d 950. The court continued on to say that "overcoming the presumption of `prima facie impropriety' [was] not easily accomplished." Id. It's significant (and worth repeating) that Flatt is both more recent and from a higher court than Klemm. SCIF has never adequately addressed how its read of Klemm comports with the Flatt ruling. Flatt brings SCIF's reading of Klemm into question.

Okay, but what if waiver was available here under Klemm, and SCIF's concurrent representation wasn't barred by Flatt? The conflict was still unwaivable under the court's own inherent authority "to control in furtherance of justice, the conduct of its ministerial officers." City & Cty. of San Francisco, 38 Cal.4th at 846, 43 Cal.Rptr.3d 771, 135 P.3d 20 (alteration and internal quotation marks omitted) (quoting SpeeDee Oil, 20 Cal.4th at 1139, 86 Cal.Rptr.2d 816, 980 P.2d 371); see Cal. Civ. P. Code § 128. "The paramount concern must be to preserve 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. Even with the clients' informed consent, courts shouldn't allow concurrent representation "when the public interest [is] involved or where the likelihood of prejudice to one party is extremely great." Unified Sewerage Agency, 646 F.2d at 1347 (interpreting the old ABA Code of Professional Responsibility).

The Court was confronted with just such a situation here. Hueston Hennigan's concurrent representation of Randall and SCIF threatened the parties' and public's interest in obtaining a just process in ways that even informed, written consent couldn't fix. The previous review of the conflict and its problems — including its impact on the parties — was extensive in part to provide some of the many examples of this threat. In the complexity of this litigation, problems could arise and greatly harm a party before the problem was even recognized. And managing the problems adds to the complexity of this litigation whose complexity is a challenge even without conflicts constantly lurking.

There's also the Court's own, independent need for adversarial advocates. The combative nature of our legal system is an integral part of the fight for truth and justice. Courts rely on attorneys to probe and attack their opponents' positions. This process helps courts. It can help parties too. Good lawyers anticipate their opponent's moves, jabs, and counters, and create appropriate offensive and defensive strategies of their own. But when an attorney represents both sides of a dispute, there's really just one fighter in the ring shadowboxing. That lack of real opposition provides the lawyer perverse incentives to act in ways contrary to our nation's notions of fairness and due process. Does the lawyer hold his punches? How can a court know? Without a robust adversary, one side might drop its gloves and put in a sloppy effort, knowing that weaknesses in its own position aren't going to be exploited. Our system can't function this way.

And of course, even if an attorney conflicted in the way that Hueston Hennigan was here could get informed waivers from its adverse clients, and even if the attorney could concurrently represent those clients' adverse interests, and even if the Court could trust the attorney's representations that it was doing so, there would still be the issue of public perception. Lawyers often appropriately delve into the details of the law. What's the applicable legal standard? Who bears the burden? What's the appropriate jurisdiction? The law is full of technical, hard questions. But lawyers also often need to step back for a moment and ask the person-on-the-street question: if you gave non-lawyers the facts in front of you and asked their opinion, what would their reaction be? That question isn't part of any formal legal analysis, but its answer can help illuminate how the public's interests are impacted by a legal issue. It also often leads to the right legal solution — the law generally (though not always) skews towards our society's commonsense notions of fair play and justice. The answer is relevant to the public's perception of the legal system.

Here, it appears no one at SCIF thought much about the person-on-the-street question or its answer. The question was posed at the beginning of this opinion: can a lawyer represent — at the same time, in the same litigation, in the same courthouse — a criminal and his victim? It's hard to imagine many people saying that this is okay. The Court has an obligation, independent of all of the other legal authority discussed here, "to preserve 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.

Finally, there are the California Rules of Professional Responsibility. They too generally bar an attorney from representing clients with adverse interests, although there's an exception the Court will discuss in the section immediately following. See Cal. R. of Prof'l Conduct 3-310(C).

For all these reasons, consistent with Klemm, following Flatt, under the Court's inherent authority, and in line with the California Rules of Professional Responsibility, Hueston Hennigan's conflict was unwaivable.

3.2.4 The Waivers

Nonetheless, Hueston Hennigan thought it had found a loophole. While California's Rules of Professional Conduct generally support the unwaivability of the conflict, they do allow concurrent representation of clients with adverse interests in limited situations if both clients provided informed, written consent. See Cal. R. of Prof'l Conduct 3-310(C). It's worth noting that this rule doesn't overcome all of the other reasons this conflict was unwaivable, and even this rule recognizes that "[t]here are some matters in which the conflicts are such that written consent may not suffice." Cal. R. of Prof'l Conduct 3-310 cmt.

But what if Hueston Hennigan had found a loophole big enough to fit this conflict through? What if this was somehow within the ambit of the limited exceptions provided under California Rule of Professional Responsibility 3-310(C)? Did Hueston Hennigan get informed written consent from Randall and SCIF? No.

Determining whether a client provided adequate informed, written waiver is "is obviously a fact-specific inquiry." Visa U.S.A., Inc. v. First Data Corp., 241 F.Supp.2d 1100, 1106 (N.D.Cal.2003) (internal quotation marks omitted) (quoting Cal. Ethics Op. 1989-115 at IIA-315). Among other things, courts consider

Id.

Hueston Hennigan sent waivers to Randall and SCIF where the clients purportedly provided informed consent to the conflicted representation. But there are many things about the waivers that caused the Court to question their authenticity, accuracy, efficacy, and reliability.

Let's start with the timeline.

So many aspects of this timeline were and are troubling. Why didn't SCIF mention the waivers at the initial meet-and-confer, instead of focusing on saber-rattling sanctions threats? Who was right and who was wrong when Randall and SCIF made contradictory representations about the number of waivers and what Randall was told about those waivers? Why did Randall later recant his sworn testimony? What does it say about Randall's purportedly informed consent that he apparently couldn't remember basic details about giving that consent? Why did SCIF wait so long to submit the waivers to the Court, even after SCIF's opponents and the Court expressed concern about those waivers? More specifically, why did it take nearly three months from the time Tantuwaya filed the motion to disqualify for SCIF to grudgingly file all the waivers (or at least all the ones SCIF promised — as discussed later, there might be more relevant material), and then take more nudging by the Court to get SCIF to lodge unredacted versions for the Court to review?

And above all else, who committed perjury? Randall submitted a declaration, signed under penalty of perjury, saying that he'd discussed the concurrent representation conflict with Sparks. The very next day, Sparks submitted a declaration, signed under penalty of perjury, saying that he'd had no such conversation with Randall. At best, this conversation was a debacle of a discussion, where one person left thinking something wasn't discussed at all, and the other person left thinking something was discussed thoroughly. That best-case scenario can't support a finding that Randall gave informed consent to waiving the conflict. And there's the worst case (and more likely) scenario: someone lied to the Court.

That leads to yet another issue.

If Sparks were truly independent counsel, qualified to advise Randall about the conflict in this case, the Court might have more readily believed him over Randall given their conflicting statements. After all, truly independent counsel would likely have little incentive to lie. On the other hand, Randall might have been facing pressure to make things okay — maybe he liked his lawyer a lot, or maybe he owed his lawyer money, or maybe he just couldn't afford the potential consequences of a disqualification order here on his wallet and his criminal case.

But here, Sparks presented conflict questions of his own. Of course, he was a central figure in the first disqualification motion in this case. But more relevant here, and in another incestuous twist, Sparks is counsel of record for Drobot Jr. and several other defendants in this case, including Industrial Pharmacy Management LLC, Coastal Express Pharmacy Inc., Long Beach Prescription Pharmacy, and Meds Management Group LLC. It's hard to say that Sparks qualifies as "independent counsel" who could have provided Randall with meaningful informed consent. See Visa, 241 F.Supp.2d at 1106 (courts should consider the quality of the conflicts discussion between the attorney and the client in determining the sufficiency of a waiver).

What's even worse is that Hueston Hennigan knew about this conflict-within-a-conflict.

On one hand, the firm knew that Randall's supposedly "independent" counsel was Sparks. Hypothetically, Randall could have consulted with Sparks and later told Hueston Hennigan he'd met with independent counsel, without specifying to Hueston Hennigan who that counsel was. The firm could then have credibly claimed ignorance of Randall's dubiously-independent independent counsel. But that's not what actually happened. Hennigan first asked Randall for a conflicts waiver on June 19, 2013, and advised Randall to get the advice of independent counsel. Randall says he consulted with Sparks and then orally told Hennigan that the conflict was acceptable, all within the next day. Hennigan memorialized all this in a letter he sent to Randall on July 12, 2013. Hennigan's letter explicitly acknowledges Sparks by name as the attorney Randall consulted with.

On the other hand, the firm knew Sparks represented other parties in the case. Just a few days before Hennigan sent his July 12 letter to Randall, Hueston Hennigan had served the summons, complaint, and related documents in SCIF 1 on Sparks as counsel for all the defendants he represents. At the time, Sparks was just one of a few attorneys on the docket in SCIF 1, so it's not as if his name got lost in the shuffle and Hueston Hennigan just didn't make the connection.

Even though Hueston Hennigan knew that Randall's supposedly "informed" consent was based on advice from so-called "independent counsel" that was anything but independent, the firm still argued that Randall provided informed consent sufficient to justify Hueston Hennigan's infidelity. Figuratively speaking, Hueston Hennigan told Randall to talk to independent counsel about the SCIF-Randall conflict, watched him walk to the other side of the courtroom to consult with opposing counsel about the conflict, accepted Randall's waiver, and now argue that Randall had informed consent by independent counsel. Even if Sparks did advise Randall precisely as SCIF says he did, Randall's waiver wasn't informed by independent counsel. That wasn't by itself enough to sustain disqualification here, but it sure hurt SCIF's arguments that Randall had informed consent.

The recency of Randall's last waiver versus SCIF's last waiver was also troubling. Before Tantuwaya filed his motion for disqualification, SCIF's most recent waiver was from December 2015. Randall's was from about eight months earlier, in April 2015. Since Randall's last waiver, there have been about 600 docket entries in SCIF 1 alone. Yet Hueston Hennigan only felt that it was necessary to readvise and get another conflicts waiver from SCIF after the motion for disqualification got filed, and not Randall. There are innocent explanations imaginable for this discrepancy in treatment — perhaps, for example, the attorney managing the relationship with SCIF was more proactive than the one managing the relationship with Randall. But the most obvious explanation is that Hueston Hennigan just cared more about making sure its (financially) heavyweight client was okay with everything than it cared about making sure its featherweight client was okay with everything. Of course, this sort of preferential treatment was one of the primary concerns the Court has here.

These are all problems that existed without even getting into the actual substance of the waivers. The previous review of the conflict and its manifestations in this litigation was extensive in part to show the sorts of issues considered when evaluating whether the content of the waivers supports the existence of informed consent. But that lengthy discussion didn't even capture all of the problems with the text of the waivers.

It's helpful to start by stepping back and looking at the all of the relevant language from each waiver, starting chronologically with Randall's three and then moving chronologically through SCIF's four. It's a lot to read, but getting into the exact language is important to understanding the Court's conclusions about the waivers' inefficacy.

Randall's first waiver came in his June 20, 2011, engagement letter with Irell & Manella. Here's the relevant language regarding conflicts.

Randall's second waiver seems to have come around the time Irell & Manella was looking to begin representing SCIF. The waiver is dated July 12, 2013. Here's the relevant language regarding conflicts, with all alterations in the original.

The waiver also included the same last paragraph about potential adverse consequences and independent counsel as the last waiver.

Randall said he signed an updated conflict waiver in February 2015 when Hennigan left Irell & Manella to form Hueston Hennigan, but it appears SCIF didn't provide this waiver to the Court. Randall's final (and for the purposes of this opinion, third) waiver came in April 2015 (although Randall's declaration mistakenly dates the waiver to April 2016). Here's the body of the waiver.

Dear Paul:

Next, SCIF's waivers. Irell & Manella apparently addressed conflicts generally in its engagement letter with SCIF, although the Court couldn't determine that for sure since SCIF didn't provide that letter to the Court. It looks like Irell & Manella first specifically addressed the Randall-SCIF conflict in a waiver signed on June 20, 2013, by SCIF's Assistant Chief Counsel. Here's the body of the waiver.

Dear Carol:

After Hueston, Hennigan, and the other former-Irell & Manella lawyers started Hueston Hennigan, the new firm provided SCIF with a new engagement letter on January 9, 2015. Curiously, that letter apparently didn't address the Randall-SCIF conflict, even though the Hueston Hennigan lawyers obviously knew about the conflict given their representation of both Randall and SCIF at Irell & Manella.

SCIF's second waiver is dated April 24, 2015. SCIF filed a heavily redacted version of the waiver on the public docket. Here's the relevant unredacted language regarding conflicts.

SCIF's third waiver is dated December 17, 2015. Again, SCIF filed a heavily redacted version of the waiver on the public docket. Here's the relevant unredacted language regarding conflicts. It's mostly identical to the language in the second SCIF waiver.

SCIF's final waiver came after Tantuwaya filed the motion for disqualification. It looks like Hueston Hennigan got it so that they could include it with SCIF's opposition to the motion — the waiver is dated February 25, 2016, and SCIF filed its opposition on February 29, 2016. Here's the entire body of the waiver.

Dear Margie:

These waivers were ineffective for many reasons — reasons that are reflected in the previous, extensive review of the conflict and its manifestations in this litigation. The Court discusses three more reasons the waivers didn't adequately reflect Randall's and SCIF's informed consent: (1) the waivers' "unrelated" language, (2) the waivers' lack of specificity, and (3) the waivers' suspect terms. There were more issues with the waivers that arose out of redacted portions of SCIF's waivers. SCIF seems to have overredacted these documents, particularly since much of the redacted information may not be privileged. See United States v. Blackman, 72 F.3d 1418, 1424 (9th Cir.1995). But out of an abundance of caution and given the myriad of other reasons the waivers were inadequate, the Court will not get into those issues possibly involving privilege here.

First, unrelatedness.

Five of the seven waivers provided that Hueston Hennigan could represent the other client — Randall, for SCIF's waivers, or SCIF, for Randall's waivers — in unrelated cases. In his first waiver, Randall agreed that Hueston Hennigan "may represent existing or new clients in any matter that is not substantially related to" Hueston Hennigans' work for Randall. Randall's second waiver incorporated identical language. SCIF's first waiver also used this language, with SCIF agreeing that Hueston Hennigan "may represent existing or new clients in any matter that is not substantially related to" Hueston Hennigans' work for SCIF. SCIF's second waiver similarly stated that Hueston Hennigan represents Randall "in an unrelated criminal matter." SCIF agreed to the same stock language again: Hueston Hennigan "may represent [Randall] in any matter that is not substantially related to" Hueston Hennigan's work for SCIF. SCIF's third waiver was identical to SCIF's second waiver in this regard: it stated that Hueston Hennigan represents Randall "in an unrelated criminal matter" and that SCIF agreed that Hueston Hennigan "may represent [Randall] in any matter that is not substantially related to" Hueston Hennigan's work for SCIF. That's every waiver except Randall's third waiver and SCIF's fourth waiver.

Hueston Hennigan argued that these five waivers allowed it to represent both Randall and SCIF in this litigation. But "unrelated?" Really? It's hard to construct any reasonable argument that the civil cases and the criminal cases are unrelated, by any measure of the word. At best, Hueston Hennigan's representations to its clients on this point merit judicial concern. At worst, they could constitute some flavor of fraud. In either case, they emphasize how much Hueston Hennigan's clients — Randall in particular — needed someone to provide them advice at critical moments. "[T]he validity of any agreement negotiated without independent representation of each of the parties is vulnerable to easy attack as having been procured by misrepresentation, fraud and overreaching." Klemm, 75 Cal.App.3d at 901, 142 Cal.Rptr. 509.

Hueston Hennigan's ever-shifting characterization of the cases reflects poorly on both the firm and the quality of the waivers it got from Randall and SCIF. Hueston Hennigan couldn't seem to decide whether its representation of Randall and SCIF was unrelated — as it stated in five of the waivers — or possibly complementary and not adverse — as it stated in its first SCIF waiver — or whether "State Fund and Randall may have, and likely do have, directly adverse interests" — as it stated in its most recent SCIF waiver. And this isn't a case where there was a dramatic scene change mid-litigation that Hueston Hennigan could point to as justification for these inconsistent, and even contradictory, representations to its clients. These sorts of contradictory statements couldn't establish informed consent in this litigation. And returning to the unrelated issue, there was no reasonable argument that the three cases at issue here aren't related. Indeed, as the Court's already discussed, the three cases should, if anything, be treated as one litigation for the purpose of this conflict analysis.

Second, boilerplate.

SCIF consistently argued that the seven waivers all adequately described the implications of waiving the specific conflict at issue, but much — and in some cases most — of each waiver consisted of boilerplate platitudes about the potential impact of the conflict. For example, the first (and therefore likely most important) time SCIF's attorneys provided written information about the conflict to Randall and SCIF, they copied and pasted this paragraph.

Other large portions of the waivers could have been dropped into virtually any waiver without modification. They didn't reflect any careful contemplation of the particular implications of the conflict here. For example, slightly tweaked versions of this language appeared more than once.

And, as noted, the relevant unredacted conflict language in SCIF's third waiver is virtually identical to the language in the second SCIF waiver. There's more like this.

Of course, boilerplate isn't by itself bad. Much of modern legal practice relies on the ability to repurpose successful work from the past when performing work in the present. But here the problem was that there wasn't much substantive meat surrounding the boilerplate bones of the waivers. The boilerplate bones didn't support much of anything on their own. When SCIF pointed to waivers full of this kind of language, the Court found it hard to characterize those waivers as reflecting or providing informed consent, particularly given the extensive difficulties already discussed.

What would have been enough? Tantuwaya's counsel identified a motion for disqualification that came before this Court in another case. There the government moved to disqualify a major law firm ("Law Firm") from representing a criminal defendant basically because of successive representation issues. See Order, United States v. DeCinces, SACR 12-0269-AG, Dkt. No. 441. This Court denied the motion. It noted that the criminal defendant had retained a former U.S. Attorney for the Central District of California — not an AUSA, but the U.S. Attorney — to serve as independent counsel that could advise him about waiver. The criminal defendant explained that he and his independent counsel had reviewed, among other things, the following conflicts and their associated risks.

See Decl., United States v. DeCinces, SACR 12-0269-AG, Dkt. No. 435-1 at 3:12-4:5. The criminal defendant and his retained independent counsel each filed a declaration under penalty of perjury that set forth many more details of their conversations. Their stories matched up with each other. This Court held that its decision to deny the motion to disqualify was "strengthened by [the criminal defendant's] waiver of conflict-free counsel, which is one of the best and most complete waivers the Court has ever seen." Order, United States v. DeCinces, SACR 12-0269-AG, Dkt. No. 441 at 8.

The Court didn't expect or require that gold standard of SCIF's counsel here, but the waiver in that case illuminated many of the inadequacies of the waivers in this case. See Visa, 241 F.Supp.2d at 1106 (courts should consider the breadth of the waiver and the quality of the conflicts discussion between the attorney and the client in determining the sufficiency of a waiver). Tantuwaya pointed out many of the critical issues the Court already identified in this opinion but that the waivers here didn't address — issues that were particularly troubling with a criminal defendant whose liberty was and is at stake. These issues included

The waivers here just didn't cut it.

Finally, enforceability. The waivers contained questionable terms. Here are two examples.

First, in Randall's first waiver he agreed to a blanket waiver of the duty of loyalty for any future conflicts that are "directly adverse." The Court doubts whether such a blanket waiver is either ethical or enforceable. See Visa, 241 F.Supp.2d at 1106 (courts should consider the temporal scope of the waiver (whether it waived a current conflict or whether it was intended to waive all conflicts in the future) in determining the sufficiency of a waiver). At the very least, in the context of this case, Hueston Hennigan couldn't cash Randall's pre-conflict blank check for very much, given that Randall didn't (indeed, couldn't) know about the actual conflict at issue here.

Second and similarly, in Randall's second waiver, Hennigan specifically referenced Irell & Manella's representation of a client in "the Other Matter" involving "claims that various entities and individuals involved in the provision of medical services defrauded the insurer." Hennigan noted that Randall could be a material witness in "the Other Matter" and that Randall agreed to waive any conflict arising from that matter, including being cross-examined and deposed by Hueston Hennigan lawyers against Randall's interests.

The Court doubts whether a client can ever intelligently consent to being cross-examined (or deposed, as has already happened here) by the client's law firm in a way that would adversely affect the client's interests. Case law suggests that a lawyer cannot literally put a conflict of interest on the stand by cross-examining one client against her interests to support another client's interests. See Gilbert v. Nat'l Corp. for Hous. P'ship, 71 Cal.App.4th 1240, 1254, 84 Cal.Rptr.2d 204 (1999) (finding an irreconcilable conflict of interest when a lawyer wanted to examine one client against his interests to support another client's interests). "The spectacle of an attorney skewering her own client on the witness stand in the interest of defending another client demeans the integrity of the legal profession and undermines confidence in the attorney-client relationship. Hernandez v. Paicius, 109 Cal.App.4th 452, 467, 134 Cal.Rptr.2d 756 (2003) (ordering a mistrial when an attorney violated the duty of loyalty by cross-examining one client to defend another client), disapproved of on other grounds by People v. Freeman, 47 Cal.4th 993, 103 Cal.Rptr.3d 723, 222 P.3d 177 (2010).

Setting aside Hennigan's failed attempt to limit the scope of his representation to Randall's "criminal" case, the following is undisputed: Hennigan represented a client with directly adverse interests to SCIF in this litigation. As noted, when a firm simultaneously represents two clients with an actual, present, existing conflict in the same litigation, "[a]s a matter of law a purported consent to dual representation of litigants with adverse interests at a contested hearing would be neither intelligent nor informed." Klemm, 75 Cal.App.3d at 898, 142 Cal.Rptr. 509. Indeed, "common sense dictates that it would be unthinkable to permit an attorney to assume a position at a trial or hearing where he could not advocate the interests of one client without adversely injuring those of the other." Id. That's effectively what did and would have happened here had the Court not granted the motion for disqualification.

These reasons and others showed that the waivers couldn't support a finding of informed consent. What's more, the waivers themselves established the adversity of the concurrent representation, and also explained why it was improper for Hueston Hennigan to represent Randall and SCIF. Take the most recent waiver, SCIF's last one. It was the best waiver among the lot by several measures. It was the only one provided to the Court with SCIF's opposition to the motion for disqualification. More importantly, it was the most honest and detailed in informing the client about the implications of the conflict. But by being forthright — and in that way more closely approaching a sufficient waiver than the others — the last waiver acknowledged many of the truths SCIF has otherwise been reluctant to admit. That last waiver explained why concurrent representation couldn't happen here.

Yes! The Court has already explained why the waivers were ineffective. Through its content, this waiver reinforces why the conflict was unwaivable.

This last waiver also reinforces why the waivers' timing impacted their efficacy. In a concurrent representation case, the existence of multiple waivers isn't surprising, particularly when the specter of disqualification arises. Since the concurrently represented parties are both still clients, an attorney will simply get the existing clients to sign off on one waiver after another, each better than the last, until a court okays the waiver. But getting new waivers late in the game can mean that a client isn't really consenting voluntarily. For their part, clients may not want to spend time and money starting a long litigation over, or switching attorneys, or incurring any of the other costs that come with getting a new lawyer. So they may stay with a firm simply to minimize those transaction costs, and consent to a waiver they really don't want. These concerns are less of an issue early in the representation. Thus a waiver becomes more effective if the conflicted attorney raised the issue of the conflict at the earliest time and provided clients with all appropriate details. Here, that happened in reverse — Hueston Hennigan's best letter was its last one. That further reflects poorly on the existence of informed consent.

3.2.5 Summing Things Up, Disqualification, and Hot Potatoes

To sum up, Tantuwaya and the other moving Defendants had standing to bring the motion for disqualification. Even if they didn't, the Court would have raised the disqualification issue on its own. There was an actual, adverse, concurrent representation conflict here. This conflict wasn't waivable. Even if it were, the waivers here weren't adequate. That leads to the bottom line: disqualification of Hueston Hennigan was both appropriate and necessary.

Could Hueston Hennigan have fixed this situation by simply dropping either SCIF or Randall as a client?

No. The so-called "hot potato rule" provides that without a proper waiver, "a law firm that knowingly undertakes adverse concurrent representation may not avoid disqualification by withdrawing from the representation of the less favored client before hearing." Truck Ins. Exch. v. Fireman's Fund Ins. Co., 6 Cal.App.4th 1050, 1057, 8 Cal.Rptr.2d 228 (1992), reh'g denied and opinion modified (June 10, 1992). As a practical matter, the rule prevents attorneys from picking up all the clients they can and then dropping the less favorable ones as soon as conflicts appear. The rule also has a principle behind it that brings this discussion full circle. The duty of loyalty to an existing client is so important, so sacred, so inviolate that "not even by withdrawing from the relationship can an attorney evade it." Flatt, 9 Cal.4th at 288, 36 Cal.Rptr.2d 537, 885 P.2d 950.

The other frequently-offered solution in SCIF's papers is "conflict counsel." SCIF ended many of its arguments by saying, essentially, "even if there's a conflict on a particular point, we can pull in conflict counsel to independently represent our clients for that point." It seems that in SCIF's world view, conflict counsel could have become a cure-all for conflicts as they arose. But there were many problems with this.

First, what about the hot potato rule? Wouldn't SCIF basically have been dropping one of its clients whenever a conflict arose, at least for a few moments, in violation of the rule? This potential on-off-on-off-again representation was worse than the clean break with a conflicting client that's prohibited by the hot potato rule. As Tantuwaya's counsel cleverly pointed out, allowing this would have lead to something messier than a hot potato: mashed potatoes.

Second, and relatedly, how would this have worked practically? Conflict counsel can't be reliably counted on because they won't know the history of the litigation as well as an attorney who has nurtured it for years. They also can't be reliably counted on to have the clairvoyance necessary to anticipate the twists and turns the litigation will take in the future. There are related details. For example, cross-examination often should provide the ingredients of a good closing argument. If conflict counsel needed to cross-examine Hueston Hennigan's client, would Hueston Hennigan — with closings in mind — have advised that counsel about how to approach the cross? If so, wouldn't the conflict counsel solution have failed? If not, wouldn't Hueston Hennigan have cheated its own client out of full representation? Relatedly, who would have paid for this conflict counsel? Did the client have to pay for two (or more) sets of attorneys to prepare for matters in the litigation, in case a conflict comes up? Did the client have to pay for two (or more) sets of attorneys to be ready at a moment's notice at a deposition or trial, in case a conflict comes up? Did Hueston Hennigan have to pay? And returning to the duty to inform, if the conflict counsel got privileged information from Randall, would the conflict counsel need to share that with Hueston Hennigan? Did Hueston Hennigan then need to share that information with SCIF? The Court asked many of these questions during the hearings and in its orders. The Court is troubled that Hueston Hennigan never provided a satisfactory answer. What's more, there were many more problems like this that would complicate an already complicated case. For what?

3.2.6 Vicarious Disqualification

So disqualification of at least some of the attorneys at Hueston Hennigan was justified. But what about the others, particularly those who aren't directly conflicted off the case? Could they have continued as counsel?

No. "When a conflict of interest requires an attorney's disqualification from a matter, the disqualification normally extends vicariously to the attorney's entire law firm." SpeeDee Oil, 20 Cal.4th at 1139, 86 Cal.Rptr.2d 816, 980 P.2d 371 (internal quotations omitted) (quoting Flatt, 9 Cal.4th at 283, 36 Cal.Rptr.2d 537, 885 P.2d 950). This is based on the rationale "that attorneys, working together and practicing law in a professional association, share each other's, and their clients', confidential information." City & Cty. of San Francisco, Inc., 38 Cal.4th at 847-48, 43 Cal.Rptr.3d 771, 135 P.3d 20 (quoting SpeeDee Oil, 20 Cal.4th at 1153-54, 86 Cal.Rptr.2d 816, 980 P.2d 371).

And not that it would have changed the Court's conclusion, but the Court notes that Hueston Hennigan never attempted to show compliance with an ethical screen or wall between the representations. As such, the knowledge of each attorney at Hueston Hennigan was automatically imputed to the others. SCIF didn't appear to argue otherwise. The entire law firm of Hueston Hennigan was disqualified from representing SCIF.

4. THE MOTION FOR RECONSIDERATION

4.1 Legal Standard

Federal Rule of Civil Procedure 59 and Local Rule 7-18 provide the applicable standards for motions for reconsideration. "Under Rule 59(e), a motion for reconsideration should not be granted, absent highly unusual circumstances, unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law." 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.1999). Similarly, Local Rule 7-18 provides that

L.R. 7-18.

4.2 Analysis

The Local Rules of the Central District of California and case law each provide requirements for motions for reconsideration. SCIF needs to satisfy both sources of law to successfully move for reconsideration. But SCIF hasn't satisfied the requirements of either. Thus, there are multiple, independent reasons why the Court must decline to reconsider its earlier decision to disqualify. Tantuwaya also argues that reconsideration is inappropriate because SCIF failed to adequately meet-and-confer with defendants before it filed the motion, as it was required to do under Local Rule 7-3. The Court declines to address this argument, other than to note that it might provide yet another basis for declining reconsideration. And even if the Court reconsidered its earlier decision and considered SCIF's repackaged arguments, it would still find disqualification appropriate.

4.2.1 Evidentiary Issues

But before getting to the substantive arguments, the Court must address evidentiary issues both sides brought up.

First, Tantuwaya's objections. SCIF included declarations from Professor Laurie L. Levenson, Dean Erwin Chemerinsky, and Ellen Pansky to support its Motion for Reconsideration. Tantuwaya has specific objections to portions of each of these declarations. Tantuwaya also has three general objections. SCIF filed responses to these objections.

Tantuwaya's first general objection is that all three declarations improperly opine on ultimate issues of law. SCIF has several responses. First, it says that the declarations are aimed at satisfying the legal standards for a motion for reconsideration and thus are permissible. Second, SCIF says legal opinions are allowed in the context of this case. Specifically, SCIF analogizes this case to legal malpractice cases, where SCIF says experts are needed to establish the proper standard of care. SCIF says here experts are needed to establish the waivability of a conflict and the standard that a waiver has to meet. Finally, SCIF says that only "opinions phrased in terms of inadequately explored legal criteria" are barred.

Tantuwaya's second general objection is that the Levenson and Chemerinsky declarations lack foundation because they are based on incomplete information. SCIF says that Levenson and Chemerinsky have reviewed enough material to have foundation, and that at the very worst, Tantuwaya's arguments get to the weight the Court should give the evidence, and not its admissibility.

Tantuwaya's third general objection is that the Levenson and Chemerinsky declarations are contradictory of views Levenson and Chemerinsky have expressed elsewhere. SCIF argues that this objection isn't a valid evidentiary objection.

Besides filing responses to Tantuwaya's objections, SCIF filed its own objections to evidence Tantuwaya submitted. In sum, SCIF objects that Tantuwaya tries to introduce improper hearsay statements through the declarations of Albert Luna and M. Cris Armenta and the attached exhibits.

The Court finds that all the objections largely go to weight and thus overrules the objections. But the Court notes that even if it resolved all of both sides' evidentiary objections entirely in SCIF's favor, SCIF would still lose. With the evidentiary issues addressed, the Court turns to the merits.

4.2.2 Local Rule 7-18(c)

First, SCIF moves for reconsideration under Local Rule 7-18(c). A motion for reconsideration brought under Local Rule 7-18(c) must show that the court failed to consider material facts presented to the court before it made its initial decision. See L.R. 7-18(c). "No motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the original motion." Id.

SCIF has done nothing it's supposed to do and everything it's not supposed to do under Local Rule 7-18(c). SCIF hasn't pointed to a single fact that was before the Court that the Court failed to consider. Instead, SCIF has just taken its opposition to the Motion for Disqualification (8 pages, plus 16 pages of declarations) and beefed it up into the Motion for Reconsideration (14 pages, plus 145 pages of declarations and exhibits). This opinion already identified many potential issues with the newly included "evidence." But on top of all that, and most relevant here, the vast majority of it consists of arguments about the law — not facts — and the application of that law here. Although even new legal arguments here would seem to fall outside of what Local Rule 7-18(c) requires, here there isn't even that. Instead, SCIF merely uses more words — and bigger names — to make the exact same legal arguments that it already made, the Court already considered, and the Court already rejected. The Court issued a lengthy tentative order after SCIF filed its opposition to the motion to disqualify hearing. The Court issued another lengthy order posing questions for the parties before the Motion for Reconsideration opposition and reply were due. Despite all that guidance from the Court, not only does SCIF's Motion for Reconsideration "repeat ... oral or written argument made ... in opposition to the original motion" — that's all it does. L.R. 7-18. This by itself is sufficient grounds for the Court to deny reconsideration.

4.2.3 Clear Error or Manifest Injustice

Second, SCIF moves for reconsideration under case law, arguing that this Court "committed clear error or the initial decision [to disqualify] was manifestly unjust. See In re Hewlett-Packard Co. Sec. Litig., No. SACV 11-1404 AG (RNBx), 2013 WL 3582761, at *1 (C.D.Cal. June 17, 2013).

SCIF doesn't clear the standard that it acknowledges "properly" presents "a high hurdle." Even if the Court set aside SCIF's failure to satisfy Local Rule 7-18(c), SCIF hasn't satisfied its burden to demonstrate that this Court committed clear error or that its order disqualifying SCIF was manifestly unjust. Put simply, SCIF still hasn't adequately addressed many of the Court's concerns, even now, months after the motion for disqualification, with unusually detailed guidance from the Court, and with multiple shots at the goal.

The Levenson, Chemerinsky, and Pansky declarations all offer examples of this. As respected as those authorities are, they implicitly and explicitly reveal many of the weaknesses in SCIF's arguments, and ignore important questions about the law and the application of that law to these particular facts. None offer anything new for the Court to consider that it hasn't already. First, the Pansky declaration. There's a lot to discuss.

For starters, the Pansky declaration, like the others, provides only a summary analysis. The Court prefers brevity. But here the Court could not embrace the brevity it prefers because the complex facts required an extensive review. Likewise, the persuasiveness of the declarations was diminished without an extensive review. Only a summary analysis is possible in the four-and-a-half page Levenson declaration and the four page Chemerinsky declaration. That's not as facially apparent with the lengthier Pansky declaration. But less than four pages of that twenty-one page document attempt to analyze the issues discussed in this opinion. Of the remaining eighteen pages, about ten go to establishing Pansky's qualifications. Three list the facts from the case, untethered to any analysis. A little more than two list case law, untethered to any analysis. One lists the documents Pansky reviewed while preparing her declaration. Half a page summarizes the scope of Pansky's review and discusses what SCIF is paying her.

The substance of Pansky's analysis doesn't help much either. The declaration doesn't acknowledge a core issue. Is the Klemm bar on unwaivable concurrent representation limited to representation of adverse parties in contested trials or hearings within the same case (such that, for example, an attorney can represent adverse parties in a deposition)? The declaration simply glosses over that important issue.

The declaration also ignores the actual text of the waivers. Among other things, the declaration doesn't acknowledge that five of the seven waivers only apply to "unrelated" cases. Nor does the declaration address how the cases at issue here could possibly be unrelated.

The declaration also puts forth the ever-popular conflict-counsel cure-all, again without explaining how that solution practically would work before and at trial, and how that solution avoids running afoul of the hot potato rule, or how that solution avoids creating an even worse mashed potato mess.

The two pages of untethered case law deserve some more discussion. The presentation of the case law is at times not on point.

For example, Pansky cites the California Court of Appeal's decision in Dino v. Pelayo. Dino v. Pelayo, 145 Cal.App.4th 347, 51 Cal.Rptr.3d 620 (2006). She quotes Dino when she states that "[t]he Courts in California have consistently held that `before disqualification of an attorney is proper, the complaining party must have or have had an attorney-client relationship with that attorney.'" Disappointingly, this quotation leaves out the important qualifier "generally." See id. at 352, 51 Cal.Rptr.3d 620. In fact, Dino goes on to quote (and seemingly adopt) case law providing that there doesn't need to be an attorney-client relationship for standing to exist. See id.

Similarly, Pansky spends most of a paragraph discussing the California Court of Appeal's decision in Zador Corp. v. Kwan. See Zador Corp. v. Kwan, 31 Cal.App.4th 1285, 37 Cal.Rptr.2d 754 (1995). But Zador is a successive representation case, not a concurrent representation case. The applicable rules and underlying concerns are different.

The Levenson and Chemerinsky declarations share some of these issues, and also present their own unique problems best left unaddressed here. Neither addresses the Klemm issues already discussed. Neither addresses the text of the waivers, and in particular the "unrelated" issue. These sorts of problems further erode the persuasive value of the declarations. The Court has immense respect for these authorities, but their analysis here is simply unpersuasive, even assuming the Court set aside SCIF's failure to satisfy the requirements for a motion for reconsideration. The Motion for Reconsideration fails.

5. CONCLUSIONS AND DISPOSITION

While the Court is confident of this ruling, it is equally confident of the continuing correctness of its earlier rulings.

The Court doesn't know what motivated Hueston Hennigan to concurrently represent SCIF and Randall in the same litigation. Regardless, "the attorneys actual intention and motives are immaterial" to whether the rule of automatic disqualification applies. SpeeDee Oil, 20 Cal.4th at 1147, 86 Cal.Rptr.2d 816, 980 P.2d 371. "`The rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct,' but also to keep honest attorneys from having to choose between conflicting duties, or being tempted to reconcile conflicting interests, rather than fully pursuing their clients' rights." Id. (quoting Anderson v. Eaton, 211 Cal. 113, 116, 293 P. 788 (1930)). In other words, it's there to protect the best of us from the worst in us.

This disqualification likely caused and will continue to cause grief to lots of people. Of course there's SCIF and Hueston Hennigan. SCIF is left trying to get its new counsel up to speed on about three years of litigation involving dozens of defendants and opposing attorneys, while Hueston Hennigan must drop a likely lucrative matter from its billing. But there are others too. Randall is left with uncertainty about his legal representation while he has to prepare for a life-altering sentencing hearing. And the Hueston Hennigan attorneys — in particular those in the trenches, who worked passionately on this case for years and who had nothing to do with the representation decisions — have had the rug pulled out from under them, and have had to drop a case they likely lived with for years. Even the civil defendants and their lawyers will have to do some shuffling to deal with the new folks on the other side of the courtroom.

The Court did not enter its disqualification order lightly. The Court understood the costs, financial and otherwise, of disqualification here. But the Court also understood the price of not disqualifying Hueston Hennigan.

This opinion ends where it began: with loyalty. For the layperson, loyalty might be just one of many desirable characteristics. For lawyers — the keepers of confidences both private and public — loyalty is the basic job requirement. Rarely can it be compromised, and never without a careful look at the consequences to the clients, the courts, and the ability of our system to achieve justice.

Hueston Hennigan remains disqualified.

IT IS SO ORDERED.