OPV Coalition et al vs Fox Canyon Groundwater Management Agency

Case Number

VENCI00555357

Case Type

Hearing Date / Time

Fri, 10/11/2024 - 15:00

Nature of Proceedings

Motion to Disqualify Counsel; CMC

Tentative Ruling

(1)       For the reasons set forth herein, the motion of defendant Fox Canyon Groundwater Management Agency to disqualify Nossaman LLP as counsel is granted.

(2)       Plaintiffs OPV Coalition, et al., shall lodge with the court a clean copy of the proposed order, attached as exhibit 3, to the Joint Submission, filed September 18, 2024, for the court’s signature. The court will enter the unopposed order as requested. Counsel are to be prepared to update the court on discussions with the Special Master and to schedule the next case management conference.

(1)       Motion to Disqualify Counsel

Background:

Defendant Fox Canyon Groundwater Management Agency (FCGMA) moves to disqualify Nossaman LLP (Nossaman) as counsel for various landowner defendants in this proceeding.

            (A)       Prior Representation

On June 5, 2018, FCGMA retained Nossaman to assist with the development of groundwater sustainability plans (GSPs), including GSPs for the Oxnard and Pleasant Valley basins, and anticipated and pending litigation related thereto. (Boada decl., ¶ 2.) The Nossaman team consisted of current Nossaman attorneys Frederic Fudacz, Alfred E. Smith II, Gina Nicholls, and Samantha Savoni, paralegal Kameran Hedayat, and former Nossaman attorneys Tara Paul, David Sack, and Stephanie Clark. (Fudacz decl., ¶ 2; Smith decl., ¶ 2.)

According to FCGMA, FCGMA’s need for Nossaman’s legal services is reflected in the staff report at which FCGMA agreed to retain Nossaman:

“At the March 2018 meeting of your Board, the Agency [FCGMA] was served with a lawsuit filed on behalf of the Las Posas Valley Water Rights Coalition. The lawsuit, which was filed in response to the Agency’s release of a preliminary draft groundwater sustainability plan for the Las Posas Groundwater Basin and draft allocation system for the basin, alleges that the Agency is violating the Sustainable Groundwater Management Act [(SGMA)] and the Coalition’s water rights. In addition to the Coalition lawsuit, the Agency has received several comment letters in response to the preliminary draft GSPs for the Oxnard and Pleasant Valley Groundwater Basins expressing concerns about the possibility of litigation over noncompliance with California water law.

“At this time, your Board is being asked to authorize the Executive Officer to sign an agreement with Nossaman LLP. Nossaman is recognized for its water law expertise and will be invaluable in assisting staff with completion of the GSPs and allocation systems currently under development, as well with defense of the Coalition lawsuit. Having Nossaman on retainer will provide the Agency with the ability to consult with leading practitioners in the fields of water law and groundwater regulation as it attempts to comply with SGMA and defend itself in litigation.” (Boada decl., ¶ 2 & exhibit A, p. 12.) (Note: Page numbers reflect the page number of the pdf document filed with the court. See, e.g., Cal. Rules of Court, rule 2.109 [pages must be numbered consecutively from the first page using only Arabic numerals].)

According to FCGMA, from the time FCGMA retained Nossaman in 2018, through the end of 2019, FCGMA was involved in the process of developing GSPs for the Oxnard and Pleasant Valley basins, along with a new allocation system for those basins that would meet the requirements of the SGMA. (Boada decl., ¶ 3.) On June 26, 2019, and again on December 13, 2019, the FCGMA board approved amendments to the contract with Nossaman to increase the not-to-exceed amount. (Ibid.) Each time it was noted that the increase was needed to allow FCGMA to continue to benefit from Nossaman’s expertise in the development of the GSPs and allocation systems in the Oxnard and Pleasant Valley basins. (Ibid.)

The representation included developing an ordinance for the Oxnard and Pleasant Valley Basins implementing the allocation systems. (Boada decl., ¶ 5.) The proposed ordinance developed in consultation with Nossaman was the subject of comment and objection by attorneys representing OPV Coalition, Inc., the plaintiff in this proceeding. (Boada decl., ¶¶ 4-8 & exhibits B, C, D.)

According to Nossaman, most of Nossaman’s efforts focused on defending FCGMA in Las Posas Water Rights Coalition v. Fox Canyon Groundwater Management Agency, Santa Barbara County Superior Court case No. VENCI00509700 (Las Posas Action). (Fudacz decl., ¶ 3.) In addition, the scope of Nossaman’s work included advising FCGMA on development and implementation of groundwater sustainability plans and water rights. (Ibid.) During Nossaman’s engagement, 29 timekeepers billed a total of 3,483.5 hours to FCGMA. (Blumenstein decl., ¶ 5.)

FCGMA terminated its contract with Nossaman on May 27, 2020. (Boada decl., ¶ 15; see also Fudacz decl., ¶ 4.)

            (B)       Disqualification Motion

On May 28, 2024, counsel for FCGMA in this action received a letter from attorney Carl Blumenstein at Nossaman that Nossaman would be representing ECO-Farms and other parties (the Pleasant Valley parties) in this litigation. (Folk decl., ¶ 3 & exhibit A; Blumenstein decl., ¶ 5.) Prior to attorney Robert Kwong joining Nossaman in April 2024, no attorney at Nossaman was counsel of record for any party in this action. (Blumenstein decl., ¶ 4.)

On August 26, 2024, FCGMA filed its motion to disqualify Nossaman as counsel representing 45 parties in this action. The motion is supported by the declarations of attorneys Ellison Folk and Alberto Boada. (The court notes that the supporting declarations are not identified in the notice of motion as required by Code of Civil Procedure section 1010 [“Notices must be in writing, and the notice of a motion … must state … the papers, if any, upon which it is to be based.”]. The identification of such documents assists the court and opposing parties to ensure that all papers are properly considered.)

On September 13, 2024, Nossaman, on behalf of the Pleasant Valley parties, filed and served opposition to the motion to disqualify. The opposition is supported by the declarations of attorneys Carl L. Blumenstein, Noah DeWitt, Frederic Fudacz, Derek Kliewer, Robert N. Kwong, Gina Nicholls, Benjamin Rubin, Samantha Savoni, and Alfred E. Smith II, and Nossaman employees Kameran Hedayat,

Amanda Johnston, Derek Knolton, and Jeremy Larsonin.

The hearing on the motion was continued by stipulation and order of the court from its original hearing date of September 20, 2024, to the present hearing date of October 11.

On September 26, 2024, FCGMA filed its reply.

Analysis:

“A lawyer who has formerly represented a client in a matter shall not thereafter represent another person* in the same or a substantially related matter in which that person’s* interests are materially adverse to the interests of the former client unless the former client gives informed written consent.*” (Rules Prof. Conduct, rule 1.9(a).)

“Two ethical duties are entwined in any attorney-client relationship. First is the attorney’s duty of confidentiality, which fosters full and open communication between client and counsel, based on the client’s understanding that the attorney is statutorily obligated [citation] to maintain the client’s confidences. [Citation.] The second is the attorney’s duty of undivided loyalty to the client. [Citation.] These ethical duties are mandated by the California Rules of Professional Conduct.” (City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 846 (Cobra Solutions).)

“[T]he duty to preserve client confidences [citation] survives the termination of the attorney’s representation.” (Cobra Solutions, supra, 38 Cal.4th at p. 846.) “That enduring duty to preserve client confidences precludes an attorney from later agreeing to represent an adversary of the attorney’s former client unless the former client provides an ‘informed written consent’ waiving the conflict. [Citation.] If the attorney fails to obtain such consent and undertakes to represent the adversary, the former client may disqualify the attorney by showing a ‘ “substantial relationship” ’ between the subjects of the prior and the current representations. [Citation.] To determine whether there is a substantial relationship between successive representations, a court must first determine whether the attorney had a direct professional relationship with the former client in which the attorney personally provided legal advice and services on a legal issue that is closely related to the legal issue in the present representation. [Citation.] If the former representation involved such a direct relationship with the client, the former client need not prove that the attorney possesses actual confidential information. [Citation.] Instead, the attorney is presumed to possess confidential information if the subject of the prior representation put the attorney in a position in which confidences material to the current representation would normally have been imparted to counsel. [Citations.] When the attorney’s contact with the prior client was not direct, then the court examines both the attorney’s relationship to the prior client and the relationship between the prior and the present representation. If the subjects of the prior representation are such as to ‘make it likely the attorney acquired confidential information’ that is relevant and material to the present representation, then the two representations are substantially related. [Citations.] When a substantial relationship between the two representations is established, the attorney is automatically disqualified from representing the second client.” (Id. at pp. 846–847.)

“[T]he question whether an attorney should be disqualified in a successive representation case turns on two variables: (1) the relationship between the legal problem involved in the former representation and the legal problem involved in the current representation, and (2) the relationship between the attorney and the former client with respect to the legal problem involved in the former representation. We emphasize, however, the significance of the latter factor in the application of the [H. F. Ahmanson & Co. v. Salomon Brothers, Inc. (1991) 229 Cal.App.3d 1445] formula. If the relationship between the attorney and the former client is shown to have been direct—that is, where the lawyer was personally involved in providing legal advice and services to the former client—then it must be presumed that confidential information has passed to the attorney and there cannot be any delving into the specifics of the communications between the attorney and the former client in an effort to show that the attorney did or did not receive confidential information during the course of that relationship. As a result, disqualification will depend upon the strength of the similarities between the legal problem involved in the former representation and the legal problem involved in the current representation. This is so because a direct attorney-client relationship is inherently one during which confidential information ‘would normally have been imparted to the attorney by virtue of the nature of [that sort of] former representation,’ and therefore it will be conclusively presumed that the attorney acquired confidential information relevant to the current representation if it is congruent with the former representation. [Citations.]” (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 709–710 (Jessen).)

There is no factual dispute that certain Nossaman attorneys had a direct relationship with FCGMA. (Opposition, at p. 7; Fudacz decl., ¶ 3; Blumenstein decl., ¶ 5.) Nossaman attorneys, including particularly attorneys Fudacz, Smith, and Nicholls, personally provided legal advice and services to FCGMA.

            (A)       Substantial Relationship

FCGMA argues that there is a substantial relationship between the current representation and the prior representation. FCGMA presents evidence that in the prior relationship Nossaman attorneys provided advice concerning its GSPs for the Las Posas Valley, Oxnard, and Pleasant Valley Basins and to establish a system for allocating groundwater in these basins. (Boada decl., ¶¶ 2, 4, 7-8.) Nossaman also served as FCGMA’s lead counsel in the first years of the Los Posas Action, including arguing legal issues that arise in this action. (Boada decl., ¶ 10 & exhibit E.)

Nossaman argues that its work for FCGMA was not substantially related because there is no showing of adversity in the present action and the two groundwater adjudications are for different basins. Nossaman argues, among other things, that the GSPs are general, planning-type documents where there is nothing particularly confidential or proprietary about them, and that because these are different basins, the only overlap is general issues of groundwater adjudications that is not materially related to the representation of Nossaman’s current clients. In support of its argument, Nossaman points to Victaulic Company v. American Home Assurance Company (2022) 80 Cal.App.5th 485 (Victaulic).

In Victaulic, the plaintiff sued three of its insurers. (Victaulic, supra, 80 Cal.App.5th at p. 490.) One case was filed in 2012, and in 2013 a law firm substituted in as counsel for the plaintiff, representing it vigorously through the action then on appeal. (Id. at pp. 490-491.) After a jury trial, the court of appeal reversed the judgment in the first appeal and remanded in 2018. (Id. at p. 491.) After remand, in 2021, the insurers learned that two attorneys who had done work for the claims-handling arm of one insurer had recently joined the law firm, some six years after they left employment at the earlier firm. (Ibid.) The insurers filed a motion to disqualify the lawyers and the law firm. (Ibid.) The trial court denied the motion, concluding that the insurers failed to meet their burden in several particulars. (Ibid.)

The Victaulic court affirmed. (Victaulic, supra, 80 Cal.App.5th at p. 491.) After agreeing with the trial court that there was no prior attorney-client personal relationship with a former client, the Victaulic court noted:

“The Rules of Professional Conduct do not bar an attorney from taking a matter adverse to a former client whenever there is any connection, no matter how tenuous, with matters previously handled for the client. Instead, rule 1.9 prohibits an attorney from taking a case adverse to a former client, without that client’s consent, only if it involves ‘the same or a substantially related matter’ as a prior representation of the client. (Rules Prof. Conduct, rule 1.9(a).) Moreover, current and former matters are deemed substantially related only ‘if they involve a substantial risk of a violation’ of a duty owed the former client. (Rules of Prof. Conduct, rule 1.9, com. [3], fn. omitted.)” (Victaulic, supra, 80 Cal.App.5th at pp. 511-512.)

“[T]his materiality requirement is not satisfied by mere relevance. The presumption that former counsel possesses confidential information is triggered only if there is a substantial risk that confidential information would be used in the current representation, which occurs where it is ‘ “reasonable to conclude’ ” that the information ‘ “would materially advance the [present] client’s position.” ’ [Citations.] As one recent case put it, reversing an attorney disqualification, to support disqualification ‘ “ ‘the information acquired during the first representation [must] be “material” to the second; that is, ... directly at issue in, or have some critical importance to, the second representation.’ ” ’ [Citation.]” (Victaulic, supra, 80 Cal.App.5th at p. 512.) Moreover, “ ‘[u]nder California law a law firm is not subject to disqualification because one of its attorneys possesses information concerning an adversary’s general business practices or litigation philosophy ....’ [Citations.]” (Ibid.)

Nossaman argues that any information the prior Nossaman team obtained or generated with respect to GSPs or the SGMA does not meet the materiality requirement as explained in Victaulic and thus does not establish a substantial relationship. FCGMA argues, among other things, that, unlike the circumstances explained in Victaulic, Nossaman lawyers provided confidential advice about the same allocation system and GSPs that are now challenged in this action.

The evidence shows the materiality of Nossaman’s representation of FCGMA to Nossaman’s present representation. The allocation system is a useful example. The evidence shows that the allocation system implemented by FCGMA for the Oxnard and Pleasant Valley Basins was the subject of objection and comment about which Nossaman provided legal advice. (Boada decl., ¶¶ 4-8 & exhibits C, D.) The culmination of that implementation was the 2019 ordinance. (Note: The text of the 2019 ordinance, referred to in the papers in this motion, is attached as exhibit C to FCGMA’s request for judicial notice in support of its opposition to plaintiffs’ motion to stay writ claims, filed December 21, 2023. The court granted that request for judicial notice on January 5, 2024.) The ordinance was amended in 2024, but without change to the disputed baseline period of the 2019 ordinance that was, in part, the subject of Nossaman advice. (See Kwong decl., ¶ 11 & evidence cited.) The allocation ordinance, and in particular, the allocation methodology, is a subject of this action. (E.g., Complaint, ¶¶ 26-31, 40, 47; Second Amended Complaint, ¶¶ 42-47, 56, 64.) The evidence shows that Nossaman worked with FCGMA to address potential or actual legal challenges, presumptively including the legal challenges that have actually now been made in this action. Thus, it is a reasonable inference that the confidential, privileged information used and exchanged in the course of Nossaman’s work for FCGMA would be useful in advancing the position of Nossaman’s current clients in this litigation.

            (B)       Adverse Interests

Nossaman further argues that there is no substantial relationship between the subjects of Nossaman’s prior representation of FCGMA and its current representation because the circumstances here do not present a sufficient level of adversity. (Opposition, at p. 4.) The issue of adversity exists by virtue of its inclusion in rule 1.9: “A lawyer who has formerly represented a client in a matter shall not thereafter represent another person* in the same or a substantially related matter in which that person’s* interests are materially adverse to the interests of the former client ….” (Rules Prof. Conduct, rule 1.9(a), emphasis added.)

The “materially adverse” issue is discussed in a different context in Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811 (Oasis West). In Oasis West, the defendant attorney agreed to represent the plaintiff in its effort to obtain approval of a redevelopment project from the Beverly Hills City Council. (Id. at p. 815.) Four years later, the attorney became involved in a campaign to thwart the same investment project by soliciting signatures on a referendum petition to overturn the city council’s approval of the project. (Ibid.) Shortly after the voters upheld the city council’s approval by a very narrow margin, the plaintiff filed a complaint for breach of fiduciary duty, professional negligence, and breach of contract against the attorney and his law firm. (Ibid.) The defendants filed an anti-SLAPP motion that was denied by the trial court on the grounds that the claim was based on breach of duties of loyalty and confidentiality rather than petitioning activity. (Ibid.) The Court of Appeal reversed, finding that although the attorney acted adversely to his former client, there was no rule prohibiting such conduct. (Id. at pp. 815-816.) On review, the California Supreme Court reversed the Court of Appeal. (Id. at p. 816.)

In addressing the issue of harm from a breach of a lawyer’s duty to maintain confidentiality, the Oasis West court noted:

“It is not difficult to discern that use of confidential information against a former client can be damaging to the client, even if the attorney is not working on behalf of a new client and even if none of the information is actually disclosed. For example, an attorney may discover, in the course of the representation of a real estate developer, that city officials are particularly concerned about the parking and traffic impacts of a proposed development, or that an identifiable population demographic is especially disposed to oppose the proposed development. Under the interpretation proposed by defendants and adopted by the Court of Appeal, the attorney would be free to terminate the representation of the developer and use this information to campaign (quite effectively, one would imagine) against the precise project the attorney had previously been paid to promote. Inasmuch as the harm to the client is the same, the rule appropriately bars the attorney from both disclosing or using the former client’s confidential information against the former client. [Citation.] Indeed, the same rule prevails in most jurisdictions, as evidenced by the Restatement Third of the Law Governing Lawyers, section 60: ‘(1) Except as provided in §§ 61–67, during and after representation of a client: [¶] (a) the lawyer may not use or disclose confidential client information ... if there is a reasonable prospect that doing so will adversely affect a material interest of the client....’ [Citations.]” (Oasis West, supra, 51 Cal.4th at p. 823.)

As the Supreme Court’s citation demonstrates, section 60 of the Restatement Third of the Law Governing Lawyers helps to understand what is “materially adverse” in the context of a lawyer’s duty of confidentiality. The Restatement provides a further explanation:

“What constitutes a reasonable prospect of adverse effect on a material client interest depends on the circumstances. Whether such a prospect exists must be judged from the perspective of a reasonable lawyer based on the specific context of the client matter.” (Rest.3d Law Governing Lawyers, § 60, com. c(i).) “Adverse effects include all consequences that a lawyer of reasonable prudence would recognize as risking material frustration of the client’s objectives in the representation or material misfortune, disadvantage, or other prejudice to a client in other respects, either during the course of the present representation or in the future. It includes consequences such as financial or physical harm and personal embarrassment that could be caused to a person of normal susceptibility and a normal interest in privacy.” (Ibid.)

“Both use and disclosure adverse to a client are prohibited. As the term is employed in the Section, use of information includes taking the information significantly into account in framing a course of action, such as in making decisions when representing another client or in deciding whether to make a personal investment. Disclosure of information is revealing the information to a person not authorized to receive it and in a form that identifies the client or client matter either expressly or through reasonably ascertainable inference. Revealing information in a way that cannot be linked to the client involved is not a disclosure prohibited by the Section if there is no reasonable likelihood of adverse effect on a material interest of the client. Use of confidential client information can be adverse without disclosure. For example, in representing a subsequent client against the interests of a former client in a related matter, a lawyer who shapes the subsequent representation by employing confidential client information gained about the original client violates the duty of § 60(1) not to use that information, even if the lawyer does not disclose the information to anyone else (see § 132).” (Rest.3d Law Governing Lawyers, § 60, com. c(i).)

The current representation is of a group of landowners asserting their interests in water and water allocation in a comprehensive groundwater adjudication action. The scope of this action broadly covers groundwater rights and water usage. (Code Civ. Proc., § 834.) FCGMA is the groundwater management agency exercising its authority as authorized by law to manage groundwater sustainably. Because FCGMA’s role, both in this litigation and generally, necessarily implicates the scope and use of the represented landowners’ interests in water, there is inherently a reasonable prospect for material adverse effects upon FCGMA’s interests by the use of FCGMA confidences in this litigation by Nossaman. As a more specific example, as discussed above, Nossaman was engaged in framing the GSPs and implementing ordinance with current objections and future litigation in mind. It is a reasonable inference that confidential information obtained in that context would be useful in advancing Nossaman’s current client’s interests as against the interests of FCGMA.

After reviewing all of the admissible evidence, the court finds that there is a substantial relationship between the subjects of Nossaman’s prior and current representations and that the current representation is materially adverse to FCGMA.

            (C)       Vicarious Disqualification

Having found that there is a substantial relationship between Nossaman’s prior and current representations, it is conclusively presumed that the particular attorneys involved in the direct relationship with FCGMA acquired confidential information relevant to the current representation. (See Cobra Solutions, supra, 38 Cal.4th at p. 847; Jessen, supra, 111 Cal.App.4th at pp. 709-710.) This does not end the inquiry because there are new and different attorneys involved in the current representation.

“While lawyers are associated in a firm,* none of them shall knowingly* represent a client when any one of them practicing alone would be prohibited from doing so by rules 1.7 or 1.9, unless

            “(1)      the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm;* or

            “(2)      the prohibition is based upon rule 1.9(a) or (b) and arises out of the prohibited lawyer’s association with a prior firm,* and

                        “(i)       the prohibited lawyer did not substantially participate in the same or a substantially related matter;

                        “(ii)      the prohibited lawyer is timely screened* from any participation in the matter and is apportioned no part of the fee therefrom; and

                        “(iii)    written* notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this rule, which shall include a description of the screening* procedures employed; and an agreement by the firm* to respond promptly to any written* inquiries or objections by the former client about the screening* procedures.” (Rules Prof. Conduct, rule 1.10(a).)

As discussed above, each of the individual lawyers involved in representing FCGMA are prohibited by rule 1.9 from representing the current landowner clients. Under the general rule of rule 1.10(a), “when any one of them practicing alone would be prohibited from doing so by rule[ ] … 1.9,” none of the lawyers associated in a firm are permitted to represent those clients unless an exception applies.

In opposition, Nossaman discounts the application of the Rules of Professional Conduct as rules governing attorney discipline and not creating standards for disqualification, citing Hetos Investments, Ltd. v. Kurtin (2003) 110 Cal.App.4th 36 (Hetos). Hetos supports this proposition only in part: “In addition, we underscore the fact that ‘the ABA Model Rules of Professional Conduct ... do not establish ethical standards in California, as they have not been adopted in California and have no legal force of their own. [Citations.]’ [Citation.] Even were this not the case, the violation of a model rule would not compel disqualification as a matter of law. Inasmuch as a violation of a rule of the State Bar Rules of Professional Conduct does not necessarily compel disqualification [citation], a fortiori a violation of a model rule would not do so.” (Id. at pp. 46–47, emphasis added.)

The statement in Hetos is correct as far as it goes, but is inapplicable here. In Hetos, the issue was whether an attorney’s appearance of impropriety, ostensibly in violation of Canon 9 of the American Bar Association Model Code of Professional Responsibility, was a sufficient basis for disqualification. (Hetos, supra, 110 Cal.App.4th at p. 47.) Hetos determined that it was not a basis for disqualification: “This is not a case where the outcome of the proceedings may be affected because the law firm the moving party seeks to disqualify has obtained confidential information that may be used to advantage against that party. [Citation.] All we have here is an awkward situation, where a law firm’s actions may indeed create an appearance of impropriety. That notwithstanding, ‘[d]isqualification is inappropriate ... simply to punish a dereliction that will likely have no substantial continuing effect on future judicial proceedings. [Citation.]’ [Citations.]” (Id. at p. 49.)

The Rules of Professional Conduct nonetheless have a place in determining whether disqualification is proper. The Rules of Professional Conduct have been used, for example, by the California Supreme Court to identify the contours of ethical behavior. (See People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1146 (SpeeDee Oil) [citing Rules of Professional Conduct as to obligations to protect client confidentiality].) This context is immediately important in the disqualification analysis: “Ultimately, disqualification motions involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility. [Citation.] The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one's choice must yield to ethical considerations that affect the fundamental principles of our judicial process.” (Id. at p. 1145.)

The fact that a violation of a Rule of Professional Conduct does not necessarily require disqualification goes to the function of disqualification: “ ‘A court’s authority to disqualify a lawyer in a pending proceeding derives from its inherent power to regulate the conduct of court officers, including attorneys, in furtherance of the sound administration of justice.’ [Citation.] Although we do not disqualify lawyers for every instance of misconduct, ethical breaches will result in disqualification where it is necessary ‘to mitigate the unfair advantage a party might otherwise obtain if the lawyer were allowed to continue representing the client.’ [Citations.]” (Doe v. Superior Court (2019) 36 Cal.App.5th 199, 205.) “Disqualification is only justified where the misconduct will have a ‘continuing effect’ on judicial proceedings.” (Baugh v. Garl (2006) 137 Cal.App.4th 737, 744.)

The continuing effect is the problem presented here. The Rules of Professional Conduct applicable here are designed to address the protection of client confidences, particularly, to address the presumption that confidential information is improperly used or disclosed where there is a substantial relationship between the prior and current representations. Indeed, unlike an ethical violation involving a single incident, where attorney representation of a client would violate the Rules of Professional Conduct, continued representation of that client in the same action would necessarily be a continuing violation of such rules. Permitting such violations, especially in the context of protecting confidential information of the prior client, would have a continuing effect on the judicial proceedings. (See O’Gara Coach Co., LLC v. Ra (2019) 30 Cal.App.5th 1115, 1124 [prohibitions regarding former representation grounded in Rules of Professional Conduct].)

Rule 1.10(a) has two express exceptions. The first, that the prohibition is based on a personal interest of the prohibited lawyer, is inapplicable and no one argues that it is applicable. The prohibition now at issue is based upon a conflict in the interests of lawyers as lawyers. The second exception applies only where the prohibition “arises out of the prohibited lawyer’s association with a prior firm ....” (Rules Prof. Conduct, rule 1.10(a)(2).)

The conflict now at issue arose when attorney Kwong joined Nossaman in April 2024. (See Kwong decl., ¶ 2.) Prior to that time, Kwong was a partner at Arnold, LaRochelle, Mathews, VanConas & Zirbel LLP (ALMVZ). (Kwong decl., ¶ 2.) ALMVZ represented 24 agricultural landowners that were parties to the Las Posas Action. While still a partner at ALMVZ, Kwong represented approximately 40 agricultural landowners in this action. (Kwong decl., ¶ 6.) After Kwong moved to Nossaman, these ALMVZ clients, as well as two additional clients (collectively, the Pleasant Valley parties), retained Nossaman to represent them in this action, with Kwong as lead counsel. (Kwong decl., ¶ 7.)

The prohibited lawyers in this case include Nossaman attorneys who did not participate directly in the prior representation of FCGMA, but who are (and were at the time of the prior representation) lawyers associated with Nossaman. (Rules Prof. Conduct, rule 1.10(a).) The prohibition on those lawyers’ current representation does not arise out of any of those lawyers’ association with a prior firm; each of those lawyers were lawyers at Nossaman at all relevant times. Consequently, by its terms, the exception of rule 1.10(a)(2) does not apply.

The limitations of the exception are deliberate:

“Paragraph (a) of proposed rule 1.10 sets forth the default rule in the introductory clause: any prohibition on representation under rules 1.7 (current client conflict) or 1.9 (former client conflict) will be imputed to all lawyers in the firm unless either subparagraph (a)(1) or (2) applies. [¶] … [¶]

“Subparagraph (a)(2), the screening provision, is derived from the corresponding paragraph in Model Rule 1.10 but has been modified to reflect that the rule is a disciplinary rule rather than a civil standard for disqualification (substitution of ‘prohibited’ for ‘disqualified’). In addition, unlike the Model Rule, which broadly permits screening, subparagraph (a)(2) provides for screening only in limited circumstances.

“Under subparagraph (a)(2), a prohibited lawyer’s conflict will not be imputed to other lawyer’s in the firm so long as the prohibited lawyer did not substantially participate in the contested matter, is timely screened, and written notice is provided to any affected former client to enable the latter to ascertain compliance with the rule. Specifics on what constitutes an effective screen are provided in rule 1.0.1(k) and associated comments.

“The phrase ‘arises out of the personally prohibited lawyer’s association with a prior firm’ further limits the availability of screening to situations where a prohibited lawyer has moved laterally from another firm. Put another way, a law firm could not erect a screen around those firm lawyers who had represented a former client when the lawyers were associated in the same firm in order to represent a new client against that former client. This is an appropriate limitation on screening and parallels the availability of screening for current and former government lawyers (rule 1.11) and former judicial personnel (rule 1.12) only when such lawyers move to new employment.” (Rules Prof. Conduct, rule 1.10, New Rule of Prof. Conduct 1.10, pp. 4, 5, at < https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_1.10-Exec_Summ…; [as of Oct. 4, 2024].)

Thus, the situation now argued by Nossaman is the situation that was intentionally excluded from rule 1.10 by its drafters.

Nossaman does not argue the inapplicability of the text of rule 1.10 apart from noting its status as a disciplinary rule rather than a standard, but instead argues that this matter is governed by Kirk v. First American Title Ins. Co. (2010) 183 Cal.App.4th 776 (Kirk). As summarized in Fluidmaster, Inc. v. Fireman's Fund Ins. Co. (2018) 25 Cal.App.5th 545 (Fluidmaster): “The facts in Kirk require a brief abstraction: The chief counsel of a major insurance company … was contacted by the lawyers for the plaintiffs who were litigating against another, First American Title. The lawyers wanted to hire the chief counsel away to help them in their litigation against the title insurer. In a phone call, the chief counsel was undisputedly given confidential information regarding the ongoing litigation against the title insurer. But he turned them down, and later joined the San Francisco office of a mega-firm in its insurance regulatory practices group. But about a month after joining the mega-firm, the team defending the title insurer in the ongoing litigation moved to that mega-firm—one lawyer went to the mega-firm’s Los Angeles office and the two others to its St. Louis office. The defense of the ongoing litigation against the title insurer went with them, that is, the title insurer’s law firm was now the mega-firm. And almost as soon as the lawyers for the plaintiffs in the litigation against the title insurer learned of the move, they objected to the mega-firm’s now being counsel on the case.” (Id. at pp. 550–551, fn. omitted.)

“There was no question the former chief counsel himself was disqualified from working on the mega-firm’s defense of the title insurer; the issue was whether the entire mega-firm had to be disqualified, too. The trial court applied an automatic rule of vicarious disqualification [citation]. The case then went up on appeal. And—just like the case here—during the appeal the disqualified (now former) chief counsel left the mega-firm.” (Fluidmaster, supra, 25 Cal.App.5th at p. 551.)

“The Kirk court held the case had to be returned for reconsideration. Structurally, Kirk is really two separate opinions: (1) a major disquisition on the topic of vicarious disqualification which appears to have been prepared prior to the court’s receiving the news that the disqualified attorney had left the mega-firm; and (2) a secondary opinion exploring the issue of the disqualified attorney’s leaving the target mega-firm during the pendency of the appeal.” (Fluidmaster, supra, 25 Cal.App.5th at p. 551.)

“The major disquisition has three parts: The first part is a scholarly demonstration that the California Supreme Court had not laid down a rule of automatic vicarious disqualification, so the question was still open as a matter of stare decisis. The second part explained why vicarious disqualification should not be an automatic rule when an ethical screen is imposed around the disqualified attorney, but should be a matter of case-by-case application. [Citation.] The third part is an exploration of those factors that bear on whether an ethical screen will be effective.” (Fluidmaster, supra, 25 Cal.App.5th at p. 551.)

“The secondary opinion confronted the question of what to do in light of the news of the former chief counsel’s departure from the mega-firm. The conclusion was that the case had to go back to the trial court for an examination of whether the chief counsel had actually conveyed any of the title insurer’s confidential information during his one-year tenure at the mega-firm.” (Fluidmaster, supra, 25 Cal.App.5th at p. 551.)

Kirk’s analysis focuses upon two important features. First, as of the time of the decision in Kirk in 2010, Kirk determined that the California Supreme Court recognized that whether vicarious disqualification is always absolute was an open question. (Kirk, supra, 183 Cal.App.4th at p. 798, citing SpeeDee Oil, supra, 20 Cal.4th at p. 1151.) Decisions subsequent to SpeeDee Oil were inconsistent as to extent of automatic vicarious disqualification and that an “ethical wall” between an attorney with confidential information and his or her firm will generally not preclude disqualification, but left open the question of when an ethical wall would be sufficient. (Kirk, supra, at pp. 799-801.) Second, Kirk determined that an ethical screen may be sufficient to rebut the presumption of vicarious disqualification if timely imposed and, depending on the circumstances of a particular case, demonstrated the imposition of preventative measures to guarantee the information would not be conveyed. (Id. at p. 810.)

“ ‘The typical elements of an ethical wall are: [1] physical, geographic, and departmental separation of attorneys; [2] prohibitions against and sanctions for discussing confidential matters; [3] established rules and procedures preventing access to confidential information and files; [4] procedures preventing a disqualified attorney from sharing in the profits from the representation; and [5] continuing education in professional responsibility.’ [Citation.] … We stress, however, that the inquiry before a trial court considering the efficacy of any particular ethical wall is not to determine whether all of a prescribed list of elements (beyond timeliness and the imposition of prophylactic measures) have been established; it is, instead, a case-by-case inquiry focusing on whether the court is satisfied that the tainted attorney has not had and will not have any improper communication with others at the firm concerning the litigation.” (Kirk, supra, 183 Cal.App.4th at pp. 810–811.)

The first focus of the Kirk analysis is no longer true. Although the Supreme Court has not decided a case directly addressing this issue since Kirk was decided, the Supreme Court adopted rule 1.10 in 2018. (Supreme Ct. of Cal. Admin. Order 2018-05-09, filed May 10, 2018.) Rule 1.10 was approved in that order as submitted by the State Bar; 42 rules were approved as modified by the Supreme Court; one rule submitted for approval was denied. (Id. at pp. 1, 2, 6.) The Supreme Court has both literally approved rule 1.10 and has by implication approved the underlying limitations of that rule in avoiding vicarious disqualification. As discussed above, although rule 1.10 is a disciplinary rule but not necessarily a standard for disqualification, permitting continued representation under the circumstances here would be permitting a continuing violation of rule 1.10. This court therefore concludes that Kirk does not apply to avoid disqualification by the use of an ethical screen not authorized by rule 1.10.

With that said, even applying Kirk, the evidence here does not persuasively rebut the presumption of disqualification. The first part of the Kirk analysis is the timeliness of the ethical screen.

“The specific elements of an effective screen will vary from case to case, although two elements are necessary: First, the screen must be timely imposed; a firm must impose screening measures when the conflict first arises. [Fn.] It is not sufficient to wait until the trial court imposes screening measures as part of its order on the disqualification motion. [Citations.] Second, it is not sufficient to simply produce declarations stating that confidential information was not conveyed or that the disqualified attorney did not work on the case; an effective wall involves the imposition of preventive measures to guarantee that information will not be conveyed. [Citation.] ‘To avoid inadvertent disclosures and establish an evidentiary record, a memorandum should be circulated warning the legal staff to isolate the [tainted] individual from communications on the matter and to prevent access to the relevant files.’ [Citation.]” (Kirk, supra, 183 Cal.App.4th at p. 810.) “ ‘[S]creening should be implemented before undertaking the challenged representation or hiring the tainted individual.’ [Citation.]” (Id. at p. 810, fn. 31.)

The evidence presented here is that screening was not undertaken until after Kwong joined Nossaman. Kwong joined Nossaman on April 15, 2024. (Kwong decl., ¶ 2.) Screening did not begin until June 19. (Kwong decl., ¶ 17.) Kwong reached out to Nossaman paralegal Hedayat, who had been involved with Nossaman’s representation of FCGMA, and communicated with him to work on this matter on behalf of the current clients. (Kwong decl., ¶ 16.) This communication occurred between April 24 and May 8. (Ibid.) Shortly thereafter, Nossaman’s Assistant General Counsel, attorney Blumenstein, instructed Kwong not to work with Hedayat in connection with this matter and to assign projects to a different paralegal. (Ibid.) Blumenstein sent a letter to current counsel for FCGMA on May 28 regarding Nossaman’s current representation. (Blumenstein decl., ¶ 5; Folk decl., ¶ 3 & exhibit A.)

Nossaman characterizes these events as regrettable but minor lapses immaterial to the effectiveness of Nossaman’s screening. (Opposition, at p. 11, fn. 4.) However, the timing of events gives rise to a different inference. Blumenstein’s involvement in instructing Kwong’s use of paralegals occurred after Kwong had already communicated with Hedayat about working on the present matter. As Kirk explains, quoted above, the inquiry must focus on whether the court is satisfied that the tainted attorney has not had and will not have any improper communication with others at the firm concerning the litigation. The court is not satisfied that there has not been improper communication.

This problem persists under the current Rules of Professional Conduct. “ ‘Screened’ means the isolation of a lawyer from any participation in a matter, including the timely imposition of procedures within a law firm* that are adequate under the circumstances (i) to protect information that the isolated lawyer is obligated to protect under these rules or other law; and (ii) to protect against other law firm* lawyers and nonlawyer personnel communicating with the lawyer with respect to the matter.” (Rules Prof. Conduct, rule 1.0.1(k).) Again, the court is not satisfied that the procedures were timely so as to adequately protect against improper communication.

Thus, even if Kirk were to apply generally, the court resolves the conflicting inferences presented by the parties’ evidence to find Nossaman’s screening untimely and inadequate.

            (D)       Equitable Concerns

Nossaman finally argues that equitable concerns weigh against disqualification and thus the court should exercise its discretion to deny the motion.

“A motion to disqualify a party’s counsel may implicate several important interests. Consequently, judges must examine these motions carefully to ensure that literalism does not deny the parties substantial justice. [Citation.] Depending on the circumstances, a disqualification motion may involve such considerations as a client’s right to chosen counsel, an attorney’s interest in representing a client, the financial burden on a client to replace disqualified counsel, and the possibility that tactical abuse underlies the disqualification motion. [Citations; fn.] Nevertheless, determining whether a conflict of interest requires disqualification involves more than just the interests of the parties.” (SpeeDee Oil, supra, 20 Cal.4th at pp. 1144–1145.)

“[P]reservation of the public trust is a policy consideration of the highest order. However, it is just one of the many policy interests which must be balanced by a trial court considering a disqualification motion, and we are not prepared to say that this interest always outweighs the opposing party’s right to counsel of its choice. We reiterate the policy considerations to be taken into consideration in a motion for disqualification: (1) a client’s right to chosen counsel; (2) an attorney’s interest in representing a client; (3) the financial burden on a client to replace disqualified counsel; (4) the possibility that tactical abuse underlies the disqualification motion; (5) the need to maintain ethical standards of professional responsibility; and (6) the preservation of public trust in the scrupulous administration of justice and the integrity of the bar.” (Kirk, supra, 183 Cal.App.4th at pp. 807–808, fn. omitted.)

In addressing these considerations, it is important to note that this groundwater adjudication is still in its early stages. There have been no substantive adjudications of rights yet; a special master is now being appointed to create and implement an initial discovery plan. Also, the conflicts which create the issues discussed above began with Kwong joining Nossaman. These circumstances minimize the burden on the Pleasant Valley parties in finding new counsel. Moreover, the court does not find that this motion is the subject of tactical abuse. FCGMA has a serious and legitimate concern in the protection of its confidences under the circumstances here and this motion was brought promptly. As discussed above, the circumstances here favor maintaining the ethical standards set forth in rule 1.10, and preserving public trust and the integrity of the bar. Balancing all of these considerations, including the not-insignificant interest of the affected clients in retaining the counsel of their choice in an area of law for which expertise is uncommon and valuable, the court finds that that these equitable considerations do not outweigh the interests supporting disqualification.

Considering all of the evidence and arguments of the parties, disqualification is appropriate based upon the conflict of interest discussed herein. FCGMA’s motion to disqualify will therefore be granted.

The court has considered the evidentiary objections of Nossaman to the evidence presented by FCGMA and FCGMA’s responses to those objections. The court has considered all of the admissible evidence presented by the parties in reaching this conclusion, whether or not specifically discussed in this ruling.

(2)       Case Management Orders

At the July 19, 2024, case management conference (CMC), the court provided guidance and identified four issues for the appointment of Judge Beckloff as special master:

“(1)      Is Judge Beckloff willing to accept this appointment at this time? Assuming he remains willing:

“(2)      How much money is necessary for the organizational meetings/ hearings with Judge Beckloff? Once the amount necessary for start-up is determined, the court will finalize an initial allocation to assess this amount from the parties. This initial allocation is not intended to represent the interim or final allocation, but is to get the process started so that Judge Beckloff can provide a recommendation as to the allocation and mechanism for ongoing payments. To the extent the initial allocation differs from the interim or final allocation, the court expects to address the interim or final allocation retroactively so that any relative over-payments or under-payments made initially are credited or debited against the allocation as if it had been initially determined. The parties’ further input or agreement regarding this initial allocation is also needed.

“(3)      What process should exist to determine exemptions from assessment on the basis of de minimis participation or other circumstances?

“(4)      What orders are necessary to meet statutory requirements to appoint and effect the special mastership as discussed herein?”

In response, the plaintiffs and multiple defendants made a joint submission answering these questions:

“Answer to Question 1. The undersigned parties have confirmed that Judge Beckloff is and remains willing to serve as Special Master.” (Joint Submission, filed Sept. 18, 2024, p. 2.)

“Answer to Question 2. Judge Beckloff’s firm, Signature Resolution, has asked for a retainer of $112,500 plus a $10,000 administrative fee for Signature Resolutions to get his work underway. Based on the anticipated scope of work and Judge Beckloff’s hourly rate, the undersigned agree that this is a reasonable retainer. To fund this initial allocation, subject to recoupment as contemplated in the Court’s July 19 Order, Plaintiffs will advance $56,250 and Defendants the Cities of Oxnard, Camarillo, Ventura and Port Hueneme, Fox Canyon Groundwater Management Agency, United Water Conservation District, Calleguas Municipal Water District, Camrosa Water District, Port Hueneme Water Agency, Channel Islands Beach Community Services District, California-American Water Company, Marathon Land, the Archdiocese of Los Angeles, Archdiocese of Los Angeles Education & Welfare Corp, St. John’s Seminary in California, and The Procter & Gamble Paper Products Company have agreed to collectively advance $56,250. There parties are working to identify another party or parties to advance the $10,000 administrative fee. The parties’ agreement among each other and with Signature are documented in the emails attached hereto as Exhibit 2.” (Joint Submission, filed Sept. 18, 2024, p. 2, bolding omitted.) R.N. Daily Ranch, LLC, subsequently clarified that it was not among the parties agreeing to front costs, but this would not change the amount that the remaining members of the defendant group would front. (Id. at p. 2, fn. 1.)

In their joinder to the Joint Submission, defendant intervenors Pleasant Valley County Water District, Guadalasca Mutual Water Company, and defendants John S. Broome and Rancho Guadalasca, LLC, who are shareholders in Guadalasca (collectively, the Responding Parties) have agreed to advance the $10,000 administrative fee subject to credit when the cost-share is determined. (Responding Parties’ Joinder, filed Sept. 19, 2024, at p. 2.)

“Question 3. The parties will continue to work together to determine if agreement can be reached upon a process to determine exemptions from assessment for special master fees (such as, for example, parties who claim a right to less than a certain number of acre-feet of water per year). Failing agreement, the parties may seek a recommendation from Judge Beckloff for a bright line test, and any party may ask Judge Beckloff or the Court for an exemption, subject to the right of other parties to object. (See Civ. Proc. Code, § 845, subd. (b).) In addressing and contesting these issues, the parties will remain mindful of the Court’s admonition that each party’s respective share of the special master’s fees is relatively small and should not be dwarfed by costs spent disputing them.” (Joint Submission, filed Sept. 18, 2024, p. 2.)

“Question 4. The Court should enter the Proposed Order attached as Exhibit 3 appointing Judge Beckloff. Judge Beckloff has stated he is ready to set an initial telephone conference to begin his work right away. See supra Ex. 2.” (Joint Submission, filed Sept. 18, 2024, pp. 2-3, bolding omitted.)

In the case management statement of plaintiffs OPV Coalition, et al., filed September 19, 2024, plaintiffs identify that the proposed order included as exhibit 3 to the Joint Submission is unopposed.

The July 19, 2024, CMC set a further CMC for August 9. The CMC was then continued from August 9 to October 4 at the request of the parties. The CMC was then continued from October 4 to October 11, again at the request of the parties. During this time, no party has filed any objection or further qualification to the entry of the proposed order. The court will therefore enter the proposed order as requested. To maintain a clear record, plaintiffs shall lodge with the court a clean copy of the proposed order for the court’s signature and entry.

In their case management statement, plaintiffs propose the next CMC to take place on November 8, 2024. Counsel will need to be prepared to discuss this, or a different, date for the next CMC.