July 2012 Vol. 9, No. 2

9.2.10

Rule 3-310:  Avoiding Representation of Adverse Interests

Case:

Active Network, Inc. v. Monster Worldwide, Inc. (S.D.Cal. 2012) 2012 WL 1713584

Issue:

Plaintiff-company sued its former Chief Information Officer for alleged violation of non-solicitation agreement.  Was non-party current employer of CIO entitled to quash subpoena from firm representing plaintiff where firm partner:  (1) formerly advised one of non-party company’s employees about the scope of employee’s non-solicitation obligations with former employer; (2) advised employee about whether company could be compelled to indemnify employee if former employer sued her for violation of non-solicitation agreement; and (3) made a presentation to company on general wage and hour issues?

Holding:

No.  Company seeking to quash subpoena failed to establish any former attorney-client relationship between firm representing plaintiff and company.  While firm attorney had offered to represent company’s employee and her former employer should they be sued, company declined to sign an engagement letter with the firm partner or retain him for any purpose thereafter.  (2012 WL 1713584, *3.)  In addition, firm partner submitted an affidavit attesting that he had not received confidential information from or about company at any time.  That affidavit alleviated any concern that the firm had confidential information about the company provided either by the employee the firm’s partner had advised or by the company itself.  (Ibid.)

“While it is likely that [firm partner] had a professional relationship with [non-party’s employee], that does not automatically impute that relationship to [the non-party company],” especially in light of non-party company and employee’s adverse interests regarding indemnity.  Because non-party was not a former client of the firm representing plaintiff and because the Court was satisfied that the firm partner had at no time received confidential information from or about the non-party company, the Court found that it was not unduly burdensome for the company to respond to the subpoena.  (Ibid.)      

Notes:

The Court noted that it was irrelevant to its analysis that firm partner did not bill for the advice it gave non-party’s employee or for the wage and hour law presentation and that firm spent only a couple of hours advising non-party’s employee and less than an hour giving the presentation.  (Id. at *2, note 1.)

The Court denied without prejudice non-party company’s motion to disqualify the firm from seeking any discovery against non-party company.  Even had the Court found that there was a conflict between the firm and the subpoenaed company, the Court could simply quash the subpoena and leave it to the Southern District of New York, where the underlying case was pending, to determine what other protective measures were warranted.  (Id. at *4.)

The Court felt it “important to note” the lack of anything in non-party company’s pleadings that there was any willful or gross ethical violations threatening the Court’s integrity.  At most, the pleadings suggest negligence in the firm “failing to discover that an employee of a non-party was briefly the client of an attorney in a separate office.”  (Id. at *4, note 2.)  

  Return to index