Fluidmaster, Inc. v. Fireman's Fund Ins. Co.
Fluidmaster, Inc. v. Fireman's Fund Ins. Co.
Opinion of the Court
The law firm of Crowell & Moring (Crowell) was vicariously disqualified from this insurance coverage action based on a newly-hired, but disqualified discovery associate in a geographically distant office. Then, while the disqualification appeal was pending in this court, the associate left Crowell. At that point, Kirk v. First American Title Ins. Co. (2010)
II. FACTS
Fluidmaster, Inc. is a major plumbing supply company alleged to have manufactured defective flexible toilet connectors. The defective product allegation has generated a large number of class actions against the company. (See generally In re Fluidmaster, Inc., Water Connector Components Prods. Liab. Litig. (N.D. Ill., Mar. 31, 2017, No. 14-cv-5696),
Fireman's Fund is an insurance company that has paid homeowner claims based on Fluidmaster's allegedly defective product and has sued Fluidmaster in subrogation to recover the monies paid. Fireman's Fund issued commercial liability insurance policies to Fluidmaster from 1999 through 2001.
In October 2014, Fluidmaster sued Fireman's Fund in Los Angeles seeking to establish, in an insurance coverage case, that Fireman's Fund owed Fluidmaster a defense of the class actions. About a year later, in 2015, the case was transferred to Orange County and Fireman's Fund retained Crowell's Irvine office to represent it.
Elizabeth Pollock is an especially computer-savvy attorney. In 2008, she began working for a technology services company specializing in helping law firms and businesses with electronic discovery needs, and in January 2013, moved to another such company, E-STET. Pollock worked at E-STET from 2013 through January 2016 as Director of Managed Review.
In 2014, Fluidmaster hired E-STET to help it with the discovery in the class actions. That discovery entailed production of some 140,000 pages (not a misprint) of Fluidmaster documents, plus the withholding of another 10,000 pages of documents claimed by Fluidmaster to be privileged. Pollock was E-STET's lead on the project, but in January 2016, she found other employment.
*891She changed jobs again in July 2017. She began working for Crowell's Los Angeles office as a "discovery attorney." The backstory of her hiring, *549according to her later declaration, is that she was approached by an outside recruiter in March and asked "extensively about potential conflicts" by a recruiting lawyer at Crowell in April. In late April she completed a questionnaire about past employment and identified four companies that had engaged one of her previous employers. One was Fluidmaster. She was then contacted by Crowell's professional responsibility "counsels" (two attorneys at Crowell) but did not volunteer-and was not asked about-"any facts or communications regarding Fluidmaster that would be considered confidential." On the day she began work for Crowell, the firm sent out an "ethics wall notice" to all personnel prohibiting any communication with her on the Fluidmaster plumbing products litigation, and specifically prohibiting attorneys working on the Fluidmaster litigation from using her services.
Fluidmaster almost immediately-and successfully-sought disqualification of the entire Crowell firm. In September 2017, the trial court ordered Crowell disqualified but specifically noted that "Ms. Pollock's presence at C&M is still very evident in this case" and on that basis distinguished Kirk . Wrote the trial judge: "[t]he Kirk court was influenced by the fact that the tainted attorney had left the law firm sought to be disqualified which, again, is not the case here."
Fireman's Fund and Crowell filed this appeal. The coverage litigation was put on hold.
Then, in February 2018, during the pendency of this appeal, Pollock left Crowell. Appellants' counsel made a motion for this court to take evidence to establish the fact of her discontinued employment, this court granted it and *550then asked for further briefing on the effect of Pollock's leaving Crowell on the order of disqualification. In particular, we asked whether there was any evidence before the trial court on the disqualification motion that showed Pollock had shared any of Fluidmaster's confidential information with any person at Crowell. In its letter brief Fluidmaster concedes there was no such evidence.
III. DISCUSSION
We will assume, without deciding, that Pollock is conflicted out of representing *892Fireman's Fund in the coverage litigation brought by Fluidmaster. There is no question there was a substantial relationship between her work for E-STET on Fluidmaster's behalf, and the Crowell firm's work on Fireman's Fund's behalf against Fluidmaster.
But this appeal is about the vicarious disqualification of a 500-plus attorney firm. It is safe to say that Kirk is by far the most thoughtful and well researched California appellate opinion on the topic of California law in regard to the topic of the vicarious disqualification of an entire law firm based on the employment of one disqualified attorney.
The facts in Kirk require a brief abstraction: The chief counsel of a major insurance company (Fireman's Fund, no less) 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 *551Francisco office of a mega-firm in its insurance regulatory practices group.
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 ( Kirk, supra , 183 Cal.App.4th at p. 790,
*893chief counsel left the mega-firm. ( Id . at 815,
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.
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. (See Kirk, supra , 183 Cal.App.4th at pp. 801-810,
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. (See Kirk, supra , 183 Cal.App.4th at pp. 815-816,
*552Given the posture of our case, we derive the most guidance from Kirk's secondary opinion as it relates to disqualified counsel departing the target firm. There is one difference in the cases, but it weighs in Crowell's favor at this juncture. In Kirk , the trial court had applied a rule of automatic exclusion, laboring under a misimpression of what stare decisis required, so the case had to be remanded for a determination by the trial court in the first instance. (See Kirk, supra , 183 Cal.App.4th at p. 815,
The difference is important because the Kirk court explained that once a disqualified attorney leaves the target firm, the only real question is whether any confidences were shared with the target firm. (See Kirk, supra , 183 Cal.App.4th at pp. 815-816,
We think the case should be sent back for reevaluation by the trial court. Disqualification relates to the trial court's authority to control its own proceedings. (See *894Kirk, supra , 183 Cal.App.4th at p. 791,
Furthermore, the record is silent as to whether any confidences might have been spilled during the roughly six months Pollock was at Crowell. The Kirk court opined that the target law firm needs to provide declarations sufficient to exclude any possibility of shared confidences-the declaration of the disqualified attorney is not sufficient. The court said the target firm should, at the very least, provide declarations from each member of its team working on the former client's matter, plus those attorneys (usually on the professional responsibility unit of a large firm) who learned of the facts that prompted the erection of the ethical screen in the first place. (See Kirk, supra , 183 Cal.App.4th at p. 816, fn. 38,
*553The case must therefore be returned for the retroactive evaluation of any possible sharing. In that regard, the Kirk court said the trial court "may consider the elements of the ethical wall constructed" by the target firm as "relevant" to the "strength" of wall and the likelihood "confidential information was actually conveyed." ( Kirk, supra , 183 Cal.App.4th at p. 816,
For the guidance of the trial court on remand, we now recount the factors from the Kirk opinion that bear on evaluating the retroactive "strength" of the ethical wall. While the first one was not specifically enumerated in Kirk as its own separate factor, we include it because it undergirds much of the Kirk opinion, and in particular Kirk's rejection of automatic vicarious disqualification:
(1) Size, or lack thereof . An overarching factor is the size of the target firm. (See Kirk, supra , 183 Cal.App.4th at pp. 801-802,
(2) The geographical, physical and departmental distance between the disqualified attorney and the attorneys working *895on matters affecting the disqualified attorney's former client . (See Kirk, supra , 183 Cal.App.4th at p. 811,
(3) The nature, if any, of the target law firm's prohibitions against the discussion of confidential information. (See Kirk, supra , 183 Cal.App.4th at pp. 811-812,
*554(4) The existence, if any, of rules and procedures to prevent access to confidential information and files. (See Kirk, supra , 183 Cal.App.4th at p. 812,
(5) Whether the disqualified attorney has some financial incentive in regard to the representation against the former client. (See Kirk, supra , 183 Cal.App.4th at p. 812,
(6) The existence if any of any supervisorial relationship between the disqualified attorney and the attorneys working on any former client matters. (See Kirk, supra , 183 Cal.App.4th at p. 813,
(7) The speed with which the former client was notified of the target firm's employment of the disqualified attorney. (See Kirk, supra , 183 Cal.App.4th at p. 813,
Fluidmaster argues Kirk does not compel a remand because the trial court here has already found a conflict existed, so the employee's departure would not change the result. The sole support for this contention is the trial court's reference to the Crowell firm's not having "maintained ... a cone of silence." The reference to "cone of silence" is based on a passage in the trial court's 16-page ("Smartly" written) September 2017 opinion, on the disqualification motion.
Fluidmaster reads too much into the cone of silence reference. In context, all the cone of silence passage shows is that Pollock had conversations with Crowell attorneys "about" the Fluidmaster litigation prior to being hired-conversations presumptively necessary to a proper conflicts check.
IV. DISPOSITION
The order disqualifying the Crowell firm from the Fluidmaster-Fireman's Fund litigation is reversed, and the matter hereby remanded for a new hearing at which the trial court will reweigh the competing considerations. Each side will bear its own costs on appeal.
WE CONCUR:
ARONSON, J.
GOETHALS, J.
The ethics wall notice said: "Elizabeth Pollock, previously an employee with E-STET Litigation Services ("E-STET"), recently joined Crowell & Moring as a discovery attorney. At E-STET, Ms. Pollock assisted Fluidmaster Inc. with e-discovery issues in connection with class action consumer litigation related to plumbing products ("E-STET Matter"). Crowell & Moring has been retained by FFIC to represent it in connection with insurance coverage claims related the class action consumer litigation related to plumbing products (CAM 102923.0000302) ("C&M Matter").
"Ms. Pollock has an ongoing obligation prohibiting any communication of confidential information regarding the E-STET Matter, as is true with all former clients. In addition, an ethics wall is being put in place to ensure that Ms. Pollock does not participate in the firm's representation of FFIC in the C&M Matter and does not communicate any confidential information regarding the E-STET Matter to those individuals employed by Crowell & Moring representing FFIC in the C&M Matter.
"Accordingly, Ms. Pollock is prohibited from discussing or providing access to information concerning the E-STET Matter to the FFIC Attorneys and the FFIC Attorneys are prohibited from using Ms. Pollock's services on the C&M Matter and from discussing information with Ms. Pollock concerning the E-STET Matter or the C&M Matter."
There are at least two obvious areas of direct conflict. First, as a person making an initial determination whether a given Fluidmaster document was privileged, Pollock would necessarily have been privy to communications between Fluidmaster and its attorneys on the class actions. Second, in the coverage litigation, there is the issue of whether the attorney fees and costs spent by Fluidmaster on its defense of the class action were reasonable. Pollock would necessarily have insight into both issues from her work as document reviewer for E-STET on the class action litigation.
The idea of automatic vicarious disqualification worked its way into California case law in a couple of California appellate decisions that took the rule for granted, which themselves can traced back to a number of federal decisions that also took the rule for granted. (See Henriksen v. Great American Savings & Loan (1992)
The firm was Sonnenschein Nath & Rosenthal. The chief counsel had worked in the general counsel's office of the California Department of Insurance prior to going to Fireman's Fund.
One of the most perceptive defenses of the imputed knowledge rationale is to be found in Justice Scotland's dissent in Adams . We might call it the "it takes no imagination" theory of vicarious disqualification. Significantly, it is a defense of the rule based on the small size of the firm involved in the Adams case: "It is inconceivable that, in such a small firm with only three partners, there would not have been discussions among all the attorneys, particularly the partners, about material matters relating to the representation of a major, sustaining client like Aerojet. It takes no imagination to recognize that confidential information which would be useful to someone later suing Aerojet normally would be imparted during discussions about billing matters or billing rates, during casual conversations at social occasions with Aerojet principals, or in the many other types of contacts among attorneys in the firm that would not constitute direct representation and would not show up on billing records. The client was too big, the firm too small, and the matters at issue too closely related to say there is no conflict." (Adams, supra , 86 Cal.App.4th at pp. 1344-1345,
Here is the passage, verbatim: "The Complex Asbestos Court held that most likely means of rebutting the presumption of shared confidences is to implement a procedure which effectively screens the employee from any involvement in the litigation, 'a procedure one court aptly described as a "cone of silence." Id. at 593,
Case-law data current through December 31, 2025. Source: CourtListener bulk data.