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June 23, 2003

Koo v. Rubio’s Restaurants, Inc. (2003) 109 Cal.App.4th 719

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In the context of a disqualification motion the Fourth District confirms that the existence of an attorney-client relationship is a question of law evaluated by the totality of the circumstances.  The relationship cannot be created by the declaration of one party; it requires mutual assent.  However, managing agents of a corporation are “represented parties” for the purpose of California Rule of Professional Conduct Rule 2-100’s bar on ex-parte contacts with a party known to be represented by counsel.

Kerry O.  Bartlett (Bartlett) filed a complaint as a class representative alleging that defendant Rubio’s Restaurants, Inc.  (Rubio’s) failed to pay salaried general managers and assistant managers overtime compensation.  Bartlett’s counsel, the law firm of Righetti Wynne (Righetti), sought to discover the names, addresses and telephone numbers of all of Rubio’s managers and filed a motion to compel.  Rubio’s counsel, Carlton, DiSante & Freudenberger (Carlton), filed a declaration in opposition stating it represented Rubio’s current assistant and general managers.  Carlton asserted these individuals could not be contacted without its consent.

At the hearing Righetti argued that Carlton could not represent Rubio’s and its managers without a conflict of interest.  In response, Carlton asserted no conflict arose out of its representation of Rubio’s managerial agents for purposes of communication or depositions by Bartlett’s counsel.  The trial court ordered some depositions of current Rubio’s managers and full access to the current managers by deposition only.

Righetti later filed a motion to disqualify Carlton on the basis of a conflict of interest he asserted arose from Carlton’s claimed representation of Rubio’s and its managers.  Carlton clarified its prior declaration.  It informed the court that it never intended to establish an attorney-client relationship with the current managing agents of the corporation in their individual capacities.  Instead, Carlton meant to inform that court that it intended to assert the application of California Rule of Professional Conduct Rule 2-100, which bars ex-parte contacts with a party, and by extension managing agents of a party, who are represented by counsel.  The trial court granted the motion to disqualify.  The trial court then denied Rubio’s motion for reconsideration.

The Court of Appeal disagreed with the trial court and found Carlton did not have an attorney client relationship with Rubio’s managers.  Rule of Professional Conduct 3-310(C)(1)(2), which prohibits the representation of conflicting interests without a written waiver, does not apply absent an attorney-client relationship.  The existence of an attorney client relationship is judged by the “totality of the circumstances” and is a question of law.  The Court of Appeal found it improbable that experienced, presumably ethical class action defense counsel would undertake representation of class members in their individual capacity and announce this to the court.  More importantly, Carlton’s declaration could not unilaterally create an attorney-client relationship.  There was no evidence that the individual managers agreed to be represented by Carlton.  Finally, Rubio’s did not have authority to create an attorney-client relationship between Carlton and Rubio’s managers in their individual capacities.

The Court of Appeal also confirmed Carlton’s representation of Rubio’s managers in their representative capacities, as opposed to their individual capacities.  By confirming this limited representation, the Court ensured Righetti (and other class counsel) would be subject to Rule 2-100.

The court cautioned that not all of Rubio’s employees were “represented “ for the purposes of Rule 2-100.  Only employees who possess the type of binding corporate authority that could potentially qualify them as “managing agents” or whose acts or omissions in connection with the matter may be binding upon or imputed to the corporation for purposes of civil liability or whose statements may constitute admissions on the part of the defendant will be deemed “represented.”

Comment: This case illustrates the ethical dilemmas that can be encountered by class counsel in determining the propriety of contact with managing agents of a corporation, when those managing agents may also be members of the represented class.  This is not an uncommon situation in class action employment litigation and counsel should be cautious about inadvertent violations of Rule 2-100’s preclusion on ex-parte contacts.


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