<b>Counsel Concerns</b>Music Publisher's Defense Counsel To Stay in Case

Rule 3-310(E) of California Rules of Professional Conduct states that a lawyer “shall not, without the informed written consent of the client or former client, accept employment adverse to the client, or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment.” Rule 1.10(b) of the American Bar Association (ABA) Model Rules of Professional Conduct states: “When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless 1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and 2) any lawyer remaining in the firm has [protected] information … material to the matter.”

Both rules were cited by the California Court of Appeal in a recent ruling involving entertainment industry litigation. After losing her job, Ilene Goldberg, an in-house attorney for Warner/Chappell Music from 1993 to 2002, filed suit against the music publisher. The suit alleged, among other things, gender discrimination and wrongful termination. Shortly after filing the complaint, Goldberg moved to disqualify Warner-Chappell defense counsel Mitchell Silberberg & Knupp (MS&K). Goldberg claimed that she had revealed confidential information to former MS&K partner J. Eugene Salomon when she consulted him in 1997 about her employment with Warner-Chappell. This was just after MS&K began doing legal work for Warner-Chappell. Goldberg said she also had personal and professional relationships with other MS&K lawyers.

Goldberg purportedly “disclosed confidential information to [Salomon] including the nature and term of [her] employment agreement, [her] compensation and benefits, disability, termination by [Warner], [her] ability to retain, disclose, and use confidential/privileged information concerning [her] employment relationship with [Warner], scripts and other literary works created by [her], the effect of a change in control of [Warner], expiration of the employment agreement, and [Warner's] obligations under state and federal law.”

For Goldberg, the issue was whether MS&K should be disqualified due to its presumed possession of confidential information about Goldberg. MS&K argued that under the ABA Model Rules, it could defend Warner-Chappell against the Goldberg suit if no current member of the firm had confidential information about Goldberg.

The trial court denied Goldberg's motion to disqualify, noting “The evidence is undisputed that [MS&K] and Salomon never opened a file for Ms. Goldberg. They never billed her. There are no notes or records in their files about the meeting and no documents were prepared. No telephone calls were made. It was simply a meeting late one afternoon where Ms. Goldberg and Mr. Salomon sat down and discussed the meaning of the employment contract she was being offered and what provisions she might request. … There is no evidence that Mr. Salomon talked to anyone about this matter when he was with [MS&K]. And more importantly, he had left the firm approximately three years before this matter began. There is no fear of him talking about the case in the lunch room, or having his files seen by other members of the firm, as he is no longer there.”

The Court of Appeal of California, Second Appellate District, Division Four affirmed. In its opinion, the court of appeal acknowledged that an entire firm can be disqualified when one of its attorneys formerly represented and may possess confidential information harmful to a former client who is now an adverse party in litigation. But the court of appeal emphasized that this wasn't so if “there was no opportunity for confidential information to be divulged.” The court of appeal then noted: “At some point, it ceases to make sense to apply a presumption of imputed knowledge as a lawyer moves from firm to firm. Salomon, while at MS&K, gave advice to Goldberg concerning the terms of her contract with Warner. We agree with the trial court that, despite the informality, an attorney-client relationship existed between them. Moreover, if Salomon were still practicing at MS&K, MS&K would likely have to be disqualified from the current litigation because there would be no practical way of ensuring that, despite his best intentions, Salomon would not let slip some confidential information he may not even be aware that he possesses. But Salomon is no longer with MS&K. We need not be concerned that he will inadvertently pass on confidential information to his colleagues in the future because he is no longer there 'in the lunch room' as the trial court said. It was appropriate under the circumstances for the trial court to make an assessment of whether Salomon actually passed on confidential information. Since the court found he had not, there was no basis for disqualification. Goldberg v. Warner/Chappell Music Inc., B174102.

Key to the appeal court's ruling is that Salomon left MS&K several years before its handling of the defense for Warner-Chappell. But this leaves open the question of what length of time may found acceptable in other cases in which an entertainment lawyer may have left a firm less than three years before the firm has taken on a lawsuit against a former client.

' Stan Soocher

Rule 3-310(E) of California Rules of Professional Conduct states that a lawyer “shall not, without the informed written consent of the client or former client, accept employment adverse to the client, or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment.” Rule 1.10(b) of the American Bar Association (ABA) Model Rules of Professional Conduct states: “When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless 1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and 2) any lawyer remaining in the firm has [protected] information … material to the matter.”

Both rules were cited by the California Court of Appeal in a recent ruling involving entertainment industry litigation. After losing her job, Ilene Goldberg, an in-house attorney for Warner/Chappell Music from 1993 to 2002, filed suit against the music publisher. The suit alleged, among other things, gender discrimination and wrongful termination. Shortly after filing the complaint, Goldberg moved to disqualify Warner-Chappell defense counsel Mitchell Silberberg & Knupp (MS&K). Goldberg claimed that she had revealed confidential information to former MS&K partner J. Eugene Salomon when she consulted him in 1997 about her employment with Warner-Chappell. This was just after MS&K began doing legal work for Warner-Chappell. Goldberg said she also had personal and professional relationships with other MS&K lawyers.

Goldberg purportedly “disclosed confidential information to [Salomon] including the nature and term of [her] employment agreement, [her] compensation and benefits, disability, termination by [Warner], [her] ability to retain, disclose, and use confidential/privileged information concerning [her] employment relationship with [Warner], scripts and other literary works created by [her], the effect of a change in control of [Warner], expiration of the employment agreement, and [Warner's] obligations under state and federal law.”

For Goldberg, the issue was whether MS&K should be disqualified due to its presumed possession of confidential information about Goldberg. MS&K argued that under the ABA Model Rules, it could defend Warner-Chappell against the Goldberg suit if no current member of the firm had confidential information about Goldberg.

The trial court denied Goldberg's motion to disqualify, noting “The evidence is undisputed that [MS&K] and Salomon never opened a file for Ms. Goldberg. They never billed her. There are no notes or records in their files about the meeting and no documents were prepared. No telephone calls were made. It was simply a meeting late one afternoon where Ms. Goldberg and Mr. Salomon sat down and discussed the meaning of the employment contract she was being offered and what provisions she might request. … There is no evidence that Mr. Salomon talked to anyone about this matter when he was with [MS&K]. And more importantly, he had left the firm approximately three years before this matter began. There is no fear of him talking about the case in the lunch room, or having his files seen by other members of the firm, as he is no longer there.”

The Court of Appeal of California, Second Appellate District, Division Four affirmed. In its opinion, the court of appeal acknowledged that an entire firm can be disqualified when one of its attorneys formerly represented and may possess confidential information harmful to a former client who is now an adverse party in litigation. But the court of appeal emphasized that this wasn't so if “there was no opportunity for confidential information to be divulged.” The court of appeal then noted: “At some point, it ceases to make sense to apply a presumption of imputed knowledge as a lawyer moves from firm to firm. Salomon, while at MS&K, gave advice to Goldberg concerning the terms of her contract with Warner. We agree with the trial court that, despite the informality, an attorney-client relationship existed between them. Moreover, if Salomon were still practicing at MS&K, MS&K would likely have to be disqualified from the current litigation because there would be no practical way of ensuring that, despite his best intentions, Salomon would not let slip some confidential information he may not even be aware that he possesses. But Salomon is no longer with MS&K. We need not be concerned that he will inadvertently pass on confidential information to his colleagues in the future because he is no longer there 'in the lunch room' as the trial court said. It was appropriate under the circumstances for the trial court to make an assessment of whether Salomon actually passed on confidential information. Since the court found he had not, there was no basis for disqualification. Goldberg v. Warner/Chappell Music Inc., B174102.

Key to the appeal court's ruling is that Salomon left MS&K several years before its handling of the defense for Warner-Chappell. But this leaves open the question of what length of time may found acceptable in other cases in which an entertainment lawyer may have left a firm less than three years before the firm has taken on a lawsuit against a former client.

' Stan Soocher