1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 GOLDEN EYE MEDIA USA, INC., a ) Case No.: 3:18-cv-02109-BEN-LL California corporation, ) 12 ) ORDER ON MOTION TO BE Plaintiff, 13 ) RELIEVED AS COUNSEL OF v. ) RECORD 14 ) TROLLEY BAGS UK LTD, a 15 ) [ECF No. 100] corporation of the United Kingdom; and ) 16 BERGHOFF INTERNATIONAL, ) INC., a Florida corporation, 17 ) Defendants. ) 18 ) TROLLEY BAGS UK LTD, a 19 ) corporation of the United Kingdom; and ) 20 BERGHOFF INTERNATIONAL, ) INC., a Florida corporation, 21 ) Counterclaimants, ) 22 v. ) 23 ) GOLDEN EYE MEDIA USA, INC., a ) 24 California corporation; FARZAN ) 25 DEHMOUBED, an individual; and ) JENNIFER DUVALL, an individual, ) 26 ) 27 Counterdefendants. ) ) 28 1 I. INTRODUCTION 2 Plaintiff/Counterdefendant GOLDEN EYE MEDIA USA, INC., a California 3 corporation (“Plaintiff”) brings this action seeking a declaratory judgment of non- 4 infringement against Defendants/Counterclaimants TROLLEY BAGS UK LTD, a 5 corporation of the United Kingdom (“Trolley Bags”); and BERGHOFF 6 INTERNATIONAL, INC., a Florida corporation (“Berghoff”) (collectively, 7 “Defendants”). ECF No. 1. 8 Before the Court is the Motion to Withdraw as Counsel of Record submitted by 9 Sheppard, Mullin, Richter & Hampton LLP (“Sheppard Mullin”) and Honigman LLP 10 (“Honigman”) (collectively, “Counsel”), current counsel of record for Berghoff (the “Motion”). ECF No. 100. 11 The motion was submitted on the papers without oral argument pursuant to Civil 12 Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 13 114. After considering the papers submitted, supporting documentation, and applicable 14 law, the Court DENIES the Motion. 15 II. LEGAL STANDARD 16 An attorney may not withdraw as counsel except by leave of court, permitting the 17 party to either appear on the party’s own behalf or substitute other counsel in as counsel of 18 record. S.D. Cal. Civ. R. 83.3(f)(1); see also P.I.C. Int’l, Inc. v. Gooper Hermetic, Ltd., 19 No. 3:19-CV-00734-BEN-LL, 2020 WL 2992194, at *1 (S.D. Cal. Jun. 4, 2020). Under 20 the Local Rules, “[o]nly natural persons representing their individual interests in propria 21 persona may appear in court without representation by an attorney permitted to practice 22 pursuant to Civil Local Rule 83.3.” S.D. Cal. Civ. R. 83.3(k). “All other parties, including 23 corporations, partnerships and other legal entities, may appear in court only through an 24 attorney permitted to practice pursuant to Civil Local Rule 83.3.” Id.; see also Laskowitz 25 v. Shellenberger, 107 F. Supp. 397, 398 (S.D. Cal. 1952) (“Since a corporation cannot 26 practice law, and can only act through the agency of natural persons, it follows that it can 27 appear in court on its own behalf only through a licensed attorney.”). Thus, courts may not 28 1 grant a motion to withdraw filed by counsel for a corporate entity unless the attorney and/or 2 corporate entity have arranged for qualified replacement counsel to substitute in as counsel 3 of record. See, e.g., id. 4 California law governs issues of ethics and professional responsibility in federal 5 courts. See, e.g., Radcliffe v. Hernandez, 818 F.3d 537, 541 (9th Cir. 2016) (“California 6 law governs questions of conflicts of interest and disqualification”); see 7 generally RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 1 cmt. 8 b (2000) (“Federal district courts generally have adopted the lawyer code of the jurisdiction 9 in which the court sits, and all federal courts exercise the power to regulate lawyers 10 appearing before them.”); but see Unified Sewerage Agency of Washington Cty., Oregon 11 v. Jelco, Inc., 646 F.2d 1339, 1342 n.1 (9th Cir. 1981) (“We express no opinion on the law 12 to apply where the district court has not designated the applicable rules of professional 13 responsibility (e.g., state law, the Model Code of Professional Responsibility, or a federal 14 common law of professional responsibility).”). Under Rule 1.16 of California’s Rules of 15 Professional Conduct, effective June 1, 2020, subdivision (a) governs mandatory 16 withdrawal while subdivision (b) governs permissive withdrawal. In ruling on a motion to 17 withdraw, “[i]t is the duty of the trial court to see that the client is protected, so far as 18 possible, from the consequences of an attorney’s abandonment.” CE Res., Inc. v. Magellan 19 Group, LLC, No. 08-cv-02999-MCE-KJM, 2009 WL 3367489, at *2 (E.D. Cal. Oct. 14, 20 2009) (denying motion to withdraw where corporation would be left unrepresented by 21 counsel) (citations omitted). 22 III. DISCUSSION 23 Rule 1.16(b) of the California Rules of Professional Conduct, governing permissive 24 withdrawal, permits an attorney to withdraw from representation of a client for several 25 enumerated grounds. In the present case, Counsel asks to be permitted to withdraw from 26 representation “because there are multiple grounds for withdrawal under Rule 1.16(b).” 27 ECF No. 100-1 at 2:9-11. Counsel claims that they “have taken reasonable steps to 28 prevent any potential prejudice to BergHOFF under Rule 1.16(d) of the California Rules 1 of Professional Conduct, including providing reasonable notice to BergHOFF.” Id. at 2 2:11-15. While there is no declaration submitted concurrently with the Motion, Counsel 3 states that “[a] copy of the Motion and this Brief in Support have been served on 4 BergHOFF and its regular outside counsel via email and U.S. Mail, as well as all counsel 5 of record using the Court’s ECF system.” Id. at 2:16-18. Counsel asks that their client, 6 Berghoff, “be granted 14 days to engage new counsel.” Id. at 2:18-19. 7 The Court denies the Motion because (1) Counsel failed to submit a declaration in 8 support of their Motion; (2) the Court may not permit counsel to withdraw leaving a 9 corporate entity defendant unable to defend itself; and (3) Counsel failed to set forth 10 adequate grounds for this Court to grant the Motion. 11 A. Counsel Failed to Submit the Declaration Required by the Local Rules. 12 A motion to withdraw must (1) be served on the adverse party and moving 13 attorney’s client and (2) include a declaration regarding service of the motion on those 14 parties. S.D. Cal. Civ. R. 83.3(f)(3). “Failure to . . . file the required declaration of service 15 will result in a denial of the motion.” S.D. Cal. Civ. R. 83.3(f)(3)(b). In the present case, 16 Counsel filed a “Certificate of Service” stating that the Motion was electronically served 17 via the Court’s ECF system as well as via regular U.S. Mail and e-mail to the client and 18 its outside counsel. ECF No. 100-1 at 4. This document, however, although signed by 19 John Burns, was not signed under penalty of perjury, and as such, does not qualify as a 20 “declaration.” See, e.g., 28 U.S.C. § 1746(2) (providing that whenever a law of the United 21 States or rule requires a matter to be supported by sworn declaration in writing, that matter 22 may be proved “by the unsworn declaration . . . in writing of such person which is 23 subscribed by him, as true under penalty of perjury, and dated,” so long as it substantially 24 follows the form proscribed by the statute). As such, the Motion fails to meet the 25 requirements of Local Rule 83.3(f)(3). 26 / / / 27 / / / 28 / / / 1 B. CWohuerrtes TMhaeyr eN ios tN Aol lOowth ePre Crmouisnssiveel RWeiatdhyd rtoa wSaulb fsotrit uat eC ionr paos rCaoteu nEsnetli toyf 2 Record.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 GOLDEN EYE MEDIA USA, INC., a ) Case No.: 3:18-cv-02109-BEN-LL California corporation, ) 12 ) ORDER ON MOTION TO BE Plaintiff, 13 ) RELIEVED AS COUNSEL OF v. ) RECORD 14 ) TROLLEY BAGS UK LTD, a 15 ) [ECF No. 100] corporation of the United Kingdom; and ) 16 BERGHOFF INTERNATIONAL, ) INC., a Florida corporation, 17 ) Defendants. ) 18 ) TROLLEY BAGS UK LTD, a 19 ) corporation of the United Kingdom; and ) 20 BERGHOFF INTERNATIONAL, ) INC., a Florida corporation, 21 ) Counterclaimants, ) 22 v. ) 23 ) GOLDEN EYE MEDIA USA, INC., a ) 24 California corporation; FARZAN ) 25 DEHMOUBED, an individual; and ) JENNIFER DUVALL, an individual, ) 26 ) 27 Counterdefendants. ) ) 28 1 I. INTRODUCTION 2 Plaintiff/Counterdefendant GOLDEN EYE MEDIA USA, INC., a California 3 corporation (“Plaintiff”) brings this action seeking a declaratory judgment of non- 4 infringement against Defendants/Counterclaimants TROLLEY BAGS UK LTD, a 5 corporation of the United Kingdom (“Trolley Bags”); and BERGHOFF 6 INTERNATIONAL, INC., a Florida corporation (“Berghoff”) (collectively, 7 “Defendants”). ECF No. 1. 8 Before the Court is the Motion to Withdraw as Counsel of Record submitted by 9 Sheppard, Mullin, Richter & Hampton LLP (“Sheppard Mullin”) and Honigman LLP 10 (“Honigman”) (collectively, “Counsel”), current counsel of record for Berghoff (the “Motion”). ECF No. 100. 11 The motion was submitted on the papers without oral argument pursuant to Civil 12 Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 13 114. After considering the papers submitted, supporting documentation, and applicable 14 law, the Court DENIES the Motion. 15 II. LEGAL STANDARD 16 An attorney may not withdraw as counsel except by leave of court, permitting the 17 party to either appear on the party’s own behalf or substitute other counsel in as counsel of 18 record. S.D. Cal. Civ. R. 83.3(f)(1); see also P.I.C. Int’l, Inc. v. Gooper Hermetic, Ltd., 19 No. 3:19-CV-00734-BEN-LL, 2020 WL 2992194, at *1 (S.D. Cal. Jun. 4, 2020). Under 20 the Local Rules, “[o]nly natural persons representing their individual interests in propria 21 persona may appear in court without representation by an attorney permitted to practice 22 pursuant to Civil Local Rule 83.3.” S.D. Cal. Civ. R. 83.3(k). “All other parties, including 23 corporations, partnerships and other legal entities, may appear in court only through an 24 attorney permitted to practice pursuant to Civil Local Rule 83.3.” Id.; see also Laskowitz 25 v. Shellenberger, 107 F. Supp. 397, 398 (S.D. Cal. 1952) (“Since a corporation cannot 26 practice law, and can only act through the agency of natural persons, it follows that it can 27 appear in court on its own behalf only through a licensed attorney.”). Thus, courts may not 28 1 grant a motion to withdraw filed by counsel for a corporate entity unless the attorney and/or 2 corporate entity have arranged for qualified replacement counsel to substitute in as counsel 3 of record. See, e.g., id. 4 California law governs issues of ethics and professional responsibility in federal 5 courts. See, e.g., Radcliffe v. Hernandez, 818 F.3d 537, 541 (9th Cir. 2016) (“California 6 law governs questions of conflicts of interest and disqualification”); see 7 generally RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 1 cmt. 8 b (2000) (“Federal district courts generally have adopted the lawyer code of the jurisdiction 9 in which the court sits, and all federal courts exercise the power to regulate lawyers 10 appearing before them.”); but see Unified Sewerage Agency of Washington Cty., Oregon 11 v. Jelco, Inc., 646 F.2d 1339, 1342 n.1 (9th Cir. 1981) (“We express no opinion on the law 12 to apply where the district court has not designated the applicable rules of professional 13 responsibility (e.g., state law, the Model Code of Professional Responsibility, or a federal 14 common law of professional responsibility).”). Under Rule 1.16 of California’s Rules of 15 Professional Conduct, effective June 1, 2020, subdivision (a) governs mandatory 16 withdrawal while subdivision (b) governs permissive withdrawal. In ruling on a motion to 17 withdraw, “[i]t is the duty of the trial court to see that the client is protected, so far as 18 possible, from the consequences of an attorney’s abandonment.” CE Res., Inc. v. Magellan 19 Group, LLC, No. 08-cv-02999-MCE-KJM, 2009 WL 3367489, at *2 (E.D. Cal. Oct. 14, 20 2009) (denying motion to withdraw where corporation would be left unrepresented by 21 counsel) (citations omitted). 22 III. DISCUSSION 23 Rule 1.16(b) of the California Rules of Professional Conduct, governing permissive 24 withdrawal, permits an attorney to withdraw from representation of a client for several 25 enumerated grounds. In the present case, Counsel asks to be permitted to withdraw from 26 representation “because there are multiple grounds for withdrawal under Rule 1.16(b).” 27 ECF No. 100-1 at 2:9-11. Counsel claims that they “have taken reasonable steps to 28 prevent any potential prejudice to BergHOFF under Rule 1.16(d) of the California Rules 1 of Professional Conduct, including providing reasonable notice to BergHOFF.” Id. at 2 2:11-15. While there is no declaration submitted concurrently with the Motion, Counsel 3 states that “[a] copy of the Motion and this Brief in Support have been served on 4 BergHOFF and its regular outside counsel via email and U.S. Mail, as well as all counsel 5 of record using the Court’s ECF system.” Id. at 2:16-18. Counsel asks that their client, 6 Berghoff, “be granted 14 days to engage new counsel.” Id. at 2:18-19. 7 The Court denies the Motion because (1) Counsel failed to submit a declaration in 8 support of their Motion; (2) the Court may not permit counsel to withdraw leaving a 9 corporate entity defendant unable to defend itself; and (3) Counsel failed to set forth 10 adequate grounds for this Court to grant the Motion. 11 A. Counsel Failed to Submit the Declaration Required by the Local Rules. 12 A motion to withdraw must (1) be served on the adverse party and moving 13 attorney’s client and (2) include a declaration regarding service of the motion on those 14 parties. S.D. Cal. Civ. R. 83.3(f)(3). “Failure to . . . file the required declaration of service 15 will result in a denial of the motion.” S.D. Cal. Civ. R. 83.3(f)(3)(b). In the present case, 16 Counsel filed a “Certificate of Service” stating that the Motion was electronically served 17 via the Court’s ECF system as well as via regular U.S. Mail and e-mail to the client and 18 its outside counsel. ECF No. 100-1 at 4. This document, however, although signed by 19 John Burns, was not signed under penalty of perjury, and as such, does not qualify as a 20 “declaration.” See, e.g., 28 U.S.C. § 1746(2) (providing that whenever a law of the United 21 States or rule requires a matter to be supported by sworn declaration in writing, that matter 22 may be proved “by the unsworn declaration . . . in writing of such person which is 23 subscribed by him, as true under penalty of perjury, and dated,” so long as it substantially 24 follows the form proscribed by the statute). As such, the Motion fails to meet the 25 requirements of Local Rule 83.3(f)(3). 26 / / / 27 / / / 28 / / / 1 B. CWohuerrtes TMhaeyr eN ios tN Aol lOowth ePre Crmouisnssiveel RWeiatdhyd rtoa wSaulb fsotrit uat eC ionr paos rCaoteu nEsnetli toyf 2 Record. 3 Under the Local Rules, “[o]nly natural persons representing their individual 4 interests in propria persona may appear in court without representation by an attorney 5 permitted to practice pursuant to Civil Local Rule 83.3.” S.D. Cal. Civ. R. 83.3(k). “All 6 other parties, including corporations, partnerships and other legal entities, may appear in 7 court only through an attorney permitted to practice pursuant to Civil Local Rule 83.3.” 8 S.D. Cal. Civ. R. 83.3(k); see also Laskowitz, 107 F. Supp. at 398. Thus, courts may not 9 grant a motion to withdraw filed by counsel for a corporate entity unless the attorney 10 and/or corporate entity have arranged for qualified replacement counsel to substitute in as 11 counsel of record. See, e.g., id. Here, the Court denies the Motion as granting the Motion 12 would leave a corporate entity unrepresented, and Counsel has failed to set forth an 13 adequate plan for replacement counsel to appear on Berghoff’s behalf. 14 C. Counsel Failed to Set Forth Adequate Grounds for Granting the Motion, Especially in Light of Potential Prejudice. 15 Under Rule 1.16, subdivision (b) of the California Rules of Professional Conduct, 16 counsel may withdraw from representing a client where (1) “a continuation of the 17 representation is likely to result in a violation of these rules or the State Bar Act”; (2) the 18 attorney “believes in good faith, in a proceeding pending before a tribunal, that the 19 tribunal will find the existence of other good cause for withdrawal”; and/or (3) the client 20 (a) “insists upon presenting a claim or defense in litigation . . . that is not warranted under 21 existing law and cannot be supported by good faith argument for an extension, 22 modification, or reversal of existing law,” (b) “either seeks to pursue a criminal or 23 fraudulent course of conduct or has used the lawyer’s services to advance a course of 24 conduct that the lawyer reasonably believes was a crime or fraud,” (c) “insists that the 25 lawyer pursue a course of conduct that is criminal or fraudulent,” (d) “by other conduct 26 renders it unreasonably difficult for the lawyer to carry out the representation effectively,” 27 (e) “breaches a material term of an agreement with, or obligation, to the lawyer relating 28 1 to the representation, and the lawyer has given the client a reasonable warning after the 2 breach that the lawyer will withdraw unless the client fulfills the agreement or performs 3 the obligation,” or (f) “knowingly and freely assents to termination of the representation.” 4 Cal. R. Prof. Conduct, Rule 1.16(b). Subdivision (d) requires that “[a] lawyer shall not 5 terminate a representation until the lawyer has taken reasonable steps to avoid reasonably 6 foreseeable prejudice to the rights of the client, such as giving the client sufficient notice 7 to permit the client to retain other counsel.” Cal. R. Prof. Conduct, Rule 1.16(d). 8 “In ruling on a motion to withdraw as counsel, courts consider: (1) the reasons why 9 withdrawal is sought; (2) the prejudice withdrawal may cause to other litigants; (3) the 10 harm withdrawal might cause to the administration of justice; [and] (4) the degree to 11 which withdrawal will delay the resolution of the case.” Garrett v. Ruiz, No. 11-cv- 12 02540-IEG, 2013 WL 163420, at *2 (S.D. Cal. Jan. 14, 2013); see also Bernstein v. City 13 of Los Angeles, No. CV1903349PAGJSX, 2020 WL 4288443, at *1–2 (C.D. Cal. Feb. 14 25, 2020) (same). There is no danger of prejudice where a hearing date is not immediately 15 set or where litigation is at a relatively nascent stage. Gurvey v. Legend Films, Inc., No. 16 09-cv-00942-IEG, 2010 WL 2756944, at *1 (S.D. Cal. July 12, 2010). Further, there is 17 no undue delay where the counsel takes “reasonable steps to avoid reasonably foreseeable 18 prejudice to the rights of the client, including giving due notice to the client [and] allowing 19 time for employment of other counsel …” Cal. R. Prof. Conduct, Rule 1.16(c). 20 “It is the duty of the trial court to see that the client is protected, so far as possible, 21 from the consequences of an attorney’s abandonment.” CE Res., 2009 WL 3367489, at 22 *2 (denying motion to withdraw where corporation would be left unrepresented by 23 counsel) (citations omitted). “[C]onclusory assertions that there was a communication 24 breakdown is not sufficient to warrant withdrawal.” Amazon Logistics, Inc. v. Mann Bros. 25 Transp., Inc., No. 1:19-cv-01060-DAD-SAB, 2020 WL 2194005, at *4 (E.D. Cal. May 26 6, 2020). At the same time, attorney must “preserve client confidences even when seeking 27 to be relieved as counsel.” Tuft, Mark L., et al., Cal. Prac. Guide Prof. Resp., Ch. 10-B 28 (Dec. 2019); see also Cal. State Bar Form. Opn. 2015-192 (decided under former rule, | providing that an attorney may disclose to court only as much as reasonably necessary to 2 demonstrate need to withdraw). 3 The Court recognizes that granting the withdrawal motion would leave Berghoff, a 4 corporate Defendant, without counsel, in contravention of Local Rule 83.3(k). However, > |lRule 83.3(k) is not offended where the court orders an unrepresented corporate defendant © find substitute counsel and gives them some time to do so. See e.g., Indymac Fed. 7 Bank, F.S.B. v. McComic, No. 08-CV-1871-IEG-WVG, 2010 WL 2000013 (S.D. Cal. 8 May 18, 2010) (granting counsel’s motion to withdraw as defendants could no longer pay ? || and were not prejudiced, but also directing defendants to secure substitute counsel, where 10 counsel cited the client limited partnership’s refusal to participate in litigation and V1 inability to pay fees as reasons for withdrawal); McNally v. Commonwealth Financial 12 Systems, Inc., 2013 WL 685364 (S.D. Cal. Feb. 25, 2013) (granting motion where 13 litigation was at an early stage and where corporate defendant was unable to pay legal 14 fees, consented to the motion, and had “ample opportunity to retain substitute counsel as 15 needed’). Nonetheless, the matter remains within the Court’s discretion and subject to 16 || considerations of prejudice, harm, and delay. The Court notes this case is not in the earlier 17 stages, and on the contrary, is nearing trial. Thus, concerns of prejudice, harm, and delay 18 || are heightened at this stage of the proceedings. Accordingly, the Court finds that the 19 motion, as drafted, is inadequate and is therefore DENIED. Counsel may refile their 20 || motion if they believe the Court’s concerns laid out in this Order can be readdressed. 21 CONCLUSION 22 For the above reasons, the Court DENIES the Motion as follows: 23 1. Defendant’s counsel’s Motion to Withdraw as Counsel of Record is DENIED 24 |! without prejudice to counsel refiling the motion in accordance with Local Rules and stating 25 grounds discussed above. 26 IT IS SO ORDERED. 27 || DATED: January 5, 2021 28 HON. ROGER T. BENITE United States District Judge _7-