Neal v. Health Net, Inc.

123 Cal. Rptr. 2d 202, 100 Cal. App. 4th 831, 2002 Daily Journal DAR 8561, 2002 Cal. Daily Op. Serv. 6844, 2002 Cal. App. LEXIS 4450
CourtCalifornia Court of Appeal
DecidedJuly 30, 2002
DocketB153290
StatusPublished
Cited by21 cases

This text of 123 Cal. Rptr. 2d 202 (Neal v. Health Net, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Neal v. Health Net, Inc., 123 Cal. Rptr. 2d 202, 100 Cal. App. 4th 831, 2002 Daily Journal DAR 8561, 2002 Cal. Daily Op. Serv. 6844, 2002 Cal. App. LEXIS 4450 (Cal. Ct. App. 2002).

Opinions

Opinion

TURNER, P. J.

I. Introduction

In Flatt v. Superior Court (1994) 9 Cal.4th 275, 283 [36 Cal.Rptr.2d 537, 885 P.2d 950], the California Supreme Court recognized the presumption that exists when a client seeks to disqualify a former lawyer in subsequent litigation. The court held: “[W]here a former client seeks to have a previous attorney disqualified from serving as counsel to a successive client in litigation adverse to the interests of the first client, the governing test requires that the client demonstrate a ‘substantial relationship’ between the subjects of the antecedent and current representations.” (Ibid.) Once a substantial relationship exists, it is presumed that the lawyer who the former client seeks to be disqualified is in possession of .confidential information pertinent to the present lawsuit and disqualification is mandatory. (Ibid.) The same presumption applies when an attorney has an of counsel relationship with the prior attorney. (People ex rel. Dept, of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1144-1156 [86 Cal.Rptr.2d 816, 980 P.2d 371].) But what happens when a lawyer is representing a plaintiff in an existing lawsuit and is subsequently retained by a former legal secretary for the defendant in that very same litigation; in the context of the specific facts before us, is there a presumption the new client is in possession of confidential information such as to mandate or even permit disqualification? And if the new client, the legal secretary formerly employed by the defendant, exposes the lawyer to confidential information, is disqualification in the existing lawsuit a proper remedy under California law? We answer each of these questions in this very, very close and difficult case in the negative.

[834]*834Plaintiff, Khybrette Neal, appeals from an order disqualifying her attorney, Michael S. Traylor, from representing her in an employment discrimination lawsuit filed against defendants, Health Net, Inc., Foundation Health System (Health Net) and Gil Gallegos, her former employer and supervisor, respectively. Relying on Hull v. Celanese Corporation (2d Cir. 1975) 513 F.2d 568, 569-571, the trial court granted defendants’ motion to disqualify Mr. Traylor from representing plaintiff after he agreed to represent Cynthia Brockett, a legal secretary formerly employed by Health Net. Ms. Brockett was terminated after she accessed a Health Net computer file containing attorney-client information related to plaintiff’s action against defendants. Ms. Brockett accessed the computer file while employed by Health Net. Mr. Traylor later agreed to represent Ms. Brockett in her own separate discrimination lawsuit against Health Net. No applicable legal principle allows for disqualification under the circumstances of this case. Accordingly, the disqualification order must be reversed.

II. Background

On June 1, 2001, plaintiff filed this action against her former employer and supervisor alleging she had been wrongfully discharged from her position as human resources manager due to race and gender discrimination. She alleged causes of action for contract breach, fraud, intentional infliction of emotional distress, assault, and slander. Ms. Brockett also was employed by Health Net and had made complaints that she was the victim of gender and disability discrimination. As the human resources manager, plaintiff had reviewed and responded to at least one of Ms. Brackett’s discrimination complaints. Needless to note, this review occurred prior to plaintiff’s termination.

On September 10, 2001, during the pendancy of the present lawsuit, defendants filed a motion to disqualify Mr. Traylor as counsel of record for plaintiff. Defendants contended that Mr. Traylor met with and began representing Ms. Brockett, a member of Health Net’s legal department. Ms. Brockett admitted accessing and reviewing plaintiff’s litigation file. The file contained confidential documents including attorney notes and memoranda. In support of these contentions, defendants filed the declaration of Cory Sotolov, a manager of litigation administration. Ms. Sotolov oversaw the activities of the legal department’s support staff. From March 9, 1998, to August 22, 2001, Ms. Brockett was employed as a secretary in the legal department. As a legal secretary, Ms. Brockett was under the direct supervision of an attorney who handled managed care litigation. Ms. Brockett was responsible for tendering all claims to Health Net’s insurance carrier. Ms. Brockett had no day-to-day involvement in handling employment litigátion [835]*835problems. The legal department utilizes “Case Track,” a document management database that permits a user to access all information pertinent to a particular litigation matter rather than reviewing the “hard file.” The legal department’s practice is to input all information into the system including attorney notes of privileged communications. Because the system has the ability to scan documents, the files include privileged correspondence and reports from outside litigation counsel. The legal department also maintains a physical file for each litigation matter. In an employment-related case, the file includes a copy of the plaintiff’s personnel file, including any internal investigation conducted at the request of counsel.

On August 9, 2001, Ms. Sotolov received an e-mail from the legal department’s administrative assistant, Michelle Hart-Molina. Ms. Hart-Molina advised Ms. Sotolov that Ms. Brockett had been looking for plaintiff’s file earlier that day. Ms. Hart-Molina became suspicious and tried to access plaintiff’s file in the computer. The system advised her that the file had been “locked” by Ms. Brockett for two and one-half hours. The file included attorney notes and memoranda.

Also on August 9, 2001, a person identifying herself as Cynthia Brockett telephoned the office of Ballard, Rosenberg, Golper & Savitt, LLP, requesting to speak to Linda Miller Savitt, who is the lead trial counsel in this action. Ms. Brockett spoke to Lori Liebman, Ms. Savitt’s assistant. Ms. Brockett stated she worked in the Health Net legal department. Ms. Brockett wished to speak to Ms. Savitt. Ms. Liebman informed Ms. Brocket that Ms. Savitt represented Health Net. Ms. Liebman’s declaration relates, “Ms. Brockett thanked me for my time and hung up.”

On August 13, 2001, Ms. Sotolov met with Phillip Davis, vice-president and assistant general counsel of litigation for Health Net, to discuss the issues raised by Ms. Brockett’s access to plaintiff’s file and the apparent attempt to contact Ms. Savitt. Mr. Davis subsequently met with Ms. Brockett. Ms. Brockett admitted requesting plaintiff’s litigation file. Ms. Brockett admitted reviewing plaintiff’s case track file. Ms. Sotolov’s declaration stated; “[Ms.] Brockett advised Mr. Davis that she was a ‘very close friend’ of [plaintiff] and that she wished to review her employment file because she was ‘concerned’ about her.” However, Ms. Brockett denied calling outside counsel. Ms. Brockett was placed on a one-week paid suspension, pending completion of a further investigation.

In investigating the matter, Ms. Sotolov discovered that on August 13, 2001, Ms. Brockett attempted to delete all personal documents stored in her computer. However, they retrieved the documents from Ms. Brockett’s [836]

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123 Cal. Rptr. 2d 202, 100 Cal. App. 4th 831, 2002 Daily Journal DAR 8561, 2002 Cal. Daily Op. Serv. 6844, 2002 Cal. App. LEXIS 4450, Counsel Stack Legal Research, https://law.counselstack.com/opinion/neal-v-health-net-inc-calctapp-2002.