1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 LEANNE TAN, Case No.: 20cv1082-LL-DEB
12 Plaintiff, ORDER GRANTING MOTION TO 13 v. WITHDRAW
14 QUICK BOX, LLC, et al., [ECF No. 204] 15 Defendants. 16
17 CHAD BIGGINS, 18 Cross Claimant, 19 v. 20 LA PURA DEFENDANTS and JOHN DOES 1-10, as defined in Plaintiff’s First 21 Amended Complaint, 22 Cross Defendants. 23 24 Karl Kronenberger and Jeffrey Rosenfeld, and their law firm Kronenberger 25 Rosenfeld, LLP, move to withdraw as counsel of record for the La Pura Defendants 26 because an actual, material conflict has arisen among the La Pura Defendants. ECF No. 27 204. The Motion was submitted on the papers without oral argument pursuant to Civil 28 1 Local Rule 7.1(d)(1) and Federal Rule of Civil Procedure 78(b). No opposition has been 2 filed. For the following reasons, the motion is GRANTED. 3 I. BACKGROUND 4 Plaintiff Leanne Tan filed this putative class action on June 12, 2020, alleging that 5 she had been defrauded by a deceptive online offer for a skincare product. Ms. Tan filed 6 the suit against the La Pura Defendants (except for Rocket Management Group, LLC 7 (“Rocket”) and Kiet Lieu (“Lieu”)), who allegedly operated the deceptive offer; against 8 Quick Box, LLC, Quick Holdings, LLC, Stephen Adele, Chad Biggins, and James Martel 9 (the “Quick Box Defendants”), who allegedly facilitated the offer through fulfillment 10 services and other services; and against Konnektive Corporation, Martorano Holdings, 11 LLC, Konnektive Rewards, LLC, Matthew Martorano, and Katheryn Martorano (the 12 “Konnektive Defendants”), who allegedly facilitated the offer through the provision of 13 software and other services. Plaintiff filed a First Amended Complaint (“FAC”) on January 14 7, 2021. All Defendants moved to dismiss the FAC, and on April 7, 2021, the Court denied 15 Defendants’ motion in significant part. ECF No. 130. All Defendants (except Rocket and 16 Lieu) then filed answers to the FAC between April 21-22, 2021. ECF Nos. 131,137-141, 17 145, 147-149. The Quick Box Defendants and the Konnektive Defendants also asserted 18 crossclaims and third-party claims against the La Pura Defendants (including Rocket and 19 Lieu). ECF Nos. 136-142, 145, 147-149. The La Pura Defendants filed answers to the 20 crossclaims and third party claims between June 29, 2021 and July 1, 2021. ECF Nos. 170- 21 171, 175-184. 22 II. LEGAL STANDARD 23 “An attorney may not withdraw as counsel except by leave of court.” P.I.C. Int'l, 24 Inc. v. Gooper Hermetic, Ltd., No. 19-cv-00734-BEN-LL, 2020 WL 2992194, at *1 (S.D. 25 Cal. June 4, 2020) (citation omitted). “The trial court has discretion whether to grant or 26 deny an attorney’s motion to withdraw in a civil case.” Osgood v. Main Streat Mktg., LLC, 27 No. 16cv2415-GPC(BGS), 2017 WL 7362740, at *1 (S.D. Cal. Mar. 27, 2017). Under the 28 Local Rules, “corporations, partnerships and other legal entities, may appear in court only 1 through an attorney permitted to practice pursuant to Civil Local Rule 83.3.” S.D. Cal. 2 CivLR 83.3(j); see also Laskowitz v. Shellenberger, 107 F. Supp. 397, 398 (S.D. Cal. 1952) 3 (“Since a corporation cannot practice law, and can only act through the agency of natural 4 persons, it follows that it can appear in court on its own behalf only through a licensed 5 attorney.”). 6 “In ruling on a motion to withdraw as counsel, courts consider: (1) the reasons why 7 withdrawal is sought; (2) the prejudice withdrawal may cause to other litigants; (3) the 8 harm withdrawal might cause to the administration of justice; and (4) the degree to which 9 withdrawal will delay the resolution of the case.” Leatt Corp. v. Innovative Safety Tech., 10 LLC, No. 09-cv-1301-IEG POR, 2010 WL 444708, at *1 (S.D. Cal. Feb. 2, 2010). There 11 is no danger of prejudice, harm to the administration of justice, or undue delay where there 12 are no immediately scheduled hearings, the case is still in early stages, and the relevant 13 parties have sufficient notice of the intent to withdraw. See Gurvey v. Legend Films, Inc., 14 No. 09-cv-942-IEG (BGS), 2010 WL 2756944, at *1 (S.D. Cal. July 12, 2010). Counsel 15 must take “reasonable steps to avoid reasonably foreseeable prejudice to the rights of the 16 client, such as giving the client sufficient notice to permit the client to retain other counsel.” 17 Cal. R. Prof. Conduct 1.16(d). 18 The California Rules of Professional Conduct provide that conflicts of interest that 19 arise during representation require informed written consents, and “[i]n the absence of such 20 consents, depending on the circumstances, the lawyer may have the option [under Rule 21 1.16] to withdraw from one or more of the representations in order to avoid the conflict.” 22 Cal. R. Prof. Conduct 1.7, Comment 10. Additionally, a lawyer “shall withdraw from the 23 representation of a client if . . . the lawyer knows or reasonably should know that the 24 representation will result in violation of these rules or the State Bar Act.” Cal. R. Prof. 25 Conduct 1.16(a)(2). A motion to withdraw must (1) be served on the adverse party and 26 moving attorney’s client and (2) include a declaration regarding service of the motion on 27 those parties. S.D. Cal. CivLR 83.3(f)(3). “Failure to make [service] as required . . . or to 28 1 file the required declaration of service will result in a denial of the motion.” S.D. Cal. 2 CivLR 83.3(f)(3)(b). 3 III. DISCUSSION 4 Messrs. Kronenberger and Rosenfeld state “[a]n actual conflict . . . . has arisen 5 among the La Pura Defendants, which makes it impossible for Kronenberger Rosenfeld to 6 continue representing the La Pura Defendants consistent with the firm’s obligations under 7 the California Rules of Professional Conduct[.] ECF No. 203 at 4. They further state: 8 Withdrawal will not prejudice the other parties because, while some discovery has occurred, this case is at an early procedural posture. Moreover, because 9 the La Pura Defendants (with the exception of Kiet Lieu) are corporate parties, 10 they will need to engage replacement counsel or risk default to Plaintiff and Cross-Plaintiffs. . . . [T]he other parties do not oppose this motion. 11
12 Id. at 4. Finally, they state that “[w]ithdrawal will not harm the administration of justice 13 because Plaintiff and Cross-Plaintiffs will still be able to prosecute their claims against the 14 La Pura Defendants or seek default” and “[w]ithdrawal will not delay the resolution of this 15 case because the case has been stayed for six months during a related bankruptcy 16 proceeding, and the pretrial dates are about to be reset.” Id. at 4-5. These averments are 17 supported by a declaration by Mr. Kronenberger. ECF No. 204-1. 18 Taken together, the reasons described provide grounds for withdrawal consistent 19 with the California Rules of Professional Conduct. It does not appear that withdrawal 20 would prejudice the other litigants, harm the administration of justice, or delay the 21 resolution of the case. The La Pura Defendants were provided notice and time for the 22 employment of other counsel. See Cal. R. Prof. Conduct 1.16(d). Additionally, the case is 23 at an early stage in the litigation process because only minimal discovery has occurred. 24 Accordingly, it is appropriate for Messrs. Kronenberger and Rosenfeld to withdraw as 25 counsel. 26 Granting the withdrawal motion leaves the La Pura Defendants, corporate entities, 27 without counsel in contravention of Local Rule 83.3(j). However, Rule 83.3(j) is not 28 offended where a court orders an unrepresented entity to find substitute counsel and | || provides time to do this on the condition that failure to do so will expose the defendant to 2 || default proceedings. See, e.g., Langer v. YM Holdings, LLC, No. 18-CV-1114 JLS (KSC), 3 WL 2472623, at *2 (S.D. Cal.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 LEANNE TAN, Case No.: 20cv1082-LL-DEB
12 Plaintiff, ORDER GRANTING MOTION TO 13 v. WITHDRAW
14 QUICK BOX, LLC, et al., [ECF No. 204] 15 Defendants. 16
17 CHAD BIGGINS, 18 Cross Claimant, 19 v. 20 LA PURA DEFENDANTS and JOHN DOES 1-10, as defined in Plaintiff’s First 21 Amended Complaint, 22 Cross Defendants. 23 24 Karl Kronenberger and Jeffrey Rosenfeld, and their law firm Kronenberger 25 Rosenfeld, LLP, move to withdraw as counsel of record for the La Pura Defendants 26 because an actual, material conflict has arisen among the La Pura Defendants. ECF No. 27 204. The Motion was submitted on the papers without oral argument pursuant to Civil 28 1 Local Rule 7.1(d)(1) and Federal Rule of Civil Procedure 78(b). No opposition has been 2 filed. For the following reasons, the motion is GRANTED. 3 I. BACKGROUND 4 Plaintiff Leanne Tan filed this putative class action on June 12, 2020, alleging that 5 she had been defrauded by a deceptive online offer for a skincare product. Ms. Tan filed 6 the suit against the La Pura Defendants (except for Rocket Management Group, LLC 7 (“Rocket”) and Kiet Lieu (“Lieu”)), who allegedly operated the deceptive offer; against 8 Quick Box, LLC, Quick Holdings, LLC, Stephen Adele, Chad Biggins, and James Martel 9 (the “Quick Box Defendants”), who allegedly facilitated the offer through fulfillment 10 services and other services; and against Konnektive Corporation, Martorano Holdings, 11 LLC, Konnektive Rewards, LLC, Matthew Martorano, and Katheryn Martorano (the 12 “Konnektive Defendants”), who allegedly facilitated the offer through the provision of 13 software and other services. Plaintiff filed a First Amended Complaint (“FAC”) on January 14 7, 2021. All Defendants moved to dismiss the FAC, and on April 7, 2021, the Court denied 15 Defendants’ motion in significant part. ECF No. 130. All Defendants (except Rocket and 16 Lieu) then filed answers to the FAC between April 21-22, 2021. ECF Nos. 131,137-141, 17 145, 147-149. The Quick Box Defendants and the Konnektive Defendants also asserted 18 crossclaims and third-party claims against the La Pura Defendants (including Rocket and 19 Lieu). ECF Nos. 136-142, 145, 147-149. The La Pura Defendants filed answers to the 20 crossclaims and third party claims between June 29, 2021 and July 1, 2021. ECF Nos. 170- 21 171, 175-184. 22 II. LEGAL STANDARD 23 “An attorney may not withdraw as counsel except by leave of court.” P.I.C. Int'l, 24 Inc. v. Gooper Hermetic, Ltd., No. 19-cv-00734-BEN-LL, 2020 WL 2992194, at *1 (S.D. 25 Cal. June 4, 2020) (citation omitted). “The trial court has discretion whether to grant or 26 deny an attorney’s motion to withdraw in a civil case.” Osgood v. Main Streat Mktg., LLC, 27 No. 16cv2415-GPC(BGS), 2017 WL 7362740, at *1 (S.D. Cal. Mar. 27, 2017). Under the 28 Local Rules, “corporations, partnerships and other legal entities, may appear in court only 1 through an attorney permitted to practice pursuant to Civil Local Rule 83.3.” S.D. Cal. 2 CivLR 83.3(j); see also Laskowitz v. Shellenberger, 107 F. Supp. 397, 398 (S.D. Cal. 1952) 3 (“Since a corporation cannot practice law, and can only act through the agency of natural 4 persons, it follows that it can appear in court on its own behalf only through a licensed 5 attorney.”). 6 “In ruling on a motion to withdraw as counsel, courts consider: (1) the reasons why 7 withdrawal is sought; (2) the prejudice withdrawal may cause to other litigants; (3) the 8 harm withdrawal might cause to the administration of justice; and (4) the degree to which 9 withdrawal will delay the resolution of the case.” Leatt Corp. v. Innovative Safety Tech., 10 LLC, No. 09-cv-1301-IEG POR, 2010 WL 444708, at *1 (S.D. Cal. Feb. 2, 2010). There 11 is no danger of prejudice, harm to the administration of justice, or undue delay where there 12 are no immediately scheduled hearings, the case is still in early stages, and the relevant 13 parties have sufficient notice of the intent to withdraw. See Gurvey v. Legend Films, Inc., 14 No. 09-cv-942-IEG (BGS), 2010 WL 2756944, at *1 (S.D. Cal. July 12, 2010). Counsel 15 must take “reasonable steps to avoid reasonably foreseeable prejudice to the rights of the 16 client, such as giving the client sufficient notice to permit the client to retain other counsel.” 17 Cal. R. Prof. Conduct 1.16(d). 18 The California Rules of Professional Conduct provide that conflicts of interest that 19 arise during representation require informed written consents, and “[i]n the absence of such 20 consents, depending on the circumstances, the lawyer may have the option [under Rule 21 1.16] to withdraw from one or more of the representations in order to avoid the conflict.” 22 Cal. R. Prof. Conduct 1.7, Comment 10. Additionally, a lawyer “shall withdraw from the 23 representation of a client if . . . the lawyer knows or reasonably should know that the 24 representation will result in violation of these rules or the State Bar Act.” Cal. R. Prof. 25 Conduct 1.16(a)(2). A motion to withdraw must (1) be served on the adverse party and 26 moving attorney’s client and (2) include a declaration regarding service of the motion on 27 those parties. S.D. Cal. CivLR 83.3(f)(3). “Failure to make [service] as required . . . or to 28 1 file the required declaration of service will result in a denial of the motion.” S.D. Cal. 2 CivLR 83.3(f)(3)(b). 3 III. DISCUSSION 4 Messrs. Kronenberger and Rosenfeld state “[a]n actual conflict . . . . has arisen 5 among the La Pura Defendants, which makes it impossible for Kronenberger Rosenfeld to 6 continue representing the La Pura Defendants consistent with the firm’s obligations under 7 the California Rules of Professional Conduct[.] ECF No. 203 at 4. They further state: 8 Withdrawal will not prejudice the other parties because, while some discovery has occurred, this case is at an early procedural posture. Moreover, because 9 the La Pura Defendants (with the exception of Kiet Lieu) are corporate parties, 10 they will need to engage replacement counsel or risk default to Plaintiff and Cross-Plaintiffs. . . . [T]he other parties do not oppose this motion. 11
12 Id. at 4. Finally, they state that “[w]ithdrawal will not harm the administration of justice 13 because Plaintiff and Cross-Plaintiffs will still be able to prosecute their claims against the 14 La Pura Defendants or seek default” and “[w]ithdrawal will not delay the resolution of this 15 case because the case has been stayed for six months during a related bankruptcy 16 proceeding, and the pretrial dates are about to be reset.” Id. at 4-5. These averments are 17 supported by a declaration by Mr. Kronenberger. ECF No. 204-1. 18 Taken together, the reasons described provide grounds for withdrawal consistent 19 with the California Rules of Professional Conduct. It does not appear that withdrawal 20 would prejudice the other litigants, harm the administration of justice, or delay the 21 resolution of the case. The La Pura Defendants were provided notice and time for the 22 employment of other counsel. See Cal. R. Prof. Conduct 1.16(d). Additionally, the case is 23 at an early stage in the litigation process because only minimal discovery has occurred. 24 Accordingly, it is appropriate for Messrs. Kronenberger and Rosenfeld to withdraw as 25 counsel. 26 Granting the withdrawal motion leaves the La Pura Defendants, corporate entities, 27 without counsel in contravention of Local Rule 83.3(j). However, Rule 83.3(j) is not 28 offended where a court orders an unrepresented entity to find substitute counsel and | || provides time to do this on the condition that failure to do so will expose the defendant to 2 || default proceedings. See, e.g., Langer v. YM Holdings, LLC, No. 18-CV-1114 JLS (KSC), 3 WL 2472623, at *2 (S.D. Cal. June 13, 2019) (granting counsel’s motion to withdraw 4 representing a corporate defendant; ordering the defendant to obtain new counsel 5 || within forty-five days and requiring counsel to file a notice of appearance within that 6 timeframe; and warning the defendant of the risk of default judgment upon its failure to 7 retain new counsel); see also United States v. High Country Broad Co., Inc., 3 F.3d 1244, 8 (9th Cir. 1993) (affirming a default judgment against a corporate defendant that failed 9 ||to comply with the court’s order requiring it to retain new counsel). 10 IV. CONCLUSION 1] For the above reasons, Messrs. Kronenberger and Rosenfeld’s Motion to Withdraw 12 |/as counsel of record [ECF No. 204] is GRANTED. The La Pura Defendants must retain 13 |}counsel within thirty days from the date of this Order and have counsel file a notice of 14 || appearance. The Court will enter default judgment against the La Pura Defendants if they 15 || fail to obtain new counsel and have counsel file a notice of appearance within thirty days 16 the date of this Order. The Clerk of Court shall update the docket to reflect the 17 || withdrawal of Messrs. Kronenberger and Rosenfeld as counsel of record for the La Pura 18 || Defendants. 19 IT IS SO ORDERED. 20 Dated: April 11, 2022 NO 21 DE | 22 Honorable Linda Lopez 33 United States District Judge 24 25 26 27 28