Summary of Decision

In a slip opinion, the Northern District of California joins those circuits that have concluded that a non-client may not generally seek disqualification of an opposing attorney, absent a fiduciary relationship or exceptional circumstances.   IMCO, L.L.C. v. Ford, et al ., 2011 WL 5117265 (N.D.Cal.) 

Factual Background

This case involved a civil rights action by a company that had won a portion of a city contract pursuant to a request for proposals to operate and manage parking facilities.  After being advised that it had won, plaintiff subsequently learned that the RFP had been rejected by the municipal transit authority and a new RFP was held.  Plaintiff sought assistance from the City Attorney and there was an investigation of the municipal transit authority’s actions.  The investigation concluded when the City Attorney issued a report absolving defendants and other City officials of any wrongdoing.  Plaintiff sued, naming among others, the City Attorney, the City and County, and the Director of the municipal transit authority.  The claims against the City Attorney were dismissed under California’s anti-SLAPP statute, as well as certain other claims against the defendants.  Plaintiff then moved to disqualify the City Attorney from representing the remaining defendants on the grounds of a conflict of interest. 


Judge William Alsup acknowledged that the circuit courts are split on whether an attorney can be disqualified on grounds of a conflict by a non-client.  The majority view (adopted in the Fifth, Third and Eighth Circuits) generally requires the movant to be a current or former client.  The minority view (adopted in the First and Fourth Circuits) permits non-clients to seek disqualification based on an ethical violation.  The court noted that the Ninth Circuit has yet to directly address the issue.  The court also explained that California law follows the majority rule, but has expanded it in certain circumstances to find standing where there is a breach of the duty of confidentiality or other fiduciary duty.  “The majority of circuits, as well as California courts, demand some sort of attorney-client or fiduciary relationship before a party can move to disqualify an attorney.”  Applying this requirement, the court held that plaintiff did not have, and never had, an attorney-client relationship with the City Attorney; nor did plaintiff allege it had any fiduciary relationship with the City Attorney, or any confidential relationship. 

The court proceeded to reject the application of two “exceptions” that have been recognized in jurisdictions following the majority view.  The first exception provides that a party lacking standing can still seek disqualification when the ethical violation involved is “manifest and glaring” and “open and obvious and confronting the Court with a plain duty to act.”  The second exception permits a non-client to seek disqualification “where the ethical breach so infects the litigation in which disqualification is sought that it impacts the moving party’s interest in a just and lawful determination of her claims.”

The court found that neither exception had been satisfied as plaintiff failed to demonstrate how the interests of the Director of the municipal transit authority and the City and County were in conflict.  Pursuant to the Government Code, the City was required to defend and indemnify the Director for claims or injuries arising out of the course and scope of the Director’s official employment.  Thus the City appeared to have a common interest in seeing the Director succeed in the litigation.

The court also rejected the argument that a conflict existed because the Director had violated a section of the City Charter that would prohibit the City Attorney from representing the Director where a “cause of action exists in favor of the City and County against [the Director].”  Plaintiff claimed such a cause of action existed because the Director had allegedly violated a City Ethics Ordinance in failing to disclose a “professional or business relationship” with the attorney of one of the other companies who bid on the original RFP, while making a “governmental decision.”  In response, the court explained that the Director had hired the attorney on an employment matter after he had made the decision to throw out the RFP and therefore had no professional relationship with the attorney when he made the governmental decision, and thus did not violate the City Ethics Ordinance.

The court also rejected the argument that the Director had violated the Ethics Ordinance by virtue of the attorney attending a meeting between plaintiff and other bidders following rejection of the RFP, while contemporaneously representing the Director on the employment matter.  The court reasoned that the Director was not present at the meeting, which was held in a private setting not a governmental setting, and failed to show how the Director had made a “governmental decision” involving a private meeting he did not attend.

Finally, the court dismissed the argument that the Director made a subsequent decision “to reverse his decision to reject the award and instead recommend its approval.”  The only evidence on this point was an email from a municipal transit official to the Director which contained the statement “now that we’re going forward with the awards,” which was made in the context of discussing the scheduling of meetings.  The court concluded that the plaintiff had not shown that any such decision was the Director’s decision alone.

For these reasons, the court held that plaintiff failed to show any conflict of interest between the Director and the City, “let alone one glaring enough to excuse [plaintiff’s] lack of standing.” 

Significance of Decision

This decision, although unpublished, demonstrates that District Courts in California (especially Northern California) are likely to follow the same approach to standing for disqualification motions that is applied under California law, and that non-clients will usually lack standing to seek disqualification of opposing counsel absent  a fiduciary relationship or exceptional circumstances.