Big Lots Stores v. Super. Ct. ( 2020 )

Filed 11/20/20
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
BIG LOTS STORES, INC., et al., D077486
Petitioners,
v. (San Diego County Super. Ct.
No. 37-2019-00024738-CU-OE-CTL)
THE SUPERIOR COURT OF
SAN DIEGO COUNTY,
Respondent;
M. MENLO et al.,
Real Parties in Interest.
ORIGINAL PROCEEDINGS in mandate following an order revoking
the pro hac vice admission of petitioners’ out-of-state counsel. Kathleen A.
Bacal, Judge. Petition granted.
Haight Brown & Bonesteel, Arezoo Jamshidi, Yvette Davis, and Cory
D. Catignani for Petitioners.
Law Offices of David J. Gallo, David J. Gallo and for Real Parties in
Interest.
This lawsuit is one of many recent attempts to challenge what some
believe are inappropriate efforts by business entities to misclassify workers
as “managerial” employees in order to avoid paying overtime and other
benefits to which they would otherwise be entitled. In this case, real parties
in interest and plaintiffs Menlo, Ngo, Pedraza and Smith are former store
managers for petitioner and defendant Big Lots Inc.1 who claim they spent
less than 50 percent of their worktime on managerial tasks and, as a result,
should have been paid overtime compensation for hours worked in excess of a
standard 40-hour week.
The writ proceeding before us represents an interesting but minor
procedural skirmish in that much larger legal battle. Big Lots is an Ohio
corporation. When this lawsuit was first filed, it retained a California law
firm—Haight Brown & Bonesteel LLP (Haight Brown)—as counsel of record.
Big Lots later sought the superior court’s permission for attorneys from an
Ohio law firm—Vorys, Sater, Seymour & Pease LLP (Vorys)—to also
represent it. This request is known as an application for an out-of-state
lawyer to be admitted “pro hac vice” to practice law before the court.2 The
trial judge ultimately granted applications filed by three different attorneys
in the Vorys firm. But after later being advised that these Ohio attorneys
were attempting to represent various current and former Big Lots managers
in depositions noticed by plaintiffs, the court revoked pro hac vice
1 Plaintiffs also sued a California corporation, PNS Stores, Inc., alleging
it did business under a fictitious name, “Big Lots!” We refer to defendants
collectively as “Big Lots.”
2 “Pro hac vice” means “ ‘for this occasion.’ ” (See 1 Witkin, Cal.
Procedure, Attorneys (5th ed. 2020) § 389.)
2
authorization for all three lawyers. Big Lots asks that we overturn that
order by means of this writ petition.
Addressing the narrow issue before us, we chart a course between the
polar positions of the two parties. We agree with the trial judge that there is
a difference between an attorney’s representation of the defendant
corporation in a lawsuit and his or her representation of current or former
employee witnesses. Pro hac vice admission as to one client does not
necessarily allow a lawyer to represent a different client even if substantive
law does not otherwise prohibit it. We nonetheless conclude that the total
revocation of pro hac vice status for the Vorys attorneys was not supported by
the record then before the court. The scope of the court’s pro hac vice orders
did not become a disputed issue until after the first two orders were entered,
and all the depositions (at which the Vorys attorneys represented the
deponent) took place before plaintiffs’ counsel raised the issue with the court
in conjunction with the third pro hac vice application.
At that point, having clarified the scope of its orders, the trial court
could have prohibited additional representation of current and former
employee-deponents absent further court order (the more limited remedy that
plaintiffs requested). And it could have set a further hearing to determine
whether, in contacting the prospective deponents, the Vorys attorneys
engaged in some form of ethical misconduct that would justify other
corrective action. But in advance of such a hearing and appropriately
supported findings, the circumstances did not justify barring all further
participation by Big Lots’ counsel of choice based on conduct that occurred
before the issue was ever presented to the trial court. We therefore grant the
petition to vacate the revocation order, but return the matter to the trial
3
judge for any additional hearings and/or orders that she deems are
warranted.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs’ complaint was filed in May 2019.3 Roughly four months
later, Big Lots submitted two applications to have Vorys attorneys Michael
Ball and Jocelyn Hoffman admitted pro hac vice. As is typically the case, the
applications were unopposed and were granted by the court. Each order
permitted the attorney to “appear pro hac vice on behalf of Defendants in the
above-captioned matter.”
Plaintiffs then noticed ten depositions of various Big Lots store
managers (referred to by the company as “Store Team Leaders”) and district
managers (referred to by the company as “District Team Leaders”) who
supervised them. Of these, the eight former district managers were no longer
employed by Big Lots. The two store managers remained employed in that
capacity.
All ten depositions took place between September 11, 2019 and
January 16, 2020, with Big Lots always represented by a Vorys attorney. At
each deposition, plaintiffs’ counsel inquired whether the deponent was
represented by counsel. In virtually every case, the witness answered that
they had been offered and accepted representation by the Vorys firm. In one
instance, the deponent indicated he had declined the offer.
3 Prior to filing this action, plaintiffs’ counsel filed a lawsuit in federal
court on behalf of other Big Lots store managers based on similar overtime
claims. (Wellons v. PNS Stores, Inc. (S.D.Cal., No. 3:18-cv-2913 DMS (WVG))
(Wellons).) Unlike this case, the Wellons action includes a Private Attorneys
General Act (PAGA; Lab. Code, § 2698 et seq.) claim for civil penalties, a
portion of which would be paid to affected employees. (See generally Kim v.
Reins International California, Inc. (2020) 9 Cal.5th 73, 81.) Discovery in the
two actions has been coordinated.
4
In the meantime, on January 10, 2020, Big Lots filed another
application asking to have a third Vorys attorney, Daniel Clark, admitted pro
hac vice. This application differed from the previous two in that it noted a
dispute between the parties that had arisen during the recent depositions. It
explained that while plaintiffs did not oppose the application “to represent
the named Defendants in this action,” it was their position that “should []
Clark seek to represent non-party witnesses in depositions or other matters
. . . , he is required to obtain separate approval from the Court.” (Italics
added in first quote.) Big Lots, on the other hand, “disagree[d] with
Plaintiffs’ limited opposition.” On January 23, the court granted the
application but made a point of underscoring the portion of the order that
permitted Clark to “appear pro hac vice on behalf of Defendants in the above-
captioned matter.”
Less than a month later, plaintiffs filed a motion to “disqualify the
Vorys firm from representing any non-party in this action who is a resident of
California, and who testifies in California.” At the same time, plaintiffs also
asked the court to “consider whether the facts presented herein also warrant
disqualification from continued representation of Defendants, and/or
revocation of admission pro hac vice.” They argued that by undertaking to
represent nonparty witnesses at depositions, the Vorys firm had exceeded the
scope of the pro hac vice orders, which only authorized representation of the
two named defendants in the action. Plaintiffs also claimed the Vorys
lawyers had committed several ethical violations in connection with soliciting
the deponents’ consent to be represented. Big Lots opposed the motion,
asserting that permission to appear pro hac vice necessarily “includes
representing former managerial employees for purposes of their depositions.”
5
Following a hearing, the court revoked permission for the three Vorys
attorneys to appear pro hac vice. As a threshold matter, it found that the pro
hac vice orders did not authorize the Vorys lawyers to represent clients other
than the two named corporate entities. Those orders, in the court’s view,
“made it very clear that it was allowing counsel to appear only on behalf of
defendants.” It was “[f]or this reason [that] the Court specifically underlined
the word ‘defendants,’ clearly indicating that counsel was allowed to
represent the defendants.” Accordingly, it determined, “Vorys[’s] subsequent
representation of defendants’ current and former employees exceeded the
scope of the pro hac vice admissions,” and this was grounds to revoke
permission for the Vorys attorneys to appear in the action. The court did not
address plaintiffs’ remaining arguments regarding possible ethical violations
by the Vorys firm.
DISCUSSION
As a general rule, “[n]o person shall practice law in California unless
the person is an active licensee of the State Bar.” (Bus. & Prof. Code, § 6125.)
Rule 9.40 of the California Rules of Court creates a limited exception to this
general rule by allowing attorneys from another jurisdiction who are not
licensed to practice law in California to apply for court permission to
participate as counsel in a particular case as long as the client has also
6
retained a California lawyer.4 This application to be admitted “pro hac vice”
is addressed to the court’s sound discretion, keeping in mind that “ ‘the state
should keep to a necessary minimum its interference with the individual’s
desire to defend himself in whatever manner he deems best.’ ” (Magee v.
Superior Court (1973) 8 Cal.3d 949, 952; quoting People v. Crovedi (1966) 65
Cal.2d 199, 208.) Any decision on the application is reviewed for an abuse of
that discretion. (See Walter E. Heller Western, Inc. v. Superior Court (1980)
111 Cal.App.3d 706, 711.)
Consistent with the deference owed to a party’s counsel of choice, the
trial court in this case granted applications for three Vorys attorneys to be
admitted pro hac vice to represent Big Lots. But the court later revoked that
authorization because the Vorys firm undertook to represent various current
and former Big Lots employees when their depositions were noticed in the
action. The question we must decide is whether the actions of the Vorys
attorneys in soliciting or accepting representation of the current and former
employees justified revoking pro hac vice authorization.
A
Big Lots asserts there was no basis to rescind the Vorys attorneys’ pro
hac vice admission because counsel for a corporation is necessarily entitled to
represent current and former managerial employees. Thus, in Big Lots’ view,
4 Subdivision (a) of Rule 9.40 of the California Rules of Court provides in
pertinent part: “A person who is not a licensee of the State Bar of California
but who is an attorney in good standing of and eligible to practice before the
bar of any United States court or the highest court in any state, territory, or
insular possession of the United States, and who has been retained to appear
in a particular cause pending in a court of this state, may in the discretion of
such court be permitted upon written application to appear as counsel pro
hac vice, provided that an active licensee of the State Bar of California is
associated as attorney of record.”
7
permission to represent the employer automatically includes permission to
represent the management employees. Big Lots goes on to cite the United
States Supreme Court decision in Upjohn Co. v. United States (1981) 449
U.S. 383 (Upjohn) as support for its contention that “[c]urrent and former
management employees are part of the corporate defendant.” Because the
deponents are “part” of the corporation, Big Lots claims its corporate counsel
has the “ability” to represent them.
But Upjohn and California cases that rely on it (e.g., Zurich American
Ins. Co. v. Superior Court (2007) 155 Cal.App.4th 1485, 1497) do not address
the necessary or even permissible scope of an attorney’s representation. They
are cases that concern the scope of the attorney-client privilege in situations
where corporate counsel obtains information from management employees as
part of an investigation. They deal with the types of communications that
qualify for the protection afforded by the privilege.
This case does not involve communications between corporate
managers and corporate counsel that the corporation seeks to shield from
discovery by plaintiffs. It does not even raise the issue whether corporate
counsel can represent current or former management employees when their
depositions are noticed. Instead, it asks a much simpler question: When the
trial court granted the Vorys attorneys permission to represent Big Lots, did
that authorization necessarily extend to representing every current and
former Big Lots management employee, regardless of whether those lawyers
had ever previously communicated with those employees? The answer to this
question is clearly “no.” Big Lots is Vorys’s client, and the client Vorys was
authorized by the court to represent.
The fact that Big Lots might have been entitled to assert the attorney-
client privilege as to hypothetical communications between a Vorys lawyer
8
and a manager-deponent—had there been any—does not mean that every
current or former Big Lots manager is automatically a client of the Vorys
firm. Koo v. Rubio’s Restaurants, Inc. (2003) 109 Cal.App.4th 719 (Koo) is
instructive, albeit in a slightly different context. Koo was a wage-and-hour
class action brought on behalf of Rubio’s restaurant managers seeking
overtime pay. Attempting to prevent plaintiffs’ counsel from contacting
potential class members without notice to Rubio’s (see Cal. Rules of Prof.
Conduct, rule 4.2 (former rule 2-100)5; Doe v. Superior Court (2019) 36
Cal.App.5th 199, 205‒206), Rubio’s corporate counsel filed a declaration in
opposition to a motion to compel discovery referencing former rule 2-100 and
stating, “ ‘Rubio’s counsel represents Rubio’s current assistant and general
managers. . . . Therefore, Plaintiff's counsel cannot directly contact these
individuals without Rubio’s consent.’ ” (Koo, at p. 724.) Explaining that
Rubio’s current assistant and general managers were putative class
members, plaintiffs successfully moved to disqualify Rubio’s counsel based on
their alleged representation of conflicting interests. Reversing, the Court of
Appeal held that “an attorney’s unilateral declaration regarding
representation cannot, by itself, create an attorney-client relationship when
none otherwise exists.” (Id. at p. 723; see also id. at p. 729.) It repeatedly
distinguished between counsel’s representation of corporate managers in a
representative capacity—where the managers are acting as corporate
representatives—and representation of managers in their individual
capacity—which is what gave rise to the alleged conflict of interest in Koo.
(Id. at pp. 730‒733.)
5 All subsequent rule references are to the Rules of Professional Conduct
of the State Bar of California.
9
Similarly here, the current and former employees were being deposed
in their individual capacities. This is not a situation in which plaintiffs seek
to hold Big Lots liable for the acts of the manager-deponents as corporate
representatives. They are mere witnesses to some of the relevant facts and
circumstances.
An analogous issue arises under rule 4.2, which regulates attorney
communication with “represented” persons. Generally speaking, a lawyer
cannot communicate with a represented person unless that person’s attorney
gives consent. (Rule 4.2(a).) Subdivision (b) specifically addresses when a
person associated with a represented organizational entity is also deemed to
be represented by the organization’s counsel. Such persons are “represented”
in two situations: (1) if they are “[a] current officer, director, partner, or
managing agent of the organization,” or (2) if they are “[a] current employee,
member, agent, or other constituent of the organization [and] the subject of
the communication is any act or omission of such person in connection with
the matter which may be binding upon or imputed to the organization for
purposes of civil or criminal liability.”
If Big Lots were contending that the former district managers and/or
current store managers were agents of Big Lots within the ambit of rule
4.2(b), it would make sense to argue that the court’s pro hac vice
authorization for Vorys attorneys to represent the corporate entities
necessarily implied permission to represent the managers. That is because,
by terms of rule 4.2, certain corporate employees are automatically deemed to
be represented persons because the corporation is represented. But Big Lots
does not rely on rule 4.2, nor could it. Neither alternative under subdivision
(b) extends to former employees, who constitute eight of the ten deponents.
And store managers—the job title of the other two deponents—hardly qualify
10
as “managing agent[s]” for purposes of the rule in the context of this case
because a store manager could never have “actual authority to speak on
behalf of the organization or . . . bind it with regard to the subject matter of
the litigation”—i.e., paying overtime to store managers. (Snider v. Superior
Court (2003) 113 Cal.App.4th 1187, 1210.)
Moreover, even Big Lots does not assert that an attorney-client
relationship existed between the Vorys firm and the deponents before each
agreed to accept Vorys’s offer of representation. This is made clear by the
fact that when one of the deponents declined Vorys’s offer, the firm did not
assert any right to represent him. Just as in Koo, despite an existing
attorney-client relationship between the lawyers and the corporation, no
attorney-client relationship could be formed with each manager until he or
she agreed to be represented by corporate counsel. (Koo, supra, 109
Cal.App.4th at p. 729.) For these purposes then, Big Lots and the manager-
deponents are separate clients.
Nor does the possibility that corporate counsel might permissibly
represent a manager-deponent—if properly requested to do so—mean that
representing a deponent is the same thing as representing Big Lots.6 Having
been admitted pro hac vice, the Vorys attorneys were entitled to represent
6 Big Lots maintains that because (in its view) the superior court could
not properly preclude Vorys from representing the employee-deponents, there
was no reason why it should request separate permission. But even if Big
Lots’ premise is correct, it does not follow that the court would abuse its
discretion in believing that notice and potentially a hearing before the
representation was undertaken would be reasonable. Here, a request by
Vorys to represent the deponents would have triggered an objection from
plaintiffs’ counsel. A hearing on such an objection would then have allowed
the court, if appropriate, to set guidelines as to how the deponents would be
contacted and what they should be told before they accepted Vorys’s offer of
representation.
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Big Lots. If they wanted to represent a different client in this litigation—i.e.,
current and former employee-deponents—they should have sought the court’s
permission.
B
But this is not to say that the error by the Vorys attorneys in
interpreting the pro hac vice order justifies the wholesale revocation of
permission for them to participate as counsel in the case. Revocation of pro
hac vice authorization effectively disqualifies the entire Vorys firm, and we
have recognized that disqualification is a “drastic remedy” that should only
be ordered where attorney misconduct has a “ ‘substantial continuing effect
on future judicial proceedings.’ ” (City of San Diego v. Superior Court (2018)
30 Cal.App.5th 457, 462; quoting Gregori v. Bank of America (1989) 207
Cal.App.3d 291, 309.)
In concluding that revocation was appropriate here, the trial court
focused on its belief that the pro hac vice orders “very clear[ly]” did not
authorize the Vorys lawyers to represent clients other than Big Lots. It was
“for this reason” that the court “specifically underlined the word ‘defendants’”
in the order. Accordingly, “Vorys[’s] subsequent representation of
defendants’ current and former employees exceeded the scope of the pro hac
vice admissions.” (First italics added.)
The problem with this rationale is that parties were not aware that the
scope of the pro hac vice authorization was an issue until after the
depositions began in September 2019. And the issue was not brought to the
court’s attention until much later. The “order” the court refers to—where it
underlined the word “defendants”—was in response to the application by
attorney Clark. It was not entered until January 23, 2020. The last
deposition at which the Vorys firm purported to represent a deponent was
12
January 16, more than a week before the Clark order was filed. Thus, there
was no subsequent representation of any current or former employee, at least
if “subsequent” was intended to refer to a deposition conducted after entry of
the Clark order, which arguably clarified the court’s intent.
The plaintiffs formally complained to the court by filing their
disqualification motion in mid-February. At that point, the Vorys attorneys
could have been told that their pro hac vice authorization extended only to
the two corporate defendants. They could have been directed not to
undertake the representation of any other person or entity without court
approval, and (at least temporarily) to discontinue any such representation
they had already begun. Finally, if the court was concerned about plaintiffs’
allegations that the Vorys lawyers had violated California ethical rules by the
manner in which they contacted the deponents and secured their agreement
to representation, it could have conducted a hearing, made factual findings,
and taken appropriate corrective action as necessary.
Here, however, the evidence adduced so far merely shows that Vorys
and Big Lots innocently misinterpreted two pro forma orders granting
routine pro hac vice applications. Without more, that is an insufficient basis
to effectively disqualify Big Lots’ counsel of choice.
C
Focusing on a much bigger picture, both sides urge us to make broad
pronouncements they believe will assist them in achieving ultimate victory in
this litigation.7 Big Lots requests that we affirmatively endorse the
7 As part of this effort, both plaintiffs and defendants ask that we take
judicial notice of various items they believe provide important “context” for
our decision. Plaintiffs also seek to submit “supplemental evidence” in the
form of an excerpt from a deposition taken several months after the trial
court’s ruling, which the court never considered and to which Big Lots had no
13
representation of both a corporate defendant and individual employees of the
corporation by the same lawyer as a matter of California law. Plaintiffs, on
the other hand, recite what they perceive to be a litany of ethical missteps by
the Vorys firm in contacting and being retained by the prospective deponents.
They view Vorys’s actions as part of Big Lots’ attempt to orchestrate a
conspiracy of silence that would hide evidence of Labor Code violations, and
they ask us to condemn them as ethical transgressions.
We decline these invitations from both sides, in large measure because
the trial court has not yet decided the relevant facts or made pertinent legal
rulings. Moreover, the litigation is still at an early stage and our perspective
at this juncture is quite limited. We have confidence that the trial court,
guided by the general principles we have articulated here, will thoughtfully
address in the first instance the broader issues that arise as the litigation
progresses and manage the proceedings in a manner that promotes a fair
resolution of the controversy.
opportunity to respond. All these requests consist largely of items that are
neither relevant to our analysis nor necessary to our conclusions. (See
Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063; City of
Grass Valley v. Cohen (2017) 17 Cal.App.5th 567, 594, fn. 13.) In the case of
plaintiffs’ request regarding the official comments to the California Rules of
Professional Conduct, judicial notice is not required for us to consider such
commentary. And although we take judicial notice of the existence of the
related federal Wellons action (see ante, fn. 3), we also decline defendants’
request to consider various pleadings and briefs in that action based on the
familiar rule that we do not generally take judicial notice of matters that
were not before the trial court. (Cox v. Griffin (2019) 34 Cal.App.5th 440,
452, fn. 12.) Finally, while we need not take formal judicial notice, we will
consider an unpublished order by the district court in Wellons as potentially
persuasive authority. (Wellons v. PNS Stores, Inc. (S.D.Cal. May 11, 2020,
No. 18-cv-2913 DMS (WVG)) 2020 U.S.Dist.Lexis 110030.)
14
Big Lots also points to the parallel Wellons action pending in federal
district court, reminding us that the depositions were part of coordinated
discovery in both actions. Relying on the district court’s ruling in its favor on
a related disqualification motion (Wellons, supra, 2020 U.S.Dist.Lexis
110030), Big Lots suggests that even if the pro hac vice order in this case did
not extend to appearing as counsel for the current and former employees, the
Vorys firm could nonetheless rely on its pro hac vice status in the federal
action to represent the deponents.
If Big Lots means to argue that one court’s refusal to sanction an
attorney for alleged misconduct in coordinated proceedings somehow
precludes the other court from taking independent action, we cannot agree.
Each court—state and federal—has an independent ability and obligation to
ensure that lawyers practicing before it comply with professional rules and
the court’s orders. In this type of situation, the attorneys are obliged to
follow all the applicable rules of both courts, not the just the ones issued by
the court they prefer.
That said, and understanding that it is merely persuasive authority, we
do not read the Wellons ruling as broadly as Big Lots does. In denying
plaintiffs’ motion to disqualify the Vorys firm, the district court emphasized
the discretionary nature of any decision to disqualify counsel, which depends
on balancing numerous factors. (Wellons, supra, 2020 U.S.Dist.Lexis 110030,
at p.*6.) Noting that the parties vigorously disagreed as to whether Vorys
“was able to represent these non-party witnesses at their depositions in this
action,” it expressly “decline[d] to resolve that dispute.” (Id. at pp.*10‒*11.)
Instead, the court simply concluded, in the exercise of its discretion, that the
totality of the circumstances did not justify the disqualification of the Vorys
firm, “particularly when it appears counsel were acting in good faith and
15
Plaintiffs did not seek court intervention when the issue first arose.” (Id. at
p.*5.)
To that extent, our conclusion here is fully consistent with the district
court’s reasoning in Wellons.8 The parties construed the pro hac vice orders
differently and a dispute arose. But absent special circumstances, a good
faith dispute about the scope of a pro hac vice order should not result in
disqualification of counsel until the issue has been brought to the attention of
the trial judge for clarification. And here, as we have noted, the Vorys
lawyers did not attempt to represent any employee-deponents after the
superior court clarified the scope of its order by underlining the word
“defendants” in the Clark order. Under these circumstances, we agree with
the district court in the Wellons action that revocation of pro hac vice status
was not warranted.
8 To the extent the Wellons ruling went further to discuss rule 7.3 or any
alleged conflict of interest the Vorys lawyers might have had in attempting to
represent current store managers potentially affected by plaintiffs’ PAGA
claim, we offer no comment. As we have explained, the superior court here
made no findings or rulings as to those issues and we think it inappropriate
to make any observations in a vacuum.
16
DISPOSITION
Let a writ of mandate issue directing the respondent court to vacate its
order granting plaintiffs’ motion to revoke pro hac vice authorization for the
three Vorys attorneys and to conduct such further proceedings consistent
with this opinion as it may deem appropriate. The stay issued May 14, 2020
will be vacated when the opinion is final as to this court. Each party shall
bear its own costs.
DATO, J.
WE CONCUR:
MCCONNELL P. J.
HUFFMAN, J.
17