Keating v. Jastremski ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JEREMY L. KEATING ET AL., CASE NO. 3:15-cv-00057-L-AGS 12 Plaintiffs, ORDER (1) DENYING MOTION TO 13 v. WITHDRAW AS COUNSEL OF RECORD FOR STEVE DALTON AND 14 JOHN A. JASTREMSKI ET AL., ARDENT RETIREMENT PLANNING, 15 LLC; AND (2) BRIEFING SCHEDULE Defendants. 16 (Doc. no. 471) 17 AND RELATED CROSS-ACTIONS. 18 19 Pending before the Court in this action alleging misappropriation of trade secrets 20 is an unopposed motion filed by counsel for Counter-Defendants Steve Dalton 21 (“Dalton”) and Ardent Retirement Planning, LLC (“Ardent”) seeking withdrawal from 22 representation. (Doc. no. 471). Two counsel of record are reflected on the docket for 23 Dalton and Ardent. Robert Bursky, an out-of-state attorney who was permitted to 24 appear pro hac vice pursuant to Civil Local Rule 83.3.c.4 (doc. nos. 384, 385), and 25 Assly Sayyar, who was designated by Mr. Bursky as his local counsel pursuant to Civil 26 Local Rules 83.3.c.4 and 5 (doc. no. 384). According to the declaration of counsel, the 27 clients consent to the withdrawal. Counterclaimant The Retirement Group, LLC 28 1 (“TRG”) filed a notice of non-opposition. (Doc. no. 472). Nevertheless, for the 2 reasons which follow, the motion is denied. 3 Most recently, the Court considered TRG’s and Defendant John A. Jastremski’s 4 (“Jastremski”) motion for terminating sanctions for spoliation of evidence against 5 Plaintiffs/Counter-Defendants Jeremy Keating, Richard P. Gigliotti and Alexander J. 6 Mele (collectively, “the Keating Group”), as well as Counter-Defendants Securities 7 America, Inc. ("SAI"), Lloyd J. Silvers (“Silvers”), Dalton and Ardent (Silvers, Dalton 8 and Ardent are sometimes collectively referred to as the “Ardent Group”).1 The Court 9 appointed Hon. Ronald S. Prager (Ret.) as the Special Master pursuant to Rule 53 of 10 the Federal Rules of Civil Procedure to prepare a report and recommendation. The 11 Special Master held a six-day evidentiary hearing. After considering voluminous 12 briefing, evidence, and extensive argument, the Special Master concluded that 13 members of the Ardent Group intentionally and maliciously destroyed evidence. He 14 recommended granting motion for terminating sanctions and striking the Ardent 15 Group’s answers. On TRG’s motion, which was vigorously opposed by the Ardent 16 Group, this Court adopted the Special Master’s recommendation. (See doc. no. 467.) 17 Accordingly, the Ardent Group’s answers were stricken, and default was entered 18 against them. (Doc. nos. 467, 468.) Furthermore, the Court granted TRG’s motion, 19 filed in anticipation of a motion for default judgment, to amend its counterclaim to 20 more accurately allege the amount of damages sought against the Ardent Group 21 members. (Doc. no. 466.) 22 On May 8, 2020, TRG filed its motion for default judgment. (Doc. no. 470.) A 23 week later and before any opposition was due, Dalton’s and Ardent’s counsel filed the 24 instant motion to withdraw. (Doc. no. 471.) No opposition to the motion for default 25 judgment has been filed to date. 26 27 1 A settlement reached in April 2019 disposed of all claims between the Keating Group, SAI and Jastremski. (See doc. no. 436 (Klein Decl.) at 2; see also docs. no. 28 1 Ms. Sayyar wishes to withdraw because Dalton and Ardent have failed to pay 2 her bills. (Doc. no. 471-2 (“Sayyar Decl.”) at 2-3.) After she had brought this to their 3 attention and after this Court adopted the Special Master’s Report and 4 Recommendation, “Dalton and Ardent knowingly and freely assented to termination of 5 the attorney client relationship.” (Id. at 2.) Mr. Bursky wishes to withdraw because 6 upon Ms. Sayyar’s withdrawal he will no longer have a local counsel, and he was 7 informed by Dalton and Ardent that they did not intend to retain local counsel to 8 replace Ms. Sayyar. (Doc. no. 471-3 (“Bursky Decl.”) at 2.) 9 An attorney may not withdraw as counsel except by leave of court. Darby v. 10 City of Torrance, 810 F.Supp. 275, 276 (C.D.Cal.1992).2 11 In ruling on a motion to withdraw as counsel, courts consider: (1) the 12 reasons why withdrawal is sought; (2) the prejudice withdrawal may cause to other litigants; (3) the harm withdrawal might cause to the 13 administration of justice; and (4) the degree to which withdrawal will 14 delay the resolution of the case. 15 16 Beard v. Shuttermart of Cal., Inc., 2008 WL 410694 at *2 (S.D. Cal. Feb. 13, 2008) 17 (Hayes, J.). 18 With regard to the first factor, this District requires counsel to comply with the 19 standards of professional conduct required of members of the State Bar of California, 20 Civ. Loc. Rule 83.4(b), which allow for withdrawal from representation under certain 21 conditions, Cal. R. Prof. Conduct 1.16(b). As relevant here, an attorney may withdraw 22 if 23 (5) the client breaches a material term of an agreement with . . . the lawyer relating to the representation, and the lawyer has given the 24 client a reasonable warning after the breach that the lawyer will 25 withdraw unless the client fulfills the agreement or performs the obligation; [or] 26 27 2 Unless otherwise noted, internal quotation marks, citations, and footnotes are 28 1 (6) the client knowingly and freely assents to termination of the 2 representation. 3 Cal. R. Prof. Conduct 1.16(b)(5) – (6). However, “[a] lawyer shall not terminate a 4 representation until the lawyer has taken reasonable steps to avoid reasonably 5 foreseeable prejudice to the rights of the client . . ." Id. Rule 1.16(d). 6 The counsel do not indicate how they have complied with this requirement. 7 Instead, they contend “[t]here is little to no prejudice that will be caused by withdrawal 8 as the answers filed by Dalton and Ardent have been stricken and default entered 9 against them.” (Doc. no. 471-1 at 3.) The Court is not persuaded. 10 Although, upon entry of default all well-pleaded facts in the complaint are taken 11 as true, the allegations relating to the amount of damages are not. See TeleVideo Sys., 12 Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). A hearing may be required. 13 See Fed. R. Civ. proc. 55(b). In its motion, TRG requests $745,982.42 in 14 disgorgement damages against Dalton, statutory interest at a rate of 7%, punitive 15 damages for twice the amount of disgorgement damages, and injunctive relief. (Doc. 16 no. 470-1 (“TRG Mot. for Default J.”) at 17-21, 23.) The requested judgment would 17 make Ardent jointly and severally liable. (Id. at 21.) Finally, TRG is seeking 18 $1,889,869.92 in attorneys’ fees against the members of the Ardent Group for willful 19 and malicious theft of trade secrets. (Id. at 21-23.) Complex legal issues are raised by 20 the request for relief against Ardent, because, according to TRG, “Ardent is out of 21 business.” (Id. at 21.) The counsel do not say whether Dalton and Ardent intend to 22 contest the relief requested in TRG’s motion. 23 Based on the foregoing, the Court finds the clients would be prejudiced by the 24 withdrawal.3 Furthermore, proceedings in this case would be unduly difficult without 25 26 27 3 While Dalton could proceed pro se, Ardent cannot appear without representation. Civ. Loc. Rule 83.3.j; see also United States v. High Country 28 1 representation and withdrawal may delay the resolution of this case. Accordingly, it 1: 2 || ordered as follows: 3 1. The motion of Assly Sayyar and Robert Bursky to withdraw as counsel 4 || for Counter-Defendants Steve Dalton and Ardent Retirement Planning, LLC is denied 5 2. No later than July 13, 2020, Counter-Defendants shall file either their 6 opposition to the pending motion for default judgment or a notice of non-opposition. 7 3. No later than July 20, 2020, Counterclaimant shall file a reply, if any. 8 IT IS SO ORDERED. 9 10 || Dated: June 26, 2020 1 (ar flap 12 H . James Lorenz, 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28