UCP International Company Limited et al v. Balsam Brands Inc. et al, No. 3:2016cv07255 - Document 105 (N.D. Cal. 2017)
Court Description: ORDER GRANTING 79 MOTION TO DISQUALIFY NEWLY-ADDED COUNSEL by Hon. William Alsup. (whalc2, COURT STAFF) (Filed on 7/19/2017)
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UCP International Company Limited et al v. Balsam Brands Inc. et al Doc. 105 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 UCP INTERNATIONAL COMPANY LIMITED and GLOBAL UNITED ENTERPRISES LIMITED, 12 Plaintiffs, 13 14 No. C 16-07255 WHA v. 15 BALSAM BRANDS INC. and BALSAM INTERNATIONAL UNLIMITED COMPANY, 16 ORDER GRANTING MOTION TO DISQUALIFY NEWLYADDED COUNSEL Defendants. 17 18 19 / INTRODUCTION After two years of litigation over two patents and the extent to which they cover artificial 20 Christmas trees, the patent owners retained, as additional litigation counsel, the former law firm 21 of the then-presiding judge, who was already immersed in the case. The judge then recused 22 himself, as he had done four times in four separate cases in recent years after appearances by his 23 former firm. Following his recusal, this action was reassigned and the accused infringer moved 24 to disqualify the former law firm. This order now disqualifies the former law firm. A notice will 25 be filed to invite the originally-assigned judge to relate the action back under our local rules, so 26 that he may resume presiding over the case. 27 28 STATEMENT This patent infringement dispute involves artificial Christmas trees and has provoked two back-to-back civil actions in our district court, both assigned to the Honorable William Dockets.Justia.com 1 Orrick, III. The first was Balsam Brands Inc. v. Cinmar, LLC, No. C-15-04829-WHO, filed by 2 patent owners Balsam Brands Inc., Balsam International Limited, and Balsam International 3 Unlimited Company (collectively, “Balsam”) against Frontgate Marketing, Inc., and Cinmar, 4 LLC (collectively, “Frontgate”). Frontgate, a catalog and online retailer, sold the accused 5 artificial invertible Christmas trees called Inversion Trees made by UCP International Company 6 Limited and Global United Enterprises Limited (collectively, “UCP”) (Dkt. No. 60 at 1–2). The 7 first lawsuit will be referred to as Frontgate. 8 9 Two months before Christmas 2015, Balsam sought a temporary restraining order against Frontgate, which Judge Orrick denied in a 19-page order (Frontgate, Dkt. Nos. 11, 42). UCP was not sued, but its tree dominated the Frontgate litigation, so UCP defended Frontgate under 11 For the Northern District of California United States District Court 10 an indemnity arrangement (Dkt. Nos. 60 at 1–2, 79 at 3). 12 Judge Orrick eventually issued a 22-page claim-construction order in Frontgate (Dkt. No. 13 108). Frontgate then indicated it would file a motion for summary judgment of non-infringement 14 based on that order, but the case settled in December 2016. 15 The same day as the dismissal, UCP filed this action seeking a declaratory judgment of 16 non-infringement against Balsam. This second action also went to Judge Orrick and involves the 17 same trees and the same patents, the only difference being that this suit involves the tree 18 manufacturer rather than the tree marketer. 19 Judge Orrick ordered the parties to meet and confer over a stipulated procedure for 20 importing the Frontgate claim-construction order and claim-construction record, advising that he 21 intended to rely on his prior work and rulings in his claim-construction order and to resolve any 22 lingering claim-construction disputes on summary judgment. He set a tentative deadline of 23 June 27 for UCP to file a summary judgment motion (see, e.g., Dkt. No. 58 at 8:14–25, 10:3–22). 24 Shortly after those statements by Judge Orrick, Balsam added Jonathan Bass and his firm 25 Coblentz Patch Duffy & Bass LLP as additional counsel (Dkt. No. 68). Coblentz is Judge 26 Orrick’s former law firm, where he practiced from 1984 to 2009 and then again from 2012 to 27 2013 (Dkt. No. 89-1). (From 2009 to 2012, he worked at Main Justice in Washington, D.C.) 28 Attorney Bass was a long-time law partner of Judge Orrick. 2 1 Shortly after the appearance of his former law firm as additional counsel for Balsam, 2 Judge Orrick recused himself on June 28, causing the case to be randomly reassigned to a fresh 3 judge. Almost immediately after Judge Orrick’s recusal, Balsam filed a motion arguing that 4 reassignment of this action had somehow nullified Judge Orrick’s decision to rely on his own 5 prior claim-construction order because “the parties [now] don’t know whether this Court will 6 apply the same claim constructions that UCP uses throughout its [summary judgment] motion.” 7 Balsam further argued that “if this Court determines collateral estoppel does not apply to the 8 earlier constructions, the Court will need to enter its own claim constructions, which could differ 9 from Judge Orrick’s” order, and would need to be settled in advance of any briefing on UCP’s motion for summary judgment (see Dkt. No. 73 at 3–4). 11 For the Northern District of California United States District Court 10 UCP now moves to disqualify the Coblentz firm and to send the case back to Judge 12 Orrick. This order follows full briefing and oral argument, including supplemental briefing from 13 both sides, plus an opportunity for an evidentiary hearing, which both sides declined. 14 15 ANALYSIS Our court of appeals has not yet spoken on disqualification of an attorney whose 16 appearance has resulted or will result in a judge’s recusal. Other circuits that have considered 17 the question have held that disqualification may be warranted depending on the circumstances. 18 See In re BellSouth Corp., 334 F.3d 941, 962–65 (11th Cir. 2003); In re FCC, 208 F.3d 137, 19 139–40 (2d Cir. 2000); Robinson v. Boeing Co., 79 F.3d 1053, 1054–56 (11th Cir. 1996); 20 McCuin v. Tex. Power & Light Co., 714 F.2d 1255, 1257 (5th Cir. 1983). 21 In McCuin, the Fifth Circuit held “a lawyer may not enter a case for the primary purpose 22 of forcing the presiding judge’s recusal.” 714 F.2d at 1265. Other more persuasive circuit court 23 decisions, however, have since recognized the potential drawbacks of relying on a subjective test 24 and instead favored an objective test. See Robinson, 79 F.3d at 1055 (“No matter how extensive 25 the discovery may be, the true motive will be elusive, non-objective and not likely truly 26 ascertainable.”); see also BellSouth, 334 F.3d at 947 (noting the practical impossibility of 27 proving a party’s true motivations); FCC, 208 F.3d at 139–40 (noting that disqualification of 28 3 1 counsel was based not on the firm’s intent, but on counsel’s failure to consider in advance the 2 known or knowable risk of a judge’s recusal). 3 The Eleventh Circuit in Robinson and BellSouth identified the following objective factors 4 to consider and balance in the disqualification analysis: (1) the potential for manipulation or 5 impropriety, (2) the judicial time invested, (3) the court’s docket, (4) the delay in reaching 6 decision, (5) the injury to the other party, (6) the fundamental right to counsel, and (7) the 7 expense to the party that retained counsel. Robinson, 79 F.3d at 1055; BellSouth, 334 F.3d at 8 962–66. These factors are not exclusive, nor are they all necessary. Their weight will vary with 9 the circumstances. BellSouth, 334 F.3d at 962. Where the objective factors weigh in favor of disqualification, a party resisting such 11 For the Northern District of California United States District Court 10 disqualification must show an overriding need for its choice of counsel, i.e., a need that would 12 reflect upon its ability to have its case fairly presented. See Robinson, 79 F.3d at 1054–56. 13 This order will apply the objective test set forth by the Eleventh Circuit in Robinson and 14 BellSouth, expecting that our own circuit will follow the Eleventh Circuit, for two reasons. 15 First, the objective test avoids the attorney-client privilege barriers attendant to any inquiry into 16 the true purpose of or motive behind counsel’s appearance. Second, the objective test better 17 comports with preservation of public trust. Specifically, judicial recusal following appearance of 18 counsel mid-stream implicates two interests important to preservation of public trust. One is to 19 prevent even the appearance of manipulation to angle for a particular judge or angle away from a 20 particular judge. Another is to preserve the investment of time and effort by an assigned judge 21 and, conversely, to avoid a waste of judicial resources as a result of having to go through it all 22 over again with a new judge upon a recusal by the original judge. 23 Balsam opposes an objective test and favors a subjective test. Not surprisingly, it insists 24 that recusal wasn’t on its mind in bringing in Judge Orrick’s former law firm. This order holds 25 that the objective Robinson/BellSouth test should apply here and rejects Balsam’s arguments to 26 the contrary. 27 28 First, in the spirit of fait accompli, Balsam contends Robinson and BellSouth involved motions for leave to add counsel, not motions to disqualify counsel who have already appeared. 4 1 This is a distinction without a difference where, as here, it is clear that other Robinson/BellSouth 2 factors are implicated. See BellSouth, 334 F.3d at 962. Decisions have also applied the 3 Robinson/BellSouth test in the context of motions to disqualify. E.g., In re RFC & Rescap 4 Liquidating Trust Litig., Civil Nos. 13-3506 (SRN/HB), 13-3451 (SRN/HB), 2016 WL 7177706, 5 at *5–9 (D. Minn. Dec. 8, 2016) (Chief Judge John Tunheim); Hunters Run Apartments Ltd. v. 6 WCA Waste Corp., Case No. 1:15-CV-00151-MP-GRJ, 2016 WL 9086970, at *2–4 (N.D. Fla. 7 Apr. 25, 2016) (Judge Maurice Paul); Glover v. Standard Fed. Bank, No. CIV 97–2068 DWF 8 SRN, 2001 WL 228440, at *2 (D. Minn. Mar. 6, 2001) (Judge Donovan Frank). 9 Second, Balsam contends Robinson and BellSouth support only the proposition that counsel may be disqualified when their appearance in a case results in the presiding judge’s 11 For the Northern District of California United States District Court 10 mandatory disqualification pursuant to Section 455(b) of Title 28 of the United States Code, 12 whereas in this instance — according to Balsam — Attorney Bass’s appearance “did not require 13 Judge Orrick’s recusal” (Dkt. No. 89 at 6–8). In support of its contention, Balsam cites decisions 14 for the proposition that Judge Orrick was also not required under Section 455(a) to recuse 15 himself because of his previous employment. See, e.g., In re Complaint of Judicial Misconduct, 16 816 F.3d 1266, 1268 (9th Cir. 2016); Singer v. Wadman, 745 F.2d 606, 608 (10th Cir. 1984). 17 Balsam’s argument misses the point. The appearance of manipulation or impropriety in 18 our judicial system — e.g., the appearance of judge-shopping — threatens to erode public trust 19 irrespective of whether the underlying facts technically concern mandatory disqualification 20 versus voluntary recusal of the presiding judge. Indeed, no component of the 21 Robinson/BellSouth test suggests that the test’s underlying rationale is limited to circumstances 22 featuring mandatory disqualification as opposed to near-certain voluntary recusal. Balsam’s 23 attempt to read this limitation into the Robinson and BellSouth decisions is unpersuasive. 24 25 This order now turns to consideration of the objective factors set forth by the Robinson/BellSouth test, as applied to the facts of this case. 26 1. 27 While motions to disqualify counsel are generally strongly disfavored and subject to 28 THE POTENTIAL APPEARANCE OF MANIPULATION OR IMPROPRIETY. “particularly strict judicial scrutiny,” the “paramount concern must be the preservation of public 5 1 trust both in the scrupulous administration of justice and in the integrity of the bar.” See Optyl 2 Eyewear Fashion Int’l Corp. v. Style Cos., Ltd., 760 F.2d 1045, 1050 (9th Cir. 1985); State Farm 3 Mut. Auto. Ins. Co. v. Fed. Ins. Co., 72 Cal. App. 4th 1422, 1428 (1999). Accordingly, “[t]he 4 recognizably important right to choose one’s counsel must yield to the ethical considerations that 5 embody the moral principles of our judicial process.” State Farm, 72 Cal. App. 4th at 1428. 6 The purpose of our district’s random assignment process is, among other things, to Plan, N.D. CAL., www.cand.uscourts.gov/filelibrary/132/GO-44_6.20.17.pdf (last amended 9 June 20, 2017). Our random-assignment process aims to ensure the integrity of the judicial 10 system and is taken quite seriously by our judges, to eliminate any hint of the appearance of 11 For the Northern District of California “[e]nsure that cases are randomly and blindly assigned.” General Order No. 44 Assignment 8 United States District Court 7 judge- or case-shopping. Even the appearance of judge-shopping would “doubtless disrupt[] the 12 proper functioning of the judicial system,” and could “impair[] public confidence in the 13 impartiality of judges.” See Standing Comm. on Discipline of U.S. Dist. Court for Cent. Dist. Of 14 Cal. v. Yagman, 55 F.3d 1430, 1443 (9th Cir. 1995); Keilholtz v. Superior Fireplace Co., No. C 15 08-00836 SI, 2008 WL 5411497, at *2 (N.D. Cal. Dec. 29, 2008) (Judge Susan Illston); see also 16 BellSouth, 334 F.3d at 962. 17 Balsam again argues that because Judge Orrick was not required to disqualify himself 18 under Section 445, there is no basis for inferring any attempted manipulation of this district’s 19 assignment plan. As stated, however, the distinction between mandatory disqualification and 20 voluntary recusal under these circumstances does not alter the analysis. Regardless of whether 21 Judge Orrick was statutorily required to remove himself from this case, the point remains that 22 his recusal was a predictable consequence of Attorney Bass’s appearance herein. Judge Orrick 23 has uniformly recused himself in all four cases assigned to him in which his former law firm has 24 appeared — including as recently as April of this year. Any objective member of the bar or the 25 public would have expected Judge Orrick to recuse himself in a fifth case, just as he had in the 26 27 28 6 1 prior four.1 In short, the appearance of mischief is as inherent in our circumstances as in cases 2 where disqualification is mandated by statute. 3 Balsam next argues that the disqualification order in BellSouth was in direct response to 4 an established pattern of prior abusive attempts to manipulate the Northern District of Alabama’s 5 random assignment of judges through the appearance of a judge’s nephew (Dkt. No. 96 at 1–3). 6 It is true that such a pattern lurked as a background fact in BellSouth, but that decision in no way 7 suggested that every conflict firm somehow gets “one free bite.” As discussed, the 8 circumstances attending Judge Orrick’s recusal in this case alone are sufficient to threaten the 9 appearance of impropriety. See RFC, 2016 WL 7177706, at *6. This order therefore holds that disqualification can occur even without a prior track record of manipulation. 11 For the Northern District of California United States District Court 10 Indeed, Balsam’s arguments, insofar as they suggest that disqualification under the 12 Robinson/BellSouth test requires both subjective intent and a prior track record of abuse (see 13 Dkt. Nos. 89 at 11–12, 96 at 1–3), underscore the wisdom in relying on objective factors rather 14 than trying to prove the subjective reasons for particular appearance of counsel. Were we to 15 accept Balsam’s arguments, we would need to inquire into whether or not a prior pattern of 16 manipulation existed. In that connection, four judges in our district have recused themselves 52 17 times after the appearance of the Coblentz firm in cases assigned to them, usually at the outset of 18 each case.2 With one arguable exception, these judges have never remained in a case after the 19 Coblentz firm has appeared. Judge Orrick, specifically, has not remained in a single case after 20 Coblentz appeared. In other words, there is a long, substantiated history of recusal by judges on 21 our court who once were part of the Coblentz firm. Balsam’s view of BellSouth would thus 22 require that we delve into these prior cases to ascertain the subjective motives of counsel and 23 clients in retaining the Coblentz firm. Any such subjective inquiry, however, would run head-on 24 into attorney-client privilege and become unworkable. 25 26 27 28 1 Forge Grp. Power Pty. Ltd., Case No. 4:17-cv-02045; Fuentes v. Dish Network, LLC, Case No. 4:16cv-02001; United States v. Handl, Case No. 3:15-cr-00126; eBay, Inc. v. Dotcom Retail Ltd., Case No. 3:13-cv-02853. 2 District Judges Charles Breyer, Edward Chen, and William Orrick, III, plus Chief Magistrate Judge Joseph Spero. 7 1 Attorney Bass contended during oral argument that before disqualification of his firm, the 2 case should be sent back to Judge Orrick to see if he would seek consent of both sides to waive 3 any grounds for disqualification. This argument is a non-starter. Attorney Bass has no objective 4 basis to believe that Judge Orrick would ever exercise this option. Judge Orrick certainly did not 5 seek such consent when he had the opportunity prior to recusing himself. There is nothing to 6 suggest he would do so now. It is clear that Judge Orrick routinely recuses himself upon 7 appearances by Coblentz attorneys without offering this option. 8 This factor weighs heavily in favor of disqualification of the Coblentz firm. 9 2. In addition to the potential appearance of judge-shopping, a second issue arises when 11 For the Northern District of California United States District Court 10 JUDICIAL TIME INVESTED, THIS COURT’S DOCKET, AND PROCEDURAL DELAY. appointment of counsel provokes a judge’s recusal, i.e., the considerable investment of 12 additional judicial time and resources when a new judge has to come up to speed on matters in 13 which the previous judge already mastered. 14 This action is indisputably a continuation of the Frontgate action, which was litigated for 15 a year before Judge Orrick prior to settling. This action would undoubtedly have qualified as a 16 related action under both Civil Local Rule 3-12(a) and Patent Local Rule 2-1(1)(a)(1), which 17 requires actions concerning the same patent brought by the same plaintiff to be deemed related. 18 (In a declaratory-relief patent case, the defendant is really the plaintiff.) He issued a 22-page 19 claim-construction order and has amassed substantial knowledge that would have been useful 20 when resolving any lingering claim construction disputes at summary judgment. Reassignment 21 of this action to a new judge, if allowed to stand, would cause major duplicative investment of 22 precious judicial resources (see Dkt. No. 96 at 4–5). 23 Furthermore, Robinson reasoned that “delay for any reason is sufficient” to bring the 24 rejection of additional counsel within the court’s discretion. 79 F.3d at 1055. Balsam’s 25 argument that Judge Orrick’s recusal has not resulted in any delay is off the mark (see Dkt. No. 26 89 at 9–10), given that the ensuing reassignment has already resulted in some postponement of 27 summary judgment briefing and the hearing date. Additionally, Balsam’s argument conveniently 28 omits that it actually sought additional time and further briefing following reassignment, and this 8 1 case will proceed more or less on schedule only because a prior order for the most part rejected 2 Balsam’s requests for further delay (see Dkt. Nos. 73, 81). 3 This factor also weighs in favor of disqualification of the Coblentz firm. 4 3. 5 Other than asserting its fundamental interest to counsel — a point discussed in the next INJURY TO UCP AND EXPENSE TO BALSAM. 6 factor below — Balsam does not allege that it would incur any particular expense if the Coblentz 7 firm is disqualified. On the other hand, the appearance of the Coblentz firm and Judge Orrick’s 8 subsequent recusal have resulted in a slight delay in the case schedule, which delay would have 9 been more significant had Balsam had its way (see Dkt. Nos. 73, 81). Moreover, UCP is at greater risk of prejudice than Balsam from Judge Orrick’s recusal given that, just before said 11 For the Northern District of California United States District Court 10 recusal, UCP had filed an early dispositive motion — at Judge Orrick’s instruction and based on 12 his prior claim-construction order — representing the culmination of nearly two years of hard- 13 fought litigation. According to Balsam’s own arguments, reassignment to a new judge at this 14 key juncture would possibly threaten to unravel the foundation of UCP’s summary judgment 15 motion. On balance, this order finds that these factors weigh slightly in favor of UCP. 16 4. FUNDAMENTAL RIGHT TO COUNSEL. 17 Balsam argues that it has a fundamental right to its choice of counsel. The undersigned 18 judge agrees that choice of counsel is generally a fundamental interest in civil litigation, but it is 19 important to note that this interest is not absolute. See, e.g., BellSouth, 334 F.3d 955–56. 20 Under the Robinson/BellSouth test, choice of counsel must sometimes yield to competing 21 factors. The retention of counsel that results in a judge’s recusal is permissible only if an 22 overriding need exists. See Robinson, 79 F.3d at 1054–56. This order finds unpersuasive 23 Balsam’s suggestion that the phrase “overriding need” does not denote a general principle 24 because that phrase appeared in BellSouth only in connection with that district court’s specific 25 requirement that the defendant demonstrate an “overriding need” for the judge’s nephew as its 26 local counsel over any of the other local firms more than capable of filling a ministerial rather 27 than substantive role. Balsam’s narrow reading of the “overriding need” requirement is 28 inconsistent with how other decisions applying the Robinson/BellSouth test have construed it. 9 1 For example, in Robinson, “the fact that the case had been pending for fifteen months at 2 the time the motion was filed militate[d] against granting [the motion for leave to associate 3 additional counsel] in the absence of an overriding need for a particular lawyer.” Moreover, the 4 movant’s explanation that it hired additional counsel because of their “knowledge of 5 employment-related matters and the vast resources of the firm that would enable it to handle the 6 complexities of this case” proved insufficient to establish an “overriding need.” See Robinson, 7 79 F.3d at 1054–56. 8 9 As another example, Hunters Run, applying the Robinson/BellSouth test, similarly rejected a defendant’s argument that it had “good and legitimate reason” for selecting counsel because of counsel’s case-specific expertise. Judge Paul found this argument unpersuasive when 11 For the Northern District of California United States District Court 10 considered within the context of other applicable Robinson/BellSouth factors, including the “lack 12 of need by defendants for this particular counsel, and the potential delay and loss of judicial 13 activity.” 2016 WL 9086970, at *4. In short, Balsam has not shown any reason why the 14 “overriding need” requirement should not apply here. 15 In this action, Coblentz appeared only after more than twenty months of ongoing 16 litigation. Balsam’s original counsel in the Frontgate litigation, Marc Bernstein and The 17 Business Litigation Group, P.C., continue to represent it in this present action. (In fact, two 18 attorneys from that firm attended the hearing on this motion.) Attorney Bass and the Coblentz 19 firm are well-regarded and, for present purposes, most candid in acknowledging that, even if 20 Balsam retained him “to play a central role,” there is simply no overriding need for Coblentz’s 21 participation. He does not even purport to be offering case-specific expertise, or to be the only 22 lawyer in San Francisco or California that could have met that criteria. 23 This order finds that the other objective factors here — including the potential 24 appearance of manipulation of the judicial process, Judge Orrick’s substantial prior investment 25 of time and resources, and the likelihood of a new judge unnecessarily duplicating his efforts — 26 all outweigh any interest Balsam has in retaining the Coblentz firm, no matter how capable the 27 firm, given the absence of any overriding need for its presence. In sum, this factor does not 28 prevent disqualification of the Coblentz firm under these circumstances. 10 1 2 3 4 CONCLUSION For the foregoing reasons, this order disqualifies the Coblentz firm from appearing in this civil action. This order leaves the Coblentz firm free to appear as counsel at the outset of a case 5 assigned to a judge who once practiced at Coblentz (or for which there remains a further basis 6 for conflict). This order concerns only the mid-stream appearances by the Coblentz firm in cases 7 before our judges who once practiced at Coblentz. In these latter circumstances, the Coblentz 8 firm (or its client) must show an overriding need for its particular services, a showing that has 9 not been made here. 11 For the Northern District of California United States District Court 10 IT IS SO ORDERED. 12 13 Dated: July 19, 2017 WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11
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