Attorneys from Pepper Hamilton can continue to represent their client in a construction lawsuit for now, despite a lower court’s order disqualifying them, California’s Fourth District Court of Appeal ruled Wednesday.
California courts have never before dealt with the question of whether an appeal of an order disqualifying an attorney automatically stays enforcement of that order. The court ruled that because the disqualification of an attorney requires an affirmative action that changes the status quo of the case, enforcement of the disqualification is automatically stayed on appeal under California law.
However, the court said the appeal did not automatically stay the trial court proceedings altogether, but asked the parties to work out the scope of such a stay on their own in the lower court.
“The best outcome in this case (and future similarly situated cases) will be for the parties to stipulate to the terms of a stay of trial court proceedings,” the opinion said. “Trial courts will undoubtedly be receptive if cooperation proves feasible.”
Justices Richard Aronson, Richard Fybel and David Thompson were on the Fourth District panel that issued the ruling.
Should the parties not reach an agreement on the scope of the stay, they may end up back in the Court of Appeal.
In the underlying dispute in the Superior Court of Orange County, contractor Atkinson/Walsh and subcontractors URS Corp. and AECOM sued one another over alleged damages in a construction project on California’s State Route 91.
In June, Atkinson/Walsh attorneys filed a motion to disqualify Pepper Hamilton from representing URS and AECOM, claiming the opposing counsel improperly accessed documents that Atkinson/Walsh provided solely for pretrial mediation. URS and AECOM claimed Pepper Hamilton didn’t violate any confidentiality agreement by accessing the documents, but the lower court sided with Atkinson/Walsh and disqualified them. URS and AECOM appealed, and filed a writ requesting the order, as well as the entire case, be stayed.
In Wednesday’s opinion, the court of appeal said that under the case law, mandatory injunctions requiring an affirmative action that changes the status quo are automatically stayed on appeal while prohibitory injunctions, which restrain parties from taking action and keep the status quo, are not.
“While acknowledging the difficulty of this issue, we conclude that appellants accurately identify the pertinent ‘status quo,’” the opinion said. “An order disqualifying an attorney from continuing to represent a party in ongoing litigation is a mandatory injunction because it requires affirmative acts that upset the status quo at the time the disqualification motion was filed.”
In the appellate matter, Atkinson/Walsh is represented by Horitz & Levy’s Lisa Perrochet, Eric Boorstin, Hanson Bridgett and Scott Hennigh. O’Melveny & Myers’ Charles Lifland, Dawn Sestito and Catalina J. Vergara represent URS and AECOM.