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L.A. Firm Beats Costco’s Bid to Disqualify It Based on Conflict

May 27, 2021, 9:25 PM

Costco Wholesale Corp. can’t disqualify the plaintiff’s firm litigating a California woman’s slip-and-fall suit merely because one of its law clerks worked for the discount retailer’s counsel, according to a state appellate court ruling.

Federico Stea worked at Yukevich Cavanaugh as a law clerk while in school, and while waiting for results from the California Bar exam. During that time, he was assigned to the team of litigators handling the defense of Costco in several different cases, the company said. Yukevich left Stea and later accepted a law clerk job at the Los Angeles-based Vaziri Law Group.

Rocio Devora sued Costco for premises liability and negligence in Los Angeles County Superior Court, and is represented by Vaziri. The trial court rejected Costco’s motion to disqualify Vaziri based on Stea’s work at Yukevich.

The court found insufficient evidence of a substantial relationship between prior and current representations, because while the claims are similar, the parties aren’t identical.

The California Court of Appeal, Second District, affirmed the judgment Wednesday, rejecting Costco’s challenge to the ethical screening procedures Vaziri put in place and to the substantial relationship test used by the trial court.

Stea asserted that his work at Yukevich didn’t include confidential attorney-client information and that he only performed menial tasks on Costco files. Costco failed to explain how that explanation was insufficient, Justice Judith Ashmann-Gerst wrote in the unpublished opinion.

Appellate precedent establishes two required elements for an effective ethics screen. It must be implemented when a conflict first arises, and include preventative measures to guarantee information isn’t conveyed to a disqualified attorney.

Vaziri’s screen was implemented before Stea started work—he was explicitly told he would not be working on any Costco-related cases—and included the creation of separate email distribution lists to prevent Stea from receiving Costco-related emails. There also were locked file cabinets he didn’t have access to, Ashmann-Gerst said.

While the trial court may have applied the wrong substantial relationship test given that Stea wasn’t a lawyer, that error was harmless and wouldn’t have disqualified Vaziri, she said.

Justices Victoria M. Chavez and Brian M. Hoffstadt joined the opinion.

The case is Devora v. Costco Wholesale Corp., Cal. Ct. App., 2d Dist., No. B306090, unpublished 5/26/21.

To contact the reporter on this story: Maeve Allsup in San Francisco at mallsup@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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