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Russell Road Food and Beverage, LLC v. Galam

United States District Court, D. Nevada

July 31, 2014

RUSSELL ROAD FOOD AND BEVERAGE, LLC, Plaintiff(s),
v.
MIKE GALAM, et al., Defendant(s)

ORDER DENYING MOTION TO DISQUALIFY COUNSEL (DOCKET No. 150)

NANCY J. KOPPE, Magistrate Judge.

Pending before the Court is Plaintiff's motion to disqualify counsel representing Defendant Canico Capital Group, LLC ("Canico"). Docket No. 150. Canico filed a response in opposition and Plaintiff filed a reply. Docket Nos. 162, 167. Canico also filed a supplement in further support of its response. Docket No. 168. The Court finds the motion properly decided without oral argument. See Local Rule 78-2. For the reasons discussed more fully below, the motion is hereby DENIED.

I. Background

This case involves two strip clubs asserting claims against the other for trademark infringement based on the use of the term "crazy horse." Generally speaking, there are two sets of Defendants. First, there are the "Galam Defendants, " including: Mike Galam; Canico; Industrial Road 2440-2497 LLC; Victor Galam; Jacqueline Galam Barnes; Rhino Bare Projects, LLC; Rhino Bare Projects 4824 LLC; and Crazy Horse Too Gentlemen's Club LLC. The Galam Defendants are also counterclaimants. The Galam Defendants are represented by attorneys Michael Mushkin and Bryan Altman.

Second, there are the "Eshaghian Defendants, " including: George Eshaghian; Soleiman Nazarian; Abraham Assil; SN & GE, LLC; and West Best Capital Group, LLC. The Eshaghian Defendants are represented by Ariel Stern and Allison Schmidt.

Canico is important here because it alleges that it is the managing member of Industrial Road 2440-2497, LLC, which in turn claims to own the right to the "Crazy Horse Too" trademark that serves as the basis for Canico's counterclaims against Plaintiff. See, e.g., Docket No. 62, Counterclaim at ΒΆ 40. In on-going litigation in California state court, various of the Galam Defendants and various of the Eshagian Defendants are currently disputing which controls Canico. See Mike Galam, et al. v. Abraham Assil, et al., Case No. BC514908 (Cal. Super. Ct.).

In light of that corporate control dispute, Plaintiff brought the pending motion seeking to disqualify the Galam Defendants' counsel. In general, Plaintiff argues that most likely the Eshagian Defendants will be found to control Canico and, therefore, it is improper for Mike Galam to direct Canico in this action through the Galam Defendants' counsel. The Eshagian Defendants did not file a brief or declaration in relation to the motion to disqualify. The Court addresses the motion below.

II. Standards

Motions to disqualify counsel are disfavored and are only granted when "absolutely necessary." Switch Comm's Grp. v. Ballard, 2011 WL 3859725, *2 (D. Nev. Aug. 31, 2011) (citing United States v. Titan Pacific Constr. Corp., 637 F.Supp. 1556, 1562 (W.D. Wash. 1986). Courts are especially vigilant that such motions not be misused for the purpose of harassment, delay, or other tactical advantage. See, e.g., id. "Because of this potential for abuse, disqualification motions should be subjected to particularly strict judicial scrutiny." Optyl Eyewear Fashion Int'l Corp. v. Style Cos., Ltd., 760 F.2d 1045, 1050 (9th Cir. 1985) (internal quotations and citations omitted). The party seeking disqualification bears the burden of proof. See, e.g., Takiguchi v. MRI Int'l, Inc., 2014 WL 3105068, *4 (D. Nev. July 7, 2014). "A motion to disqualify should be accompanied by declarations and admissible evidence sufficient to establish the factual predicate on which the motion depends." Colyer v. Smith, 50 F.Supp.2d 966, 967 (C.D. Cal. 1999).

As a general rule, courts will not disqualify an attorney for a conflict of interest unless the client, whether former or current, moves for disqualification. See, e.g., In re Yarn Processing Patent Validity Litig., 530 F.2d 83, 88 (5th Cir. 1976). Although a non-client generally lacks standing to move to disqualify an attorney, it has standing to do so under limited circumstances:

The current standard applied to non client motions to disqualify... requires a non client to show they have a "personal stake in the motion, " because of an "ethical breach [that] so infects the litigation... that it impacts the moving party's interest in a just and lawful determination of her claims...." This is a two-step inquiry, and the alleged injury to the non client movant must be "(a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical."

United States v. Walker River Irrigation Dist., 2006 WL 618823, *4 (D. Nev. Mar. 10, 2006) (discussing Colyer, 50 F.Supp.2d at 971).[1] The standing requirements ensure "that non-clients will not abuse the state rules of professional responsibility by using them as tactical measures to harass the opposition or cause delay." Id. As with the merits of the motion, a non-client moving to disqualify also bears the burden of establishing its standing to bring the motion. See, e.g., id. (citing Colyer, 50 F.Supp.2d at 968).

III. Analysis

The Galam Defendants argue that Plaintiff lacks standing to bring the motion as a non-client of their attorneys. See Docket No. 162 at 7. The Court agrees. Plaintiff's motion asserts that there is a legal dispute in California over whether Canico is controlled by various of the Galam Defendants (including Mike Galam) or the Eshaghian Defendants. See, e.g., Docket No. 150 at 4-5. Plaintiff argues that "Galam is acting as if he controls Canico and Industrial Road, despite a substantial probability that [the Eshaghian Defendants] will prevail as the ones that properly control Canico." Id. at 9.[2] Plaintiff is especially displeased with Defendant Canico's counterclaims against it: "this conflict presents a significant harm to [Plaintiff] since Galam is directing Canico to bring a [sic] counterclaims for ...


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