BERNARD ZIMMERMAN, Magistrate Judge
Before me is plaintiff's motion for a protective order. It seeks to prohibit local counsel (Patrick McCarthy) for defendants from representing plaintiff's former CEO (Steve Welker) during the second day of his deposition testimony. Welker is not a defendant in this action, but plaintiff alleges he misappropriated plaintiff's trade secrets during his employment with defendants. For the reasons explained below, plaintiff's Motion is GRANTED.
Plaintiff commenced the deposition of Welker, who was not represented by counsel, on June 11, 2010. At the end of the day, Welker's deposition was adjourned and continued to a later date. McCarthy then informed plaintiff that he would represent Welker during the second part of Welker's deposition. See Declaration of Alice A. Kelly, ¶ 3 and 4.
Courts are granted the inherent power to preserve the integrity of the adversarial process. Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991); In re Coordinated Pretrial Proceedings, 658 F.2d 1355, 1358 (9th Cir. 1981) ("the district court has the prime responsibility for controlling the conduct of lawyers practicing before it"). This responsibility includes the power to issue protective orders or disqualify counsel to prevent the disclosure and use of confidential or privileged information by adverse counsel. See Cargill v. Budine, 2007 WL 1813762 (E.D. Cal. 2007); Packard Bell NEC, Inc., v. Aztech Sys. LTD., 2001 WL 880957 (C.D. Cal. 2001).
In Cargill, employees were prohibited from retaining defendant's counsel because their knowledge of their former employer's confidential and privileged information threatened the integrity of the trial process. 2007 WL 1813762. In reaching this decision, Cargill relied on Canon 9 of the ABA's Model Code which states that a "lawyer should avoid even the appearance of professional impropriety." Id. Cargill's overriding concern was the potential that confidential and privileged information may be improperly shared or used to gain a tactical advantage. Id.; see also Packard Bell, 2001 WL 880957.
The ABA's ethical rules may be persuasive when there is no controlling California rule, as is the case here. See State Bar of Cal. Standing Comm. on Prof'l Responsibility and Conduct, Formal Op. No. 1983-71. Further, federal courts, through case law, have the inherent power to apply provisions of the former Model Code even though the Northern District of California has not specifically adopted it. See In re AFI Holding, Inc., 355 B.R. 139, 153 n. 15 (B.A.P. 9th Cir. 2006).
I have the same concerns here. Welker was an original founder of plaintiff's company, spent three years as CEO operating the company, remains the company's second largest shareholder, and has an agreement with the company to not disclose any confidential information. See Declaration of Heather Flick, ¶¶ 3, 4, 6, and 8. Defendants' representation of Welker allows him, through the attorney-client relationship, to potentially disclose confidential, privileged, and trade secret information he learned during his extensive dealings with plaintiff. The potential for this disclosure and the appearance of impropriety compromises the "integrity of the judicial process" in the same manner as in Cargill. 2007 WL 1813762 at *14.
Many of the arguments defendants make in opposition to the protective order were explicitly rejected by Cargill. For instance, defendants argue Welker was not privy to any of plaintiff's privileged information. But this contention is undermined by the fact that Welker oversaw the company's daily activities as plaintiff's CEO for three years. See id. at *11 (employee's high-level position at former company is one reason there is a presumption that he knew privileged information). Defendants further contend that they, along with Welker, can determine what information is confidential and privileged and then make sure to not reveal this information. Cargill also found this argument unpersuasive since former employees in an adverse proceeding cannot be permitted to determine what information is confidential. Id. at *11-12. This concern is particularly important in this matter since Welker testifies he does not have knowledge of any confidential information while plaintiff asserts the opposite.
To the extent defendant relies on cases permitting an attorney for one party to communicate with former employees of another party, that reliance is misplaced. Counsel for defendants are representing Welker, not just communicating with him.
In an attempt to distinguish Cargill, defendants contend the case does not apply to Welker's situation because he did not have attorney-client communications while he was employed with plaintiff. This is disputed. Plaintiff's declaration states that while Welker was CEO he was privy to confidential information, including attorney-client communications. See Declaration of Heather Flick, ¶ 4. Defendants object to this declaration due to its lack of specificity. See Defendants' Objections to Declarations of Heather G. Flick and Alice A. Kelley. But, as explained in Cargill, plaintiff did not need to identify the specific attorney-client communications Welker participated in because these communications are presumed due to Welker's high-level position at the company. Id. at *11-12.
Based on the above, the likelihood that Welker possesses confidential information regarding the plaintiff, coupled with the potential that Welker may share this information with defendants in the course of his representation by McCarthy, creates a sufficient danger of impropriety, that plaintiff's motion for a protective order should be GRANTED.
Because I grant plaintiff's motion for a protective order, defendant's request for sanctions is denied.
Dated: September 30, 2010