Evans et al v. ZB, N.A.

Filing 83

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 11/5/20 DENYING 71 Motion to Appoint Counsel. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RONALD C. EVANS, an individual;
JOAN M. EVANS, an individual;
DENNIS TREADAWAY, an individual;
and all others similarly
situated

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v.
ZB, N.A., a National Banking
Association, dba California Bank
& Trust
Defendant.

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ZIONS BANCORPORATION, N.A., a
National Banking Association,
formerly known as ZB, N.A., dba
California Bank & Trust,

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MEMORANDUM AND ORDER RE:
MOTION TO BE DESIGNATED AS
INTERIM CLASS COUNSEL

Plaintiffs,

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No. 2:17-cv-01123-WBS-DB

Third-Party Plaintiff,
v.
JTS COMMUNITIES, INC., a
California Corporation; LARRY A.
CARTER, an individual; JACK T.
SWEIGART, an individual; and
BRISTOL INSURANCE COMPANY, a
dissolved Utah corporation; and
ROES 1-20 inclusive,

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Third-Party Defendant.

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Plaintiffs, as putative class representatives, allege

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that the defendant CB & T Bank (formerly known as Zions

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Bancorporation, N.A.)(“defendant” or “CB & T”) knowingly aided

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and abetted a Ponzi scheme perpetrated by Deepal Wannakuwatte

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(“Wannakuwatte”) while using his company International

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Manufacturing Group, Inc. (“IMG”) to defraud investors. (First

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Amended Complaint (“FAC”) (Docket No. 42).)

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plaintiffs’ motion to have Robert L. Brace and Michael P. Denver

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designated as interim class counsel.

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Interim Class Counsel”) (Docket No. 71).

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I.

Before the court is

(“Mot. To Be Designated as

Discussion1

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Federal Rule of Civil Procedure 23(g)(3) provides that

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“the court may designate interim counsel to act on behalf of a

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putative class before determining whether to certify the action

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as a class action.”

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so “if necessary to protect the interests of the putative class.”

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Fed. R. Civ. P. 23, advisory committee’s notes.

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“there may be rivalry or uncertainty that makes formal

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designation of interim counsel appropriate.”

Fed. R. Civ. P. 23(g)(3).

The court may do

In some cases,

Id.

The advisory

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The court previously recited the factual and procedural
background in depth in its order granting defendants’ motions to
dismiss. (See Order Granting Motion to Dismiss at 1–5 (Docket
No. 50).) Accordingly, the court will refrain from doing so
again.
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committee notes contemplate that interim counsel may be necessary

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to ensure that one attorney or firm is responsible for “tak[ing]

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action to prepare for the certification decision, can “make or

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respond to motions before certification”, and so that

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“[s]ettlement may be discussed before certification.”

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Id.

Plaintiffs contend that the appointment of Brace and

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Denver as interim class counsel is permitted under Federal Rule

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of Civil Procedure 23(g)(3) and necessary to protect the putative

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class.

(Mot. To Be Designated as Interim Class Counsel at 6.)

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However, none of the factors contemplated by the Rule 23 advisory

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committee’s notes to justify appointing interim counsel appear to

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apply here.

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to represent the putative class.

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Litig., No. 16-cv-00523-RMW, 2016 WL 3401989, at *3 (N. D. Cal

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June 21, 2016) (denying appointment of interim counsel because

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“this case does not involve competing lawsuits pending in

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district court that may be consolidated in the near future, nor

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is there a gaggle of firms jockeying to be appointed class

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counsel.”)

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plaintiffs and putative class since the complaint was filed in

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2017.

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perfectly able to make and respond to motions in this case.

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There is no rivalry here among competing law firms
See In re Seagate Tech. LLC

Indeed, Brace and Denver have represented the named

(See Compl. at 1.)

Brace and Denver have proven to be

Plaintiffs additionally argue that the appointment of

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Brace and Denver as interim class counsel is needed to prevent

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defendant from unfairly using depositions of class members in the

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related JTS litigation in state court to defeat asserted class

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claims in this action.

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Counsel at 3.)

(Mot. To Be Designated as Interim Class

However, that argument has been rendered moot.
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Following the parties’ status conference on September 28, 2020,

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defendant has agreed to (i) permit the use in the present case of

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all discovery taken in the JTS state court action, (ii) to

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produce to plaintiffs in this action all documents that they have

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produced in the JTS action, and (iii) permit plaintiffs’ counsel

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to attend depositions in the JTS action.

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(Opp’n. to Mot. at 7.)

Plaintiffs also claim that appointing Brace and Denver

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as interim class counsel will assist in settling the case.

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To Be Designated as Interim Class Counsel at 5.)

(Mot.

However, the

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parties have already retained a mediator and participated in a

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full day of mediation on August 17, 2020.

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to Be Designated as Interim Counsel (Docket No. 77) at 6). Thus,

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it does not appear that interim class certification is necessary

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to facilitate settlement talks between the parties.

(Opp’n. to Pls.’ Mot.

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For the first time on reply, plaintiffs contend that if

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Brace and Denver are not appointed as interim class counsel, they

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will be barred from contacting other putative class members and

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being present at or representing them during their depositions.

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(See Reply Br. in Supp. of Mot. at 8 (“Reply”) (Docket No. 79).)

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They base this contention on Rule 7.3 of the California Rules of

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Professional Conduct.

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“by in-person, live telephone, or real-time electronic contact

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solicit professional employment when a significant motive for

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doing so is the lawyer’s pecuniary gain, unless the person

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contacted: 1) is a lawyer or 2) has a family, close personal, or

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prior professional relationship with the lawyer.”

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Prof’l Conduct R. 7.3(a).

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That rule provides that lawyers shall not

Cal. Rules of

Not only was this argument waived because it was raised
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for the first time in plaintiffs’ reply brief, see Bazuaye v.

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INS, 79 F.3d 118, 120 (9th Cir. 1996), the argument is also

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unpersuasive.

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contacting putative class members by telephone regarding their

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deposition would constitute solicitation for professional

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employment motivated by pecuniary gain.

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case law to support their contention.

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California Rules of Professional Conduct does not appear to apply

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to merely contacting and coordinating with putative class members

Plaintiffs have not convinced the court that

Plaintiffs have cited no

Moreover, Rule 7.3 of the

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by letters or emails.

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demonstrated that contacting the putative class members in the

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way contemplated would violate the California Rules of

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Professional Conduct, the court will not assume that it will.

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In short, because plaintiffs have not

Accordingly, the court finds that none of plaintiffs’

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arguments weigh in favor of appointing interim counsel.

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the appointment of interim class counsel will not prejudice the

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putative class in any way.

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designation does not prevent the attorney who filed the action

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from proceeding in it.

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interim counsel, an attorney who acts on behalf of the class

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before certification must act in the best interests of the class

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as a whole.”

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the absence of special circumstances warranting appointment of

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interim class counsel, the court will wait to consider the

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adequacy of representation and appointment of class counsel until

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such time as plaintiffs move for class certification.

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Denying

“Failure to make the formal

Whether or not formally designated

Fed. R. Civ. P. 23, advisory committee’s notes.

IT IS THEREFORE ORDERED that plaintiffs’ motion to
appoint Robert L. Brace and Michael P. Denver as interim class
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In

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counsel (Docket No. 71) be, and the same hereby is, DENIED.

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Dated:

November 5, 2020

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