Michael Krause served as Chief Business Officer and then superintendent of the Adelanto Elementary School District (District) from 2022 until his June 2024 termination. Over roughly two years, three of his subordinates — executive assistants identified as S.A., X.L., and I.P. — experienced what the trial court later found to be a course of harassing conduct. Krause was prone to angry outbursts at meetings, including one in which he slammed his fists on a table and screamed at staff until several people cried. He also sent the three women a steady stream of unsettling text messages and photos: pictures he had secretly taken of them at a Chipotle, outside their homes at night, and near a family member’s workplace; comments suggesting he was watching them on office cameras or following them around town; and after-hours messages with a romantic or proprietary tone, such as telling one assistant he did not “love her anymore” when she was slow to reply.

On separate occasions he physically poked two of the women hard enough to startle and hurt them. After the women reported his conduct in 2024, Krause was placed on leave, filed an unsubstantiated sexual harassment complaint against one of them, and was later seen parked outside a coffee shop watching two of the women through his car window. The District terminated him and the parties signed a separation agreement releasing the District’s claims against Krause arising from his employment. Krause was then elected to the District’s own Board of Trustees, and during the campaign each woman found one of his yard signs planted near her home.

In October 2024, the District petitioned for a workplace violence restraining order (WVRO) against Krause on behalf of the three women under Code of Civil Procedure section 527.8, and the San Bernardino County Superior Court issued a temporary restraining order. Following a four-day evidentiary hearing spread across January and March 2025, at which the three women and Krause testified at length, the trial court granted a permanent WVRO. The court found Krause’s course of conduct met the statutory definition of harassment, rejected his shifting and sometimes “strained” explanations for the texts and photos, and found his lack of remorse supported a reasonable probability that the harassment would continue, particularly given that his election to the Board placed him back in regular contact with the women. The order barred Krause from contacting the women, required him to stay 100 yards from them and their workplace (five yards during Board meetings, where a District-funded security guard was required), barred him from commenting on the WVRO or the underlying proceedings at any regular Board meeting, and ran for four years.

In the published opinion in Adelanto Elementary School District v. Krause, No. D086337 (Cal. Ct. App., 4th Dist., Div. 1, July 2026) — the Court of Appeal affirmed the WVRO as modified, striking the provision barring Krause from commenting on the order at Board meetings and shortening the order’s duration from four years to the statutory maximum of three.

Writing for a unanimous panel, Justice Buchanan first rejected Krause’s argument that the District had waived its right to seek a WVRO by signing a separation agreement releasing claims against him. The court held that an employer’s statutory right to prosecute a WVRO on an employee’s behalf is unwaivable under Civil Code section 3513, which bars private contracts from contravening a law enacted for a public reason. Drawing on Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 and Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, the court reasoned that section 527.8 was enacted to combat workplace violence and harassment as a matter of public concern, not solely for individual employers’ benefit, citing legislative history describing rising threats against school employees, health workers, and election workers. Because the public benefit of the WVRO statute is a primary purpose rather than a merely incidental one — a policy the court traced through Scripps Health v. Marin (1999) 72 Cal.App.4th 324 and a case it referred to as Franklin v. The Monadnock Co. (2007) 151 Cal.App.4th 252 — the release could not extinguish the District’s right to seek the order.

Second, the court found sufficient evidence of a future threat to support the WVRO. It held that the older “reasonable probability of future unlawful violence” standard from Scripps Health no longer controls, because the Legislature amended section 527.8 in 2023 to reach harassment as well as violence, effective January 2025, precisely so employers would not have to wait until a threat escalated into violence. Under the amended statute, a reasonable probability of continued harassment suffices, and the panel found that standard met given the two-year pattern of conduct, Krause’s continued contact after being placed on leave, and his consistent refusal to acknowledge that any of it was inappropriate.

Third, the court held Krause forfeited his argument that the WVRO improperly burdened his parental rights, since he raised no evidence or objection on that point below despite adequate notice of the order’s terms.

Fourth, the court agreed with Krause that the provision barring him from commenting on the WVRO or its proceedings at Board meetings was an overbroad restriction on his First Amendment rights as an elected official. Applying Balboa Island Village Inn, Inc. v. Lemen (2007) 40 Cal.4th 1141 and Madsen v. Women’s Health Center, Inc. (1994) 512 U.S. 753, the court explained that an injunction touching speech must be no broader than necessary to serve its purpose, and this provision swept in legitimate Board business — such as evaluating the performance of the law firm that handled the case — that had nothing to do with harassing the protected women. The panel struck that provision alone, while leaving intact the WVRO’s other bars on harassment or contact during Board meetings.

Finally, the court held the trial court exceeded its authority by setting the WVRO’s duration at four years, since section 527.8, subdivision (l)(1), caps such orders at three years subject to early termination. The panel modified the order accordingly and affirmed it as modified.

John HR Doe and six other plaintiffs (Does) allege that William Babcock, a counselor at Kynoch Elementary School, sexually assaulted them between 1993 and 2001, including during counseling sessions, while the school operated within Marysville Joint Unified School District (the District). Before filing the lawsuit at issue here, Does twice filed and then voluntarily dismissed nearly identical claims against the District and Babcock. The first two rounds were filed in Yuba County Superior Court in 2020 and voluntarily dismissed without prejudice that November. The same day, Does filed a new action in the U.S. District Court for the Eastern District of California realleging their state-law claims and adding federal claims under Title IX, 42 U.S.C. section 1983, and the No Child Left Behind Act. After the District moved to dismiss on Eleventh Amendment sovereign-immunity and other grounds, Does voluntarily dismissed the federal action “without prejudice” under rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure. Weeks later, Does filed the present action in state court (later transferred to Yuba County), alleging only state-law tort claims arising from the same abuse.

The District demurred, arguing that Does’ claims were barred by claim preclusion under the so-called “two-dismissal rule” of rule 41(a)(1)(B), which provides that a second voluntary dismissal of an action based on the same claim “operates as an adjudication on the merits.” Because Does had already dismissed the same claims twice before — once in state court and once in federal court — the District argued the federal dismissal triggered the rule and barred the state action outright. Does countered that the federal dismissal could not carry claim-preclusive weight because the District’s invocation of Eleventh Amendment immunity had stripped the district court of subject-matter jurisdiction over their state-law claims. The Yuba County Superior Court agreed with the District, ruling that the federal dismissal operated as an adjudication on the merits and sustained the demurrer without leave to amend, entering judgment for the District.

In a split decision, the Court of Appeal affirmed, holding that state courts must apply the Federal Rules of Civil Procedure to determine the preclusive effect of a federal voluntary dismissal, and that rule 41(a)(1)(B) rendered the second dismissal claim preclusive as a matter of federal law. (Doe v. Marysville Joint Unified School Dist. (2023) 98 Cal.App.5th 95, 110.) The dissent, following the reasoning of Gray v. La Salle Bank, N.A. (2023) 95 Cal.App.5th 932 — a Sixth District decision issued while the appeal was pending — would have held that state claim-preclusion law, under which a voluntary dismissal without prejudice has no preclusive effect, governed the state-law claims because the federal court’s jurisdiction over them had been supplemental rather than original.

In the case of Doe v. Marysville Joint Unified School District, No. S283639 (Cal. Sup. Ct., July 2026) — the California Supreme Court reversed the judgment of the Court of Appeal and remanded the case for further proceedings.

The Court of Appeal majority had misread Semtek Int’l Inc. v. Lockheed Martin Corp. (2001) 531 U.S. 497, the U.S. Supreme Court decision that both sides treated as controlling. In Semtek, the high court held that rule 41(b)’s phrase “adjudication upon the merits” does not mean a dismissal automatically carries claim-preclusive effect in other courts; it means only that the same claim cannot be refiled in the same court. The Supreme Court explained that treating the rule as a freestanding rule of claim preclusion would be an odd place to bury such a rule, would risk exceeding the Rules Enabling Act’s bar on altering substantive rights, and would produce forum-shopping problems under Erie Railroad Co. v. Tompkins (1938) 304 U.S. 64. Because rule 41(a)(1)(B) uses the identical “adjudication on the merits” language, the court reasoned, Semtek’s interpretation applies equally: a second voluntary dismissal under the two-dismissal rule bars refiling the same claims in the same federal court, but it does not, by itself, preclude a later suit in a different court — including a state court.

The court rejected the District’s argument that Semtek’s holding was limited to diversity cases and left federal-question dismissals subject to a different rule. It reasoned that Semtek’s interpretation of the rule itself did not turn on the basis for jurisdiction; only the separate question of which body of law’s preclusion rules apply (a uniform federal rule for federal-question cases, versus the forum state’s rule in diversity cases, per Taylor v. Sturgell (2008) 553 U.S. 880) depends on the jurisdictional source. Since rule 41(a)(1)(B) is not itself a rule of claim preclusion under either body of law, the court found it unnecessary to decide which preclusion rule would apply to Does’ state-law claims, because the outcome was the same either way: California law does not treat a voluntary dismissal without prejudice as a judgment on the merits, and no persuasive authority establishes that federal common law treats a two-dismissal-rule dismissal as barring a subsequent state-court suit on state-law claims. The court found support in Gray v. La Salle Bank, N.A., which had reached the same conclusion on similar facts, and distinguished the out-of-circuit authority the District cited as either predating Semtek or addressing a different question — whether two suits raised the “same claim” for purposes of applying the rule within the federal courts, not whether the rule itself extends preclusive force into state court.

The court added that even if the federal dismissal were treated as a final adjudication of Does’ federal claims, there would be no basis to extend that finality to the supplemental state-law claims, since federal courts routinely allow such claims to be refiled in state court after a discretionary dismissal without prejudice, and there is no comparable federal interest in barring purely state-law claims from state court. Having resolved the case on this ground, the court declined to reach Does’ alternative argument that the District’s invocation of sovereign immunity in the federal action deprived that court of subject-matter jurisdiction over the state-law claims in the first place.

This court challenge concerns California’s FAIR Plan, the state-mandated “insurer of last resort” for property owners who cannot obtain coverage in the ordinary market (Ins. Code, § 10090 et seq.). The Plan is an involuntary association of all property insurers licensed in California; each member shares proportionally in the Plan’s writings, profits, and losses based on its market share two years earlier (Ins. Code, § 10095(c)). When the Plan runs short, it may levy an assessment on its member insurers, subject to the Commissioner’s approval.

At issue were two bulletins issued by Insurance Commissioner Ricardo Lara. Bulletin 2024-8 (Sept. 3, 2024) set out a procedure by which FAIR Plan member insurers could seek the Commissioner’s prior approval, under Proposition 103, to recoup any FAIR Plan assessment from their own policyholders. Bulletin 2025-4 (Feb. 11, 2025) updated that guidance after the “highly unlikely event” actually occurred: following the January 2025 Los Angeles wildfires, the FAIR Plan sought approval for roughly $1 billion in assessments — the first in over 30 years — and insurers were permitted to pass through some, but not all, of those costs to policyholders over no more than two years. Per the Department, the median homeowner fee was about $28 per year.

In April 2025, Consumer Watchdog — a nonprofit public-interest organization — sued Commissioner Lara and the Department of Insurance to invalidate the bulletins. Its verified petition raised three claims: that the bulletins were “regulations” adopted without complying with the Administrative Procedure Act; that they exceeded the Commissioner’s authority under the FAIR Plan statutes; and that, by letting insurers pass assessments through to policyholders, they violated the equal profit-and-loss-sharing command of section 10095(c).

This was a trial-court ruling on a petition for a traditional writ of mandate (Code Civ. Proc., § 1085), not an appeal. Earlier, in a July 22, 2025 order, the court had sustained the Department’s demurrer without leave to amend as to the first two causes of action — holding that the bulletins fell within an APA exception and that the Commissioner had authority for the pass-throughs under Proposition 103. Only the third cause of action — the claim that the bulletins violate section 10095(c) — survived to be decided on the merits. Consumer Watchdog argued that section 10095(c) reflects a legislative design of “symmetry,” under which member insurers who reap the Plan’s profits must also absorb its losses, and that shifting assessment costs to non-FAIR-Plan policyholders effectively turns ordinary consumers into reinsurers of their own insurers.

The trial court denied the petition in its entirety, along with the requests for declaratory and injunctive relief. The court declined to reach the Department’s argument that Consumer Watchdog lacked standing, resolving the case instead on the merits.

The court first set aside the bulk of Consumer Watchdog’s briefing, which re-argued that the bulletins were not authorized under Proposition 103. That question, the court held, had already been decided at the demurrer stage — where it ruled the Commissioner had Proposition 103 authority for the pass-throughs — and the time to seek reconsideration had passed. Attempts to reframe the argument as newly raised questions were unavailing.

On the sole surviving claim, the court held the statute’s meaning is plain: it governs how writings, profits, losses, and expenses are allocated among FAIR Plan member insurers — the Plan’s internal affairs — and says nothing about what an insurer may later do with its own policyholders. The court found Ohio Casualty Ins. Co. v. Garamendi (2006) 137 Cal.App.4th 64, on which Consumer Watchdog relied, addressed only insurers’ ongoing loss-sharing obligations to one another, not their relationships with policyholders. As the court put it, nothing in the statutory text conditions an insurer’s proportional share of Plan expenses on ultimately absorbing those costs rather than merely paying them initially; the statute regulates the apportionment obligation itself, not the insurer’s later financial decisions.

Because the statute was unambiguous, the court refused to resort to canons of construction or to compare the FAIR Plan against other insurance “safety-net” programs (CIGA, CLHIGA, and the CEA) that expressly authorize pass-throughs. It distinguished each of Consumer Watchdog’s authorities — In re Jennings (2004) 34 Cal.4th 254, BullsEye Telecom, Inc. v. Public Utilities Com. (2021) 66 Cal.App.5th 301, Goldstein v. California Unemployment Ins. Appeals Bd. (2019) 34 Cal.App.5th 1006, and Medical Bd. of California v. Superior Court (2001) 88 Cal.App.4th 1001 — noting that each involved a genuinely ambiguous statute and that none endorsed reading an affirmative limitation into a statute from a comparison to different schemes. Invoking the plain-meaning rule (Kavanaugh v. West Sonoma County Union High School Dist. (2003) 29 Cal.4th 911; Burden v. Snowden (1992) 2 Cal.4th 556), and finding Gomes v. Mendocino City Community Services Dist. (2019) 35 Cal.App.5th 249 more persuasive, the court concluded that the absence of express pass-through language in the FAIR Plan statutes could not be construed as an affirmative limit on authority the Commissioner otherwise holds under Proposition 103.

The two sides framed the outcome very differently. In a July 1, 2026 press release titled “Commissioner Lara defeats attempt to undermine California insurance market,” the Department cast the ruling as vindication of the Commissioner’s authority to stabilize the market.  (The Department’s framing was echoed in trade coverage.)

Consumer Watchdog, in a same-day statement (“Court Upholds FAIR Plan Surcharges, Consumer Watchdog Weighs Appeal”), respectfully acknowledged the ruling but sharply criticized the Commissioner and said it is reviewing its options, including an appeal.

The litigation sits within a broader, contentious backdrop around the commissioners “Sustainable Insurance Strategy.” Consumer Watchdog has repeatedly tied the case to criticism of the Commissioner, and has noted that former Insurance Commissioner (and later Congressman) John Garamendi publicly urged Lara to resign in 2025, saying he had not been willing to stand up to the insurance industry. Whether Consumer Watchdog appeals — which would move the section 10095(c) question, and potentially the reserved standing and Proposition 103 issues, before the Court of Appeal — remains to be seen.

A new dispute grew out of Vaughn v. Tesla, Inc. (Alameda County Super. Ct. No. RG17882082), a 2017 class action alleging that Black employees suffered racial discrimination and harassment — including regular use of racial slurs by coworkers and supervisors — at Tesla’s production factory, in violation of the Fair Employment and Housing Act (Gov. Code, § 12940, subd. (a)). The complaint alleged Tesla maintained a policy of tolerating a hostile work environment and a pattern or practice of ignoring and inadequately investigating harassment complaints.

In Vaughn, the trial court granted class certification only in part — certifying three common “pattern or practice” liability issues but declining to certify a class for individual liability or damages, and ordering that each worker seeking damages file a separate lawsuit. The court later denied leave to add 531 class members as individual plaintiffs, and ultimately decertified the class after the plaintiffs conceded they could not produce the 200 class-member witnesses their stipulated trial plan required.

Acting on the court’s own instruction to sue separately, 440 former Vaughn class members filed five complaints in mid-2025, each joining between 54 and 98 individual plaintiffs. All alleged FEHA claims for racial discrimination, harassment, and failure to prevent — asserting they worked at the same Tesla factory, were subjected to similar race-based mistreatment, and were harmed by Tesla’s common practice of failing to systematically address racist conduct.

Weeks after the complaints were filed — and before Tesla filed any demurrer — the trial court issued its own order to show cause why it should not find “inappropriate joinder.” After argument, the court found misjoinder and ordered that in each of the five cases “all Plaintiffs except for the first name on the complaint must be dismissed” and must refile as single-plaintiff complaints. The court reasoned that different workers experienced different harassment in different locations at different times, that there was “virtually no scenario” for a common trial with over 50 plaintiffs, and that its experience in complex litigation let it anticipate the problems these complaints would cause. It also cited concerns about discovery burdens and the loss of filing fees. The plaintiffs sought writ relief; the Court of Appeal stayed proceedings, consolidated the five petitions, and issued an order to show cause.

The Court of Appeal granted the petitions and directed issuance of a peremptory writ of mandate ordering the trial court to vacate its misjoinder order and allow the five original complaints to proceed in the published case of Smith et al. v. Superior Court (Tesla, Inc., Real Party in Interest) – Case No. A174789 (June, 2026). The court took up the matter by writ because the issues were likely to recur and presented legal questions of significant importance.

Because the court dismissed at the pleading stage before discovery (and conceded its OSC was “in essence a demurrer based on misjoinder”), the Court of Appeal reviewed the ruling de novo, assuming the truth of the complaints’ allegations and drawing all reasonable inferences in favor of joinder. Whether misjoinder was proper was a question of law, not a matter of discretion.

The permissive-joinder statute (Code Civ. Proc., § 378) lets plaintiffs join if their relief arises from the same transaction or series of transactions and shares a common question of law or fact. Joinder statutes are liberally construed, and a right to relief arises from the same transaction so long as there is “any factual relationship between the claims” (Petersen v. Bank of America Corp. (2014) 232 Cal.App.4th 238). Applying that breadth, the court relied on Anaya v. Superior Court (1984) 160 Cal.App.3d 228 (200-plus employees exposed to chemicals at one facility over decades were properly joined) and Petersen (965 borrowers harmed by one lender’s common deceptive scheme were properly joined based on commonality of liability, despite widely varying damages). Here, the plaintiffs alleged a single company-wide policy or practice of ignoring racist conduct at one factory — enough to satisfy section 378. That the harassment occurred at different times and places did not defeat joinder; “the salient point is that liability is amenable to mass action treatment.”

The court found Moe supportive: just as an employer’s negligent hiring and supervision was a “series of transactions” exposing multiple assault victims to harm, Tesla was the common entity alleged to have let known harassment persist. It distinguished the cases Tesla cited — David v. Medtronic, Inc. (2015) 237 Cal.App.4th 734 (a medical device with no single scheme; different surgeries, surgeons, and representations), Aghaji v. Bank of America, N.A. (2016) 247 Cal.App.4th 1110 (mortgage plaintiffs with no overarching plan), and Coleman v. Twin Coast Newspaper, Inc. (1959) 175 Cal.App.2d 650 (separate trespasses on separate premises) — as all lacking the common-policy allegation present here. It held the Vaughn decertification did not bind these individually represented plaintiffs (that ruling turned on a witness-production failure, and the court there expressly disclaimed any suggestion that a pattern-or-practice trial is inherently unmanageable), and that federal Rule 20 cases were inapposite given both their lack of a common-policy allegation and the more demanding federal pleading standard.

Section 379.5 does not authorize dismissal. The court rejected the argument that section 379.5’s case-management authority let the court order single-plaintiff filings. Section 378 commits the joinder decision to the plaintiffs, not the judge; section 379.5 lets a court sever trials or make just orders after parties are joined, but not undo a proper joinder. Drawing on Estrada v. Royalty Carpet Mills, Inc. (2024) 15 Cal.5th 582, the court reasoned that trial courts lack inherent authority to strike claims on manageability grounds, and that broad “interests of justice” language (there, § 128; here, § 379.5) does not supply it. That the Legislature authorized dismissal for misjoinder by demurrer (§ 430.10, subd. (d)) but included no such power in section 379.5 — and enacted a counterpart to federal Rule 20 but not to Rule 21 (which allows dropping parties) — confirmed the omission was deliberate. Filing fees, too, are set by the Legislature (Gov. Code, §§ 70611, 70616), not the court, and section 379.5 protects parties from undue expense, not the court itself.

The court acknowledged the trial court’s “formidable” challenge managing 440 plaintiffs and pointed to legitimate tools — separate trials by party or claim (§§ 379.5, 1048), tracking spreadsheets, and the case-management measures endorsed in Estrada and Petersen. But any broader limits on permissive joinder, it held, must come from the Legislature. It also found the recent decision in J.O. v. Superior Court (2026) 19 Cal.5th 753 inapposite, concluding the situation came nowhere near an unconstitutional interference with a core judicial function.

In 2020, attorneys Jennifer McGrath and Darren Kavinoky formed McGrath Kavinoky LLP for a single purpose: to represent victims of sexual abuse by Dr. James Heaps, a gynecologist at UCLA. Jane Doe 1 retained the firm in January 2020, at which point it already represented at least 36 former Heaps patients. Jane Doe 2 retained the firm in February 2021; five weeks later the firm told her it represented 180 patients. The firm ultimately represented 312 clients in separate but coordinated cases against Dr. Heaps and UCLA.

In January 2022, the firm told Does 1 and 2 it had tentatively reached an aggregate settlement. Both agreed. The court appointed retired judges to allocate the $374.4 million global settlement; Doe 1 received $1.4 million and Doe 2 received $1.7 million, less the firm’s contingency fee and costs.

In June 2024, Does 1 and 2 sued the firm and its named partners (collectively, McGrath Kavinoky), asserting professional negligence, breach of fiduciary duty, fraudulent misrepresentation, fraudulent concealment, breach of contract, breach of the implied covenant, and an accounting. They alleged they were among the most severely harmed victims, that the lawyers had promised individualized handling and made specific high-value promises about their cases, that they were “bullied” into the settlement through an improper allocation process — and, critically, that the firm never disclosed, or obtained informed written consent to, the conflicts of interest inherent in representing many clients who would compete for shares of a single settlement.

McGrath Kavinoky moved to compel arbitration under arbitration clauses in its engagement agreements. Does 1 and 2 opposed, arguing the firm violated rule 1.7(b) of the Rules of Professional Conduct — which bars representing a client where there is a significant risk the representation will be materially limited by the lawyer’s duties to another client, absent informed written consent — and that this violation rendered the agreements, including their arbitration clauses, unenforceable.

The trial court denied the motion to compel arbitration. It found that when the plaintiffs signed their retainers, the likelihood of a conflict was high: the firm represented dozens of clients with claims against the same defendant, litigated them in the aggregate toward a global settlement, and so placed each plaintiff in competition with every other for a slice of the recovery. The firm’s failure to disclose that conflict invalidated the retainer agreements and the arbitration clauses within them. McGrath Kavinoky appealed.

The Court of Appeal affirmed the order denying arbitration in the published case of Jane Doe 1 et al. v. McGrath Kavinoky LLP et al. -Case No. B343201 (June 2026). The decision is certified for publication because it resolves a question of first impression in California: whether a lawyer violates rule 1.7(b) — and thereby voids the engagement agreement — by representing multiple clients suing the same defendant for similar injuries without obtaining informed written consent at the outset. The court held that the rule in the 2018 Sheppard, Mullin Supreme Court opinion applies, even though Sheppard involved an actual conflict and this case involves a potential one.

In Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc. (2018) 6 Cal.5th 59, the Supreme Court held that when a lawyer enters an engagement agreement in violation of an ethical rule, the entire agreement — including its arbitration clause — is unenforceable as against public policy. Citing Civil Code section 1667, the Court reasoned that a contract is unlawful if it is contrary to an express provision or policy of law, and that the Rules of Professional Conduct are not merely guidance for the bar but an expression of public policy protecting the public. Crucially, where grounds exist to void the entire contract, those grounds also vitiate the arbitration clause and prevent severance.

Rule 1.7(b) was violated at the outset. The court held substantial evidence supported the trial court’s finding that a conflict was highly likely when the plaintiffs signed on. Two lawyers who formed a firm specifically to pursue Heaps’s former patients could reasonably be inferred to have intended to represent as many as possible and to resolve them through an aggregate settlement — which is exactly what occurred, only eleven months after Doe 2 signed the retainer agreement. From the start there was a significant risk that clients would disagree about settling, that the defendants might condition any deal on a high participation rate, and that the clients would necessarily compete for their shares — meaning the firm’s ability to advocate for each was materially limited by its duties to the others. Lacking informed written consent, the firm violated rule 1.7(b), which under Sheppard voided the agreements.

The court drew heavily on persuasive authority in an area with no direct California precedent, including ethics opinions and commentary recognizing that conflicts inhere in collective representation. It cited the Bar Association of San Francisco’s Formal Opinion 2017-1 (Sept. 2017), ABA Formal Opinion No. 06-438 (Feb. 10, 2006), and scholarship by Erichson (Beyond the Class Action (2003) 2003 U.Chi. Legal F. 519) and Moore (Ethical Issues in Mass Tort Plaintiffs’ Representation (2013) 81 Fordham L.Rev. 3233), all for the proposition that such conflicts must be disclosed and consented to at the outset of the representation. It also pointed to Bridgepoint Construction Services, Inc. v. Newton (2018) 26 Cal.App.5th 966, where disqualification was proper because multiple clients sought the same damages from a single pool.

The court rejected each of McGrath Kavinoky’s distinctions. It declined to apply Brawerman v. Loeb & Loeb LLP (2022) 81 Cal.App.5th 1106 — where the illegality lay in performance of a retainer by an unlicensed attorney rather than in entering it — because here the violation occurred upon entering the agreements without consent. It rejected the argument that Sheppard reached only actual conflicts, noting rule 1.7 requires informed written consent for both actual (rule 1.7(a)) and potential (rule 1.7(b)) conflicts, and that Sheppard’s rationale applies equally to both. It dismissed the concern that this invites improper “post-hoc” hindsight inquiry, observing that trial courts routinely sit as triers of fact in deciding arbitration motions and are well-equipped to assess whether a significant risk existed at an earlier time. It also clarified that Sheppard expressly left open only the enforceability of blanket advance conflict waivers — an issue not present here, since the firm never claimed to have obtained one.

Arbitration could not be severed. The court held McGrath Kavinoky forfeited its severance argument by not raising it below, and that it failed on the merits regardless: under Sheppard, when an entire contract is void for illegality, the arbitration clause falls with it. The court distinguished the firm’s cited severance and fraud-in-the-inducement cases — including Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312 — because those involved either severable provisions in otherwise valid contracts or claims of fraudulent inducement, not a claim that the entire agreement was illegal and void as against public policy.