Winterrowd v. American General Annuity Ins. Co., ___ F.3d ___, 2009 WL 367696 (9th Cir. 2009)

Brief Summary
The Ninth Circuit allowed an Oregon lawyer who supported California litigation, but who did not make an appearance in the litigation, to recover attorney fees under a California fee shifting statute.

Complete Summary
After extensive litigation, defendant American General Annuity Insurance Co. (“AGAIC”) settled with plaintiffs Winterrowd, Yurkus, and Stopp for plaintiffs’ entire amount claimed. The parties, however, agreed that the issue of attorney fees would be decided by the District Court, Central District of California. The plaintiffs then moved for attorney fees. The court granted plaintiffs’ motion but denied fees for work performed by an Oregon lawyer, William Wheatley, Sr., because he rendered services involving California law for a California client who had a claim in California court but was not admitted pro hac vice. The district court held, based on Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Ct. of Santa Clara County, 17 Cal. 4th 119 (1998), that such services by an out-of-state lawyer violated the State Bar Act. Plaintiffs appealed.

The Ninth Circuit reversed. The court held that state law ― Birbrower specifically ― does not govern practice of law in federal court. Before clarifying the controlling federal law, the court explained why, even under Birbrower, awarding fees for the Oregon lawyer’s work would be appropriate.

The Ninth Circuit differentiated Birbrower by noting that in Birbrower, attorneys from New York made multiple visits to California to advise a California client directly on California law without the help of any lawyer admitted in California. In the present case, the California client engaged a California lawyer who, in turn, engaged the Oregon lawyer; the Oregon lawyer performed all of his services remotely from Oregon; and the Oregon lawyer worked primarily on an issue of federal preemption rather than an issue of California law. The court — which started its opinion by discussing the modern day necessity of allowing multi-jurisdictional partnerships to use out-of-state personnel on certain matters — further opined that the Oregon and California lawyers had effectively entered into a multi-jurisdictional partnership for purposes of the present case.

The court then identified two ways in which plaintiffs could recover Wheatley’s fees under federal law. First, recovery would be appropriate if Wheatley had been admitted pro hac vice. Despite finding that Wheatley would have likely been admitted pro hac vice, the court declined to base its holding on this rule because the record had not been fully developed as to Wheatley’s qualifications.

The court instead based its holding on the fact that Wheatley did not “appear” before the district court. The court undertook to differentiate between merely supporting litigation and “appearing.”  Fees may be recovered, the court noted, for the work of many who perform litigation support such as paralegals and summer associates. The court reasoned that Wheatley’s work was similar to such litigation support. On the other hand, factors that would indicate an “appearance” would be physically entering the court, signing pleadings, and having extensive contact with the client without in-state counsel present. In reaching its conclusion, the court relied on Dietrich Corp. v. King Resources, Co., 596 F.2d 422 (10th Cir. 1979), which held that an out-of-state attorney’s work is not the unauthorized practice of law so long as it is filtered through a licensed in-state attorney.

Judge Rymer dissented, arguing that, because Wheatley failed to actually apply for pro hac vice admission, state law, including Birbrower, governed whether he was practicing law in California and thus whether he was entitled to recover attorney fees under California law. Judge Rymer opined that under the Birbrower fact-specific test, Wheatley did commit the unauthorized practice of law.

Significance of Opinion
This opinion draws two significant lines. First, the court delineates the power of federal courts to govern the practice of law. This power is often invisible because federal courts often defer to state law. Second, the court defines the practice of law in a way that is at least arguably different from the approach take by California state courts.

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