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rejecting the use of a screen under similar conditions because the disqualified attorney was in the same office as attorney assigned to the case
Summary of this case from Reilly v. Computer Associates Long-Term DisabilityOpinion
97 Civ. 6687 (RCC), 97 Civ. 7366 (WHP), 97 Civ. 9515 (JSR), 97 Civ. 9516 (JSR)
September 6, 2001
OPINION AND ORDER
The above-captioned cases ("Crudele," "Santulli," "Richburg" and "Day") have been consolidated before me solely for the purpose of deciding this motion to disqualify the law firm of Leeds, Morelli Brown, P.C., from continuing to act as counsel for plaintiffs. Defendants argue that disqualification is required because former Assistant Corporation Counsel John Wirenius ("Wirenius"), who was the lead attorney assigned to represent defendants in these cases during his tenure at the New York City Law Department, is now employed by Leeds, Morelli Brown. For the reasons set forth below, defendants' motion is GRANTED.
I. BACKGROUND
Unless otherwise indicated, the following facts are not in dispute. Between 1996 and 1997, Leeds, Morelli Brown on behalf of certain clients filed 16 actions in the United States District Court for the Southern District of New York, all challenging the constitutionality of the sick leave policies of various New York City agencies. In addition, Leeds, Morelli Brown brought a similar suit against the New York City Fire Department in New York State Supreme Court.
Twelve of the cases pending in the Southern District were consolidated before Judge Rakoff under the caption of Monahan v. New York City Department of Correction et al. ("Monahan"). Judge Rakoff granted summary judgment to defendants on the grounds that plaintiffs' claims were barred by a prior settlement agreement and, in the alternative, that the sick leave policy did not violate the Constitution. 10 F. Supp.2d 420. The Second Circuit affirmed Judge Rakoff's decision, 214 F.3d 275, and the United States Supreme Court denied plaintiffs' petition for certiorari. 121 S.Ct. 623. The four remaining Southern District cases at issue here, which were placed on the suspense docket pending the outcome of theMonahan appeal, are still in progress, as is the New York State Supreme Court case.
From 1997 to 1999, while an Assistant Corporation Counsel in the General Litigation Division, Wirenius was assigned as the lead attorney for defendants in all of the sick leave actions. Pestana Decl. ¶ 3. In addition to Wirenius, three other attorneys were assigned to the defense team. Wirenius Aff. ¶ 5. Six or seven attorneys also sporadically assisted with the litigation. Id.
Wirenius performed varying amounts of work on each of the cases. In the consolidated Monahan litigation, Wirenius represented defendants in pre-trial discovery and participated in settlement negotiations. Pestana Decl. ¶ 8. He also prepared and argued defendants' motion for summary judgment. Id. ¶ 9; Wirenius Aff. ¶ 5. In Crudele, Wirenius answered plaintiffs complaint, responded to interrogatories and document requests, took plaintiffs deposition and signed the consent order placingCrudele on suspense. Pestana Decl. ¶¶ 10-14. In Santulli, Wirenius answered the complaint. Id. ¶ 16. In Richburg, Wirenius signed the consent order placing that case on suspense. Id. ¶ 19. Wirenius took no action with respect to Day. Id. ¶ 20.
The parties dispute the extent of Wirenius' involvement in the subsequent appeal to the Second Circuit. According to Wirenius, he attended the pre-argument conference but did not work on the appeal. Wirenius Aff. ¶ 8. Wirenius states that his name appeared on the appellate brief simply as a courtesy to him. Id. However, according to Susan Choi-Hausman, the Assistant Corporation Counsel responsible for theMonahan appellate litigation, Wirenius reviewed and commented on the draft brief and was kept informed of the progress of the proceedings. Choi-Hausman Decl. ¶¶ 3-4.
In September 1999, Wirenius transferred from the General Litigation Division to the Legal Counsel Division. Wirenius Aff. ¶ 4. He reassigned his entire caseload, including the sick leave cases. Id. ¶¶ 10-1 1. In November 2000, Wirenius sought employment as an associate at Leeds, Morelli Brown. Id. ¶ 12. Prior to accepting an offer with the firm, Wirenius informed several supervisors at the Law Department, both within the General Litigation and Legal Counsel Divisions, that he intended to take the position. Id. ¶ 13. Although these supervisors were aware Wirenius' work on the sick leave cases, the conflict of interest issue was never raised. Id. ¶¶ 14-15.
Wirenius commenced his employment as an associate at Leeds, Morelli Brown in January 2001. Id. ¶ 3. When Wirenius began working at the firm, Rick Ostrove ("Ostrove"), the partner solely responsible for litigating the sick leave cases on behalf of plaintiffs, informed Wirenius that he was not permitted to speak about or have any dealings with those matters due to his prior representation of defendants. Ostrove Aff. ¶ 9. The physical files were placed in a locked storage room to which Wirenius does not have access, and the computer files were made accessible only from Ostrove's computer through the use of a password.Id. ¶ 10.
Leeds, Morelli Brown consists of approximately 15 attorneys and 45 other staff members, and maintains offices in Long Island, New York City and Washington, D.C. Id. ¶ 2. An office in Atlanta, Georgia is planned. Id. Both Wirenius and Ostrove work in the Long Island office. Connolly Decl. ¶ 7. During the first month of Wirenius' employment, he drafted three complaints for cases in which Ostrove was involved, unrelated to the sick leave litigation. Ostrove Aff. ¶ 13. Since that time, Ostrove and Wirenius no longer work on any common matters and their interaction is limited to 10-15 minutes per day. Id. ¶ 12; Wirenius Aff. ¶ 21; Pl. Mem. at 15.
On or about March 16, 2001, Isaac Kaufman ("Kaufman"), the Assistant Corporation Counsel currently assigned to Crudele, learned that Wirenius had joined Leeds, Morelli Brown. Kaufman Decl. ¶ 8. He brought the matter to the attention of Daniel Connolly ("Connolly"), Special Counsel for the New York City Law Department, who is responsible for, among other things, conflict of interest issues. Connolly Decl. ¶ 2. Connolly determined that no one with the authority to speak for the Law Department on such matters had been consulted regarding Wirenius' new employment or had waived any objection thereto. Id. ¶¶ 2-4. He then requested that Leeds, Morelli Brown withdraw from all matters in which Wirenius had participated as an attorney for the Law Department.Id. ¶ 7. Upon the firm's refusal to do so, defendants sought leave to file the instant motion.
II. DISCUSSION
Disqualification motions generally are viewed with disfavor in this Circuit because they are often tactical and result in unnecessary delay.See Clark v. Bank of New York, 801 F. Supp. 1182, 1196 (S.D.N.Y. 1992);United States Football League v. National Football League, 605 F. Supp. 1448, 1452 (S.D.N.Y. 1985). The moving party must meet a high standard of proof in order to convince the Court, in its discretion, to grant the motion. See Evans v. Artek Sys. Corp., 715 F.2d 788, 791 (2d Cir. 1983); Marshall v. State of New York, 952 F. Supp. 103, 106 (N.D.N.Y. 1997). That said, where the moving party has made a substantial showing that a conflict of interest exists and cannot be adequately remedied, the Court must resolve any doubts in favor of disqualification. See Cheng v. GAF Corp., 631 F.2d 1052, 1055 (2d Cir. 1980), vacated on other grounds, 450 U.S. 903 (1981); Red Ball Interior Demolition Corp. v. Palmadessa, 908 F. Supp. 1226, 1239 (S.D.N.Y. 1995).
When faced with these motions, courts look to the provisions of the American Bar Association Code of Professional Responsibility ("Code") for guidance. See, e.g., Cheng, 631 F.2d at 1055; Baird v. Hilton Hotel Corp., 771 F. Supp. 24, 26 (E.D.N.Y. 1991). Because the situation at issue here involves a former government attorney "switching sides" to a private firm, the relevant Disciplinary Rules ("DR") are DR 9-101(B) and DR 5-105(D). DR 9-101(B) provides that:
A lawyer shall not represent a private client in connection with a matter in which the lawyer participated personally and substantially as a public officer or employee, and no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter unless:
(i) the disqualified lawyer is effectively screened from any participation, direct or indirect, including discussion, in the matter and is apportioned no part of the fee therefrom; and (ii) there are no other circumstances in the particular representation that create an appearance of impropriety.
22 N.Y.C.R.R. § 1200.45(b)(1).
That provision accords with DR 5-105(D):
While lawyers are associated in a law firm, none of them shall knowingly accept or continue employment when any one of them practicing alone would be prohibited from doing so under [DR 9-101 (B)] except as otherwise provided therein.Id., § 1200.24(d).
In other words, the Code contains a presumption that client confidences are shared among the attorneys within a law firm — whether advertently or inadvertently — and thus disqualification is necessary when an attorney joins the firm of opposing counsel. See Marshall, 952 F. Supp. at 110; see also Cheng, 631 F.2d at 1057 ("[O]ne of the purposes of disqualification is to guard against the danger of inadvertent use of confidential information.") (internal citations omitted). That presumption is only rebutted if (1) the attorney is effectively screened i e an adequate "Chinese Wall" is created, and (2) there is no further appearance of impropriety.
There is no dispute here that Wirenius himself must be disqualified from any involvement in the sick leave cases on behalf of Leeds, Morelli Brown However, plaintiffs argue that the firm should be allowed to continue as counsel because adequate screening mechanisms are in place. Plaintiffs also characterize Wirenius' previous work on these cases as limited, thus minimizing any appearance of impropriety. Finally, plaintiffs argue that other considerations — for example, the firm's expertise, its long-term involvement with these cases, the costs of obtaining new counsel and the failure of the Law Department to raise the conflict in a timely manner — outweigh disqualification in this instance. The Court does not agree.
DR 9-101(B) only creates a presumption of disqualification with respect to matters in which the former government attorney participated "personally and substantially." 22 N YC.R.R. § 1200.45(b)(1). Although plaintiffs do not challenge the application of DR 9-101(B) on this basis, they do suggest that Wirenius' involvement in the sick leave litigation was sufficiently limited so as to diminish any appearance of impropriety. See Pl. Mem. at 12. In any event, for the reasons discussedinfra, the record is clear that Wirenius did have personal and substantial involvement in the sick leave matters.
A. SCREENING
Plaintiffs argue that Wirenius is effectively screened because he does not work on or discuss the sick leave cases, has no access to the firm's print or electronic files and has only limited interaction with Rick Ostrove, the partner who handles those matters. However, plaintiffs' position ignores the line of cases in this Circuit holding that such methods are inadequate in the context of a small law firm such as Leeds, Morelli Brown. In Cheng, the Second Circuit was confronted with a situation where one of the attorneys in the law firm retained by the defendants previously worked at the Legal Services office representing the plaintiff. 631 F.2d at 1054. In an effort to build a Chinese Wall, the firm assigned the attorney to a different division than the one handling the litigation and prohibited him from working on or discussing the case. Id. at 1057. Although the district court found those measures to be satisfactory, the Second Circuit reversed. Id. at 1054-55. Noting that the firm was "relatively small" — 35 attorneys in two offices — and that the matter was still active, the Second Circuit concluded that the danger of inadvertent disclosure and the appearance of impropriety still existed even with those precautions. Id. at 1058.
The Supreme Court vacated Cheng on procedural grounds after it ruled in Firestone Tire Rubber Co. v. Risiord, 449 U.S. 368 (1981), that an order denying disqualification is not "final" for purposes of appeal. However, district courts continue to look to Cheng for guidance. See, e.g., Baird, 771 F. Supp. at 27 n. 1 ("[i]t is abundantly clear that the Second Circuit considers the reasoning of its first Cheng opinion to be sound, even though it recognizes, as a procedural matter, the opinion is not binding on the district courts of this circuit.").
District courts have followed Cheng and have found similar screening attempts to be inadequate in the context of small law firms. See Marshall, 952 F. Supp. at 112 (disqualifying firm of 15 attorneys in light of Cheng); Baird, 771 F. Supp. at 27 (disqualifying firm of nine attorneys in light of Cheng); United States v. Uzzi, 549 F. Supp. 979, 984 (S.D.N.Y. 1982) (disqualifying firm of 11 attorneys in light ofCheng); see also Yaretsky v. Blum, 525 F. Supp. 24 (S.D.N.Y. 1981) (disqualifying same firm as in Cheng) cf. Solow v. W.R. Grace Co., 83 N.Y.2d 303, 311, 632 N.E.2d 437, 441, 610 N.Y.S.2d 128, 132 (1994) (rejecting disqualification where law firm consisted of 372 attorneys and tainted attorney had left firm prior to the commencement of the current litigation, but noting that "[i]n smaller, more informal settings the imputation of knowledge as a matter of law is necessary to protect the client and avoid the appearance of impropriety"). In such situations, courts are concerned that the disqualified attorney, in his day-to-day contact with his new associates, may unintentionally transmit information learned in the course of the prior representation. See Cheng, 631 F.2d at 1058; Baird, 771 F. Supp. at 27.
This Court likewise concludes that the danger of inadvertent disclosure and the appearance of impropriety is sufficiently present here so as to require disqualification. Leeds, Morelli Brown is comprised of only 15 lawyers. Although plaintiffs stress that the firm has 3 offices, with one soon to open, that factor is irrelevant as both Wirenius and Ostrove work in the same office in Carle Place, Long Island. Moreover, although Wirenius and Ostrove characterize their contact as limited see Ostrove Aff. ¶ 12 and Wirenius Aff. ¶ 21, they admittedly interact on average for 10-15 minutes every day. Pl. Mem. at 15. Wirenius and Ostrove previously have worked on the same matters. Ostrove Aff. ¶ 13. Although that practice apparently has been discontinued, the degree of both past and present interaction between Ostrove and Wirenius raises grave concerns about both the possibility of unintentional breaches of client confidences and about the appearance of impropriety such as to taint any trial in these actions.
It also suggests that the firm's size of 15 lawyers is misleading, as the attorneys presumably are divided among the different offices. Thus, the Long Island office likely contains less than 15 attorneys.
In addition, Ostrove admits that he occasionally has had limited discussions about the sick leave cases with the other partners in his firm, Lenard Leeds, Steven Morelli and Jeff Brown. Id. ¶ 7. Thus a possibility also exists that disclosures may be made indirectly through Wirenius' contact with those partners.
B. APPEARANCE OF IMPROPRIETY
Plaintiffs suggest that the appearance of impropriety is minimal here because Wirenius had only "limited" involvement with the sick leave cases while at the Law Department. Pl. Mem. at 11-13. The Court cannot credit this argument. To begin, Wirenius was the lead attorney assigned toCrudele, Santulli, Richburg and Day. Pestana Decl. ¶ 3 (emphasis added). Although plaintiffs point out that Wirenius was not solely responsible for those cases as he worked with a team of lawyers, see Pl. Mem. at 2, that in no way diminishes Wirenius' access to privileged information. In Crudele, Wirenius participated in discovery, including taking the deposition of plaintiff, and in both Crudele and Santulli he filed answers on behalf of defendants. Id. ¶¶ 11-13, 16. Although Wirenius was not as active in Richburg and Day, the Court cannot view those cases in isolation. Santulli, Richburg and Day are all challenges to the sick leave policy of the New York City Department of Correction, and involve the same claims and issues as well as the same defendants. Moreover, all four of these cases turn on the issues litigated inMonahan, in which Wirenius participated in discovery and settlement negotiations and drafted and argued defendants' summary judgment motion.Id. ¶¶ 8-9; Wirenius Aff. ¶ 5. In addition, Wirenius produced documents on behalf of defendants in the case against the New York City Fire Department pending in New York State Supreme Court. Pestana Decl. ¶ 23.
The fact that the four cases at issue in this motion were placed on suspense pending the outcome of the Monahan appeal illustrates the interconnectedness of the actions. Moreover, plaintiffs also acknowledge the overlap. See Pl. Mem. at 9 ("The depositions of the relevant Department of Corrections officials in Monahan . . . are directly applicable to the Corrections cases . . . .").
Wirenius' extensive involvement with these cases during his tenure at the Law Department creates an even greater appearance of impropriety than in Cheng. There, the disqualified attorney had merely participated in discussions with colleagues while employed at the Legal Services office and had never personally represented the plaintiffs. 631 F.2d at 1054. Here, Wirenius was the lead attorney and played a substantial role in the litigation. In these circumstances, this Court "would be hard pressed to explain to a lay person how it was in fact proper for a lawyer who was substantially involved . . . to switch sides in the middle of the action." Yaretsky, 525 F. Supp. at 30.
Plaintiffs suggest that Wirenius may not even remember any confidential information given the amount of time that has elapsed since Wirenius last worked on the sick leave cases. P1. Mem. at 2, 11-13. Again, the Court is unpersuaded. Although Wirenius left the General Litigation Division in September 1999 and reassigned those matters, Assistant Corporation Counsel Susan Choi-Hausman informed Wirenius about the progress of theMonahan appeal up to the denial of certiorari by the United States Supreme Court in December 2000. Choi-Hausman Decl. ¶ 4.
Moreover, and even more importantly, Wirenius retained the ability to refresh his recollection at any point by referring to a memorandum still in his possession regarding the Crudele case. On March 27, 2001, Daniel Connolly, Special Counsel to the Law Department, contacted Wirenius by telephone at the Long Island office of Leeds, Morelli Brown in order to determine the extent of Wirenius' involvement in the sick leave cases. Connolly Supp. Decl. ¶ 3. During the course of that conversation, Wirenius retrieved and read from a Reassignment Memorandum that he had prepared while an attorney at the Law Department. Id. ¶ 4. According to Connolly, the Reassignment Memorandum is one of the most confidential Law Department documents as it contains a description of the case, including legal arguments advanced and strategies pursued, and any other matters that the author believes should be known to his or her supervisors and the newly assigned attorney. Id. ¶ 5. Although this Court will not assume any actual wrongdoing on the part of Wirenius or Leeds, Morelli Brown, the mere fact that Wirenius possessed such a document at the firm's office creates a very clear appearance of impropriety. That appearance, combined with the inadequacies of screening in the small firm context, leads the Court to favor disqualification in this situation.
C. PREJUDICE TO PLAINTIFFS
Plaintiffs argue that the Court should balance the factors favoring disqualification against the resulting prejudice to plaintiffs. Specifically, plaintiffs contend that the firm's expertise, its long-term involvement with these cases and the costs of obtaining new counsel all weigh against disqualification. Moreover, plaintiffs argue that disqualification would be unfair because the Law Department failed to raise the conflict issue in a timely manner.
To begin, it is unclear whether a balancing analysis is even appropriate where, as here, screening measures have been deemed unsatisfactory given the small size of the firm and the appearance of impropriety is significant. See, e.g., Marshall, 952 F. Supp. at 112 (granting motion to disqualify without according weight to client's desire to retain counsel). In any event, the Court does not find the considerations raised by plaintiffs to be sufficiently compelling so as to overcome the need for disqualification.
Although the firm of Leeds, Morelli Brown may have special expertise and familiarity with the constitutional issues raised in the sick leave litigation, the Court does not credit plaintiffs' assertion that, at this stage of the proceedings, no comparable attorneys would be able to grasp the law and strategies involved. Pl. Mem. at 9. To the contrary, the Court notes that new counsel will have the benefit of written opinions issued by both Judge Rakoff and the Second Circuit inMonahan. Moreover, although plaintiffs argue that other firms may decline to represent them given the dismissal in Monahan, plaintiffs always have the option of proceeding pro se. In any event, the Court finds that these speculative factors cannot outweigh the lack of adequate screening and the appearance of impropriety present here.
Finally, plaintiffs point out that three of Wirenius' supervisors at the Law Department were aware of Wirenius' work on the sick leave cases yet did not object when Wirenius informed them of the employment offer in November 2000. Id. at 10. Plaintiffs argue that the Law Department thus "tacitly approved" of Wirenius' decision to join Leeds, Morelli Brown and that the current motion to disqualify is untimely. Id. at 9. However, this fact cannot be held against defendants.
In the first place, untimeliness is generally not a defense to a motion to disqualify in this Circuit. See Baird, 771 F. Supp. at 28 (citing cases); see also Schwed v. General Elec. Co., 990 F. Supp. 113, 117 (N.D.N.Y. 1998). Even if it were, however, the record does not reflect that the Law Department was actually aware of the potential conflict in November 2000. Although Wirenius had informed his supervisors about his new position, Wirenius acknowledges that the conflict of interest issue was never explicitly raised in his conversations with them. Wirenius Aff. ¶¶ 14-15. Nor is there any indication that Leeds, Morelli Brown formally sought consent before hiring Wirenius. Thus the Court cannot conclude that the Law Department knew that a conflict existed and knowingly waived any objection on behalf of its clients. See Schwed, 990 F. Supp. at 118 (ordering disqualification because the disqualified attorney's new firm "should have made full disclosure in writing of the circumstances and inquired if [the attorney's former firm] had any objection"); Baird, 771 F. Supp. at 28 (rejecting untimeliness argument and finding that the prejudice to plaintiffs from counsel's disqualification was, "to a great extent, the result of the failure of the [plaintiffs'] firm to formally notify defendants of the potential conflict"); cf. 22 N.Y.C.R.R. § 1200.27(a)(1) (providing that an attorney may not undertake consecutive adverse representation of private clients "without the consent of the former client after full disclosure").
Moreover, only certain individuals at the Law Department are authorized to waive conflicts, and neither Wiremus nor Leeds, Morelli Brown ever contacted those individuals prior to the commencement of Wirenius' employment at the firm. Connolly Decl. ¶¶ 2-4.
When the Law Department became aware of the conflict in March 2001 see Kaufman Decl. ¶ 7, it moved promptly to inform both the Court and plaintiffs of its objections. Id. ¶ 9-12; Connolly Decl. ¶ 4-8. Thus, there is no basis here to deny disqualification on timeliness grounds.
III. CONCLUSION
For the foregoing reasons, defendants' motion is GRANTED and Leeds, Morelli Brown is disqualified from further representation of the plaintiffs in the above-captioned cases. With respect to Crudele, both parties are directed to appear before thPs Court on September 28, 2001, at 9:30 a.m., for a status conference. Plaintiffs should seek to retain new counsel in the interim.