Opinion
No. SA-03-CA-542-RF
January 28, 2004
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISQUALIFY
BEFORE THE COURT is Defendants' Motion to Disqualify Plaintiffs' Counsel Based on Conflict of Interest, (Docket no. 27), filed October 14, 2003; Louisville Ladder Group, LLC.'s Motion to Intervene for the Limited Purpose of Moving to Disqualify Plaintiffs' Counsel (Docket no. 29), filed October 14, 2003; Response by Plaintiffs and Carl Robin Teague; Response by Thomas Jones and David Adkisson; and Defendants' Combined Reply to all Responses. On January 20, 2004, the Court held a hearing on this matter. Thereafter, Plaintiffs filed written discovery from Plaintiffs to Defendant Cuprum for the Court to consider in determining the motion to disqualify. After careful consideration of the facts and applicable law, the Motion to Disqualify (Docket no. 27) is GRANTED in part and DENIED in part. The Motion to Intervene for the Limited Purpose of Moving to Disqualify Plaintiffs' Counsel (Docket no. 29) is GRANTED.
Background
This is a products liability case based on a fall from a ladder. Plaintiffs originally sued both Cuprum, Group Imsa, and Louisville Ladder, LLC. Defendants moved to disqualify one of Plaintiff's attorneys, Carl Robin Teague, because he formerly represented Louisville Ladder, Co. for over 12 years, until October 1999. Initially, Plaintiffs agreed Teague should be disqualified and sent a letter to Defendants to that effect. However, Plaintiffs changed their mind and Teague did not remove himself from the case, though Plaintiffs did dismiss Louisville Ladder, LLC from the case. Defendants claim Teague must still be disqualified because Louisville Ladder, LLC is owned by both Defendant Group Imsa (51%) and Emerson Electric (49%), another former client of Teague. Louisville Ladder, LLC is a joint venture between Emerson Electric and Group Imsa. Furthermore, pursuant to the joint venture, Louisville Ladder, LLC assumed liability for ladders made by Cuprum and Louisville Ladder, Co. Thus, Louisville Ladder, LLC has a financial interest in this case. Teague claims that he represented Louisville Ladder, Co. before the joint venture with Group Imsa, but that he never represented Louisville Ladder, LLC.In support of their argument, Defendants claim that Teague, in his representation of Louisville Ladder, Co. defended the company in numerous lawsuits involving ladders. Plaintiffs respond that Teague has never represented Group Imsa or Cuprum, has never been involved with a Cuprum brand ladder, and has never been involved with a case regarding an allegation of a structural failure of an aluminum extension ladder.
Defendants also claim Teague should be disqualified because he has confidential information gathered from the former representation of Louisville Ladder, LLC, that is relevant to this lawsuit. Defendants claim Teague had knowledge of, and attended meetings on, defense strategy in products liability cases involving ladders. Also, Teague worked with, and defended in depositions, Mike VanBree, the Product Safety Engineer for Louisville Ladder, LLC. Mr. VanBree will be involved with this case, including inspecting the ladder at issue. Plaintiffs respond that any confidential information which Teague has is either not useful, public information, or discoverable. Also, Plaintiffs respond that the fact that Defendants filed an unsealed copy of Teague's deposition shows that Teague does not have any confidential information. Also, in Defendants' reply, Defendants claim that Teague called Mike VanBree seven months before this suit was initiated to get background information on Cuprum.
Furthermore, Defendants move to disqualify Plaintiffs' co-counsel as well because Defendants claim that disqualification of co-counsel is appropriate when disclosure of confidential information is shown. Plaintiffs respond that co-counsel should not be disqualified because Teague has not disclosed any confidential information to them.
Finally, Louisville Ladder, LLC, moves to intervene for the purpose of moving to disqualify Teague.
Analysis
Disqualification of Teague:"In the Fifth Circuit, courts are obliged to stem unethical conduct taking place in any proceeding before them. Therefore, a party may appropriately utilize a motion to disqualify to inform the Court of a breach of ethical duties." Such a motion may, however, be viewed with caution because it can be misused for purposes of harassment. The party moving for disqualification bears the burden of demonstrating that disqualification is the proper and necessary remedy. Motions to disqualify are determined using federal law. However, in determining the appropriate standards, the "[f]ederal courts may adopt state or ABA rules as their ethical standards, but whether and how these rules are to be applied are questions of federal law."
Cramer v. Sabine Transportation, Co., 141 F. Supp.2d 727, 730 (S.D. Tex. 2001) (citing In re Dresser Indus. Inc., 972 F.2d 540, 543 (5th Cir. 1992) and In re American Airlines, Inc., 972 F.2d 605, 610 (5th Cir. 1992)).
See FDIC v. United States Fire Insurance Co., 50 F.3d 1304, 1315 (5th Cir. 1995) (discussing the need for caution in the context of a motion to disqualify alleging a conflict of interest).
Cramer, 141 F. Supp.2d at 733. See also Duncon v. Merrill Lynch, Pierce, Fenner Smith, Inc., 646 F.2d 1020, 1028 (5th Cir. Unit B 1981), criticized and questioned on other grounds.
In re American Airlines, Inc., 972 F.2d 605, 611 (5th Cir. 1992), cert. denied, 507 U.S. 912 (1993).
This case is governed by the "substantial relationship" test for judging disqualifications based on prior representation. Under the "substantial relationship" test, a party seeking to disqualify opposing counsel on the ground of a former representation must establish two elements: 1) an actual attorney-client relationship between the moving party and the attorney he seeks to disqualify and 2) a substantial relationship between the subject matter of the former and present representations. Once this two-part test is met, "the court will irrebuttably presume that relevant confidential information was disclosed during the former period of representation." Because the Court finds that Defendants have shown a substantial relationship between the instant matter and Teague's prior representation, the Court need not address whether Teague actually gathered confidential information from the prior representation.
American Airlines, 972 F.2d at 614.
Id.
American Airlines, 972 F.2d at 614, quoting Duncan v. Merrill Lynch, 646 F.2d 1020, 1028 (5th Cir. 1981); In re Corrugated Container Antitrust Litigation, 659 F.2d 1341, 1347 (5th Cir. 1981).
First, as conceded by Teague during oral arguments, the first prong of the substantial relationship test, an actual attorney-client relationship, has been met in this case. Teague represented Louisville Ladder, LLC and Emerson Electric in fifty cases over fourteen years. Also, in November 2002, seven months before the suit was filed, Teague sought information from Mike VanBree of Louisville Ladder, LLC about Cuprum. Furthermore, Louisville Ladder, LLC, has a financial interest in this case because it is indemnifying Cuprum. Thus, the instant matter is "adverse" to Louisville Ladder, LLC.
Def's Reply, Exh 1, Teague Correspondence on November 6, 1999, at p. 1.
See Texas Rule 1.09.
The parties dispute whether Teague ever represented Louisville Ladder, LLC, or only Louisville Ladder, Co. The Court finds that Teague did represent Louisville Ladder, LLC. Teague's last representation of a Louisville Ladder entity was October 1999. This is more than a year after Louisville Ladder, Co., became a part of Louisville Ladder, LLC.
Affidavit of Teague, at 1.
The Court also finds that there is a substantial relationship between Teague's former representation and the instant matter. A substantial relationship may be found only after "the moving party delineates with specificity the subject matters, issues and causes of action common to prior and current representations."
American Airlines, 972 F.2d at 614 [internal citations omitted].
This is a product liability case concerning a defective aluminum extension ladder. Teague has defended Louisville Ladder entities in five cases concerning ladders, two of them concerned aluminum extension ladders. Teague has defended Mike VanBree, a likely witness in this case, at deposition, and has presented his testimony at trial.
Affidavit of Teague, at 1.
Affidavit of Teague, at 2.
Teague argues a substantial relationship does not exist because he has never been involved in a lawsuit concerning a Cuprum brand ladder, and because he has never been involved in a case regarding an allegation of a structural failure of an aluminum extension ladder. The Court does not read the `substantial relationship' test as requiring that the exact same defect in the exact same product from the exact same manufacturer, but rather a showing of the "similarity of the matters" involved. Teague defended his former client in product liability suits concerning ladders. In this case, his former client is defending a product liability suit concerning a ladder. Thus, the instant matter and Teague's former representation involve "similar liability issues, similar scientific issues, and similar defenses and strategies, " and a `substantial relationship' between the two exists. As a result, Teague must be disqualified.
In re Epic Holdings, Inc., 985 S.W.2d 41, 51 (Tex. 1998) ("[T]wo matters are "substantially related" within the meaning of Rule 1.09 when a genuine threat exists that a lawyer may divulge in one matter confidential information obtained in the other because the facts and issues involved in both are so similar." Id.)
Texaco, Inc. v. Garcia, 891 S.W.2d 255, 257 (Tex. 1995).
Disqualification of Thomas Jones and David Adkisson:
Defendants also moved to have Teague's co-counsel, Jones and Adkisson, disqualified from the case. Co-counsel never had an attorney-client relationship with Defendants. The Fifth Circuit has stated that when co-counsel have not had an attorney-client relationship, disqualification is warranted when disclosure of confidential information is shown, and a presumption of disclosure of confidences is inappropriate.
Brennan's Inc. v. Brennan's Restaurants, Inc., 590 F.2d 168 (5th Cir. 1979).
Brennan's, 590 F.2d at 174, quoting Wilson P. Abraham Construction Corp. v. Armco. Steel Corp., 559 F.2d 250, 253 (5th Cir. 1977).
The Court is also guided by the standard articulated by the Texas Supreme Court for when co-counsel should be disqualified. In In re American Home Products Corp., the Texas Supreme Court stated that the standard for determining whether confidences have been disclosed is "to place a burden of producing evidence of non-disclosure on the party resisting disqualification once the requisite showing has been made by a party seeking disqualification."
985 S.W.2d 68, 81 (Tex. 1998).
Id.
The initial showing requires that the "party seeking disqualification must first demonstrate that there were substantive conversations between disqualified counsel and co-counsel, joint preparation for trial by those counsel, or the apparent receipt by co-counsel of confidential information. A rebuttable presumption then arises that disqualified counsel shared confidential information with co-counsel. Then, the party resisting disqualification of co-counsel may rebut this presumption by providing probative and material evidence that confidential information was not disclosed to them.
Id. citing, Vicarious Disqualification of Co-Counsel Because of "Taint," 1 GEO. J. LEGAL ETHICS 155, 158 (1987).
In re American Home Products Corp., 985 S.W.2d, at 81.
Teague has stated that he never disclosed any non-public information to co-counsel. Co-counsel have likewise stated no confidential information was disclosed. Co-counsel also states that there have been no discussions with Teague regarding any prior ladder failures involving Defendants' products or prior lawsuits involving Defendants, or Defendants' trial strategy. Co-counsel have not been provided materials or documents from Defendants which may have been provided to Teague during the prior representation. Co-counsel claims that any information co-counsel has obtained in this case is from investigation and discovery.
Affidavit of Teague.
Affidavit of Jones, at 2; Affidavit of Adkisson, at 4.
Affidavit of Jones, at 2
Id.; Affidavit of Adkisson, at 5.
Based on the appearance of counsel at the hearing on the instant matter, the Court finds credible Jones and Adkisson's affidavits in their entirety, including the statement that no confidential information was disclosed. Furthermore, Defendants have made only a conclusory statement that substantive conversations occurred between Teague and co-counsel. Defendants claims Teague and co-counsel confer over issues that have arisen, but bases this claim on emails that concern matters such as scheduling and filing but not the substance of the case. Thus, even if Defendants have made a sufficient showing to warrant a rebuttable presumption of disclosure, co-counsel has rebutted that presumption. Thus, co-counsel Jones and Adkisson should not be disqualified.
See Def's Mot. to Disqualify, at 18.
Id., Exh.6.
It is ORDERED that the Motion to Disqualify (Docket no. 27) is GRANTED in part and DENIED in part.
It is ORDERED that the Motion to Intervene for the Limited Purpose of Moving to Disqualify Plaintiffs' Counsel (Docket no. 29) is GRANTED.