Opinion
No. 02-41729 (REG), No. 04 Civ. 2192 (DAB).
February 16, 2005
On Appeal from the Bankruptcy Court.
MEMORANDUM ORDER
Appellant Carla Brown Horn ("Horn") appeals the January 27, 2004 Order of the United States Bankruptcy Court for the Southern District of New York disqualifying Appellant as a result of violations of her ethical obligations to Appellee Adelphia Communications Corp. ("Adelphia").
For the reasons set forth below, the Order of the Bankruptcy Court is AFFIRMED.
I. BACKGROUND
This appeal stems from the adversary proceeding, Adelphia Communications Corp., et al. v. John J. Rigas, et al., No. 02-8051, currently pending in the United States Bankruptcy Court for the Southern District of New York.
Adelphia Communications Corp., a cable television company, voluntarily filed a petition for relief under Chapter 11 of Title 11 of the United States Code on June 25, 2002. Adelphia subsequently filed an adversary proceeding against the Rigases ("Rigas Adversary Proceeding") on July 24, 2002. John J. Rigas, and his sons, Timothy J. Rigas and Michael J. Rigas (collectively "the Rigases"), were the majority shareholders of Adelphia and formed the majority of the board of directors. The Rigas family held all senior executive positions at Adelphia. By May 23, 2002, all Rigases resigned their management positions after an investigation in the spring of 2002 by the United States Attorney's Office of the Southern District of New York, the Securities and Exchange Commission and the Special Committee of Adelphia's Board.
James Rigas also was a majority shareholder and held positions as a board member and a senior executive at Adelphia. However, he is not part of the criminal prosecution. This Memorandum Order refers to the "Rigases" as only the Rigases who are the subject of the criminal prosecution in the Southern District of New York for whom Appellant worked as part of the criminal defense team.
The SEC filed a civil action against the Rigases and Adelphia. Timothy and John Rigas were convicted after trial in the Southern District of New York in a criminal case before the Honorable Leonard B. Sand and sentencing is scheduled for March 24, 2004. Michael J. Rigas' criminal trial ended in a hung jury and a retrial is possible.
A. Appellant Carla Brown Horn's Duties at Adelphia
From March 1, 1999 to July 29, 2002, Appellant Horn was employed as a Business Contracts Development Manager at Adelphia. (Appellant's Brief at 3.) For most of her time at Adelphia, Appellant reported directly to Timothy Rigas. (APLNT 00033.) She is a licensed attorney and is a member of the Pennsylvania and Delaware bars. (Id. 00029.) She used the term "Staff Attorney" during her time at Adelphia and was authorized to do so by her supervisor. (Id. 00029, 00034-35.) While at Adelphia, Appellant worked on the acquisition and divesture of real estate, including real estate owned by the Rigases. (Id. 00040.)
APLNT refers to the Appendix of Appellant Carla Brown Horn, which includes the documents designated for record on this appeal.
After Tim Rigas resigned as Chief Financial Officer of Adelphia, Appellant continued to work at Adelphia. Her responsibilities included due diligence and work on a spreadsheet which identified properties owned by Adelphia, and properties owned by the Rigases. (APLNT 0042-44.) Appellant also assisted in gathering information for a Form 8-K that described related-party transactions and other wrongdoing involving the Rigases.
(Id. 00047-48.)
B. E-mails Sent by Appellant to the Rigases
After the Rigases left Adelphia on May 23, 2002, Appellant sent two e-mails — one to Timothy Rigas, and another to Michael Snyder, who was at the time, counsel for the Rigases.
The e-mail to Timothy Rigas consisted of a property list, identifying ownership interests in Adelphia and Rigas-owned properties.
The e-mail Appellant sent to Michael Snyder was initially sent to her on May 24, 2002, as well as to over 100 other people at Adelphia. The e-mail was sent by Adelphia's legal department. Attached to this e-mail were the following documents: (1) a memorandum from the law firm Fried, Frank, Harris, Shriver Jacobson to all Adelphia employees about document retention and preservation policies, which was marked "privileged and confidential"; (2) a Securities and Exchange Commission subpoena directed to Adelphia, dated May 16, 2002, regarding the production of documents; and (3) a Grand Jury Subpoena to Adelphia, dated May 16, 2002, from the Southern District of New York, seeking the production of documents. (APLNT 00361-00386.) The e-mail contained the following statement: ". . . [P]lease be advised that it is important not to discuss this matter other than with counsel since all non-privileged conversations regarding any inquiry are potentially discoverable." (Id. 00361.)
Appellant was placed on administrative leave on July 29, 2002. (Appellant's Brief at 6; APLNT 00033.)
C. Appellant's Responsibilities as Part of the Rigases' Criminal Defense Team.
The Rigases hired former Adelphia employees, including Appellant, to assist in their criminal case. According to Appellant, she was hired "to review and organize Adelphia's documents that had been produced to the Rigases in the criminal proceedings." (Appellant's Brief at 3.)
Part of Appellant's duties as a member of the Rigases' criminal defense team involved reviewing documents, such as SEC filings, and the complaint filed by Adelphia against Deloitte Touche in a civil matter and the answer filed by Deloitte Touche. (APLNT 00037-38.) The Rigases agreed to pay Appellant $100,000 a year. (Id. 00032.)
D. Adelphia's Motion to Disqualify Appellant and Other Former Adelphia Employees
When Adelphia was notified of the Rigases' employment of former Adelphia employees, it submitted a formal objection to Bankruptcy Judge Robert E. Gerber.
Judge Gerber ordered depositions of the three former Adelphia employees. After the depositions were held, Adelphia filed its motion to disqualify the former Adelphia attorneys from participating in the Rigases' criminal case, as part of the Rigas Adversary Proceeding. Adelphia argued that because the former employees, namely Colin Higgin, Carla Brown Horn and Keith Horn, had been attorneys at Adelphia, representing Adelphia, their subsequent employment with the Rigases was adverse.
D. The Bankruptcy Court's Decision
Judge Gerber held a hearing on this matter on December 22, 2003. He issued his opinion from the bench, granting the motion with respect to Appellant Horn after finding that Horn violated Pennsylvania Rule of Professional Conduct 1.9(b). (APLNT 00297-298.)
Judge Gerber denied Adelphia's motion to disqualify Colin Higgin and Keith Horn and granted the Rigases' request to compensate them by the use of funding pursuant to the Bankruptcy Court's Order of August 7, 2003. (Bankruptcy Court Order, dated Jan. 27, 2004.) In the August 7, 2003 Order, Judge Gerber ruled that the funding of the Rigases' criminal defense would come from cash generated by private companies owned by the Rigases.
According to Appellant, the money generated by these companies does not belong to Adelphia; rather Adelphia is merely the manager of these companies. (Appellant's Brief at 2, fn. 2.) Appellee disputes this "purported" right of the Rigases' to collect any funds from these companies which Appellee claims are only "formally" owned by the Rigases. According to Appellee, "The Rigases, through credit facilities jointly entered into between Adelphia and some of the Rigas Managed Entities [cable entities managed by Adelphia], saddled Adelphia with billions of dollars in debt and the Rigas Managed Entities' share of servicing that debt means that as a practical matter, any payment of attorneys' fees is actually made by Adelphia." (Appellee's Brief at 5, fn. 2.)
Judge Gerber found that he had the authority to disqualify Appellant Brown based on his supervisory power of the Adelphia bankruptcy proceeding. In addition, Judge Gerber made the following findings:
• There is "substantial factual overlap" between the criminal case and the Adelphia civil case, and that the outcome of the Rigases criminal case "can reasonably be expected to have at least an arguable major effect on the civil case, by reason of parties' efforts to invoke collateral estoppel." (Id. 00300.)
• Appellant violated Rule 1.9(b) of the Pennsylvania Rules of Professional Conduct. (Id. 00297.)
• Adelphia did not make any waiver of attorney-client privilege, as alleged by Appellant. (Id. 00301.)
• All three former Adelphia employees, including Appellant, acted adversely to Adelphia and without Adelphia's consent." (Id.)
• Appellant "held herself out to be an attorney at Adelphia," although Judge Gerber acknowledged that the work she did as an attorney did not appear to have been at a very high level, and the work she did on the spreadsheet did not involve information requiring the skill of a lawyer. (Id. at 00307.)
• Appellant's e-mailing information to Michael Snyder, then counsel to the Rigases, "appear[ed] to be a blatant violation of the attorney-client privilege," as was "her giving up the real estate list which was a kind of work product to Tim Rigas." (Id.)
• Appellant's access to information was diminished after the Rigases left Adelphia, but was not eliminated. It appeared to the Bankruptcy Court that Appellant gave the Rigases information which seems to have been information of potential value to her adversary. (Id. 00308.)
Appellant Horn timely filed a notice of appeal. Appellant raises five issues on appeal: (1) the Bankruptcy Court exceeded its authority when it disqualified her from representing the Rigases in their criminal case; (2) the court also erred in disqualifying Horn because it incorrectly applied the standard for disqualification under the Pennsylvania Rules of Professional Conduct; (3) the court erred because Adelphia had waived its attorney-client privilege, precluding Appellant's disqualification; (4) the court erred by determining that Appellant had violated the Pennsylvania Rules of Professional Conduct by disclosing information to the Rigases when such information had already been disclosed by Appellee; and (5) the court erred in classifying the property report prepared by Appellant as work product and therefore, was incorrect in its holding that Appellant violated the Pennsylvania Rules of Professional Conduct. (Appellant's at 1.) Appellee Adelphia filed an opposition brief; the Official Committee of Unsecured Creditors of Adelphia Communications Corp joined in the opposition to Appellant's appeal.
In its brief, Appellee argued that the appeal should be dismissed as moot. The Court finds Appellant's argument that the case is still ripe for review convincing and hence, will not go into the merits of Appellee's argument.
II. DISCUSSION
A. Standard of ReviewOrders issued by a bankruptcy court are subject to appellate review pursuant to Federal Rule of Bankruptcy Procedure 8013. The district court reviews the bankruptcy court's findings of fact under a clearly erroneous standard, and any conclusions of law de novo. See In re Momentum Mfg. Corp., 25 F.3d 1132, 1136 (2d Cir. 1994); In re Maxwell Newspapers, Inc., 981 F.2d 85, 89 (2d Cir. 1992); In re Gollump, 198 B.R. 433, 436 (S.D.N.Y. 1996). Deference is given to the original fact finder because of that court's expertise and superior position to make determinations of credibility. Id.; Fed.R.Bankr.P. 8013. Under the clearly erroneous standard, a lower court's choice between two permissible views of the facts cannot be held to be clearly erroneous. Anderson v. City of Bessemer, N.C., 470 U.S. 564, 573 (1985); In re Grant Assoc., 154 B.R. 836, 840 (S.D.N.Y. 1993). "To be clearly erroneous, a decision must strike [the court] as more than just maybe or probably wrong; it must . . . strike [the court] as wrong with the force of a five-week-old unrefrigerated dead fish." In re Andovers Togs, Inc., Nos. 96 Civ. 7601, 97 Civ. 6710, 2001 WL 262605 (S.D.N.Y. Mar. 15, 2001) (quotingParts and Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988), cert. denied, 493 U.S. 847 (1989).
The text of Rule 8013 is as follows:
On an appeal the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.
B. The Authority of the Bankruptcy Court to Disqualify Appellant
Appellant contests the Bankruptcy Court's authority to disqualify her from working on the Rigases' criminal matter. Appellant argues that Judge Gerber lacked this authority because Appellant did not practice in the State of New York, and because the criminal case and the bankruptcy proceeding are not substantially related to one another.
1. The Bankruptcy Court's Finding That It Had the Authority to Disqualify Appellant
The Bankruptcy Court held that it had "the power to [disqualify Appellant], most obviously insofar as [he had] the ability to manage the money to be doled out [pursuant to his earlier orders] but also by reason of [his] inherent power to supervise the conduct of attorneys practicing before [him]." (APLNT 00299-200.)
The Second Circuit has stated that "The disqualification of an attorney in order to forestall violation of ethical principles is a matter committed to the sound discretion of the [trial] court." Cresswell v. Sullivan Cromwell, 922 F.2d 60, 72-73 (2d Cir. 1990). As such, the Bankruptcy Court's finding that it had the authority to disqualify Appellant, is subject to an abuse of discretion standard. See United States v. Zichettello, 208 F.3d 72, 104 (2d Cir. 2000); SEC v. Sloan, 535 F.2d 679, 681 (2d Cir. 1976). In addition to this broad discretionary power given to courts to disqualify attorneys for ethical violations, bankruptcy courts have broad power to "issue any orders, process or judgment that is necessary or appropriate to carry out the provisions" of Title 11 of the United States Code. See 11 U.S.C. § 105(a).
Appellant argues that the Bankruptcy Court's decision was arbitrary and that the Bankruptcy Court exceeded its authority when it disqualified her from representing the Rigases in their criminal case. Appellant states that she is not subject to discipline by the Bankruptcy Court because she "is not admitted to practice law in the State of New York, and she has not entered an appearance before any court in the State, thus, respectfully, no court in New York has the authority to disqualify [her]." (Appellant's Mem. of Law at 10.) In essence, Appellant's position is that judges only have the authority to discipline attorneys before them and only in courts in states where an attorney is admitted to the bar.
Appellant cites two cases as support for her argument that a court cannot discipline attorneys appearing before other courts. However, it is not apparent to the Court how these cases apply to this issue, and how they support Appellant's argument. In Matter of Jacobs, 44 F.3d 84 (2d Cir. 1994), an attorney was sanctioned by the state court, and was also sanctioned by the federal court. Appellant cites the case as authority for the proposition that a court does not have the authority to discipline attorneys admitted to appear before other courts. Specifically, Appellant appears to points to the sentence in the procedural history of the case, where a federal court judge refused to enjoin a state court order suspending an attorney. A federal judge's refusal to interfere with a state court order, stating that "he lacked the authority" to do so, is unrelated to an argument that a court only has the authority to discipline officers before it. Judge Platt, the judge referred to in Matter of Jacobs, was concerned with federal and state comity.
Appellant also cites Erdmann v. Stevens, 458 F.2d 1205 (2d Cir. 1972): "The two judicial systems of courts, the state judicatures and the federal judiciary, have autonomous control over the conduct of their officers, among whom . . . lawyers are included. The court's control over a lawyer's professional life derives from his relation to the responsibilities of the court." 458 F.2d at 1209. This quote clearly shows that the court was, as was the court in Matter of Jacob, concerned with principles of comity, preventing a federal court from interfering with state courts' administration of disciplinary proceedings, and not with the situation presented in this appeal, as Appellee correctly points out.
Appellant further contends that "even if Judge Gerber had the authority to discipline Appellant through his management of the Rigases' defense funds, that authority would not have extended to disqualifying Appellant. "At the most, Judge Gerber should have limited his role to controlling the amount of income Appellant received from the Rigases." (Appellant's Brief at 8.)
Appellant's logic, that because she has not made any formal appearances as counsel in the Rigases' criminal matter, and thus, need not be admitted to practice law in New York State, leads to the illogical conclusion that any ethical violation committed by her while she is working on a New York court case, could and would go unpunished by any New York court.
The Court recognizes that the situation presented in this bankruptcy appeal is unusual. In this case, Appellant never made any formal appearances in federal criminal court on behalf of the Rigases, and is not working on the Rigases' case defending against the Rigas Adversary Proceeding filed by Adelphia. However, Judge Gerber, as the bankruptcy judge overseeing the reorganization of Adelphia and the funding of the Rigases' criminal defense, as well as the Rigas Adversary Proceeding, was the appropriate judicial officer and perhaps the only one in the position to entertain a motion to disqualify Appellant by Adelphia, Appellant's former employer, and disqualify Appellant based on her ethical violations. Given the unique set of circumstances in this case, and the broad discretionary power granted to courts to discipline attorneys before them, and that given to bankruptcy judges to supervise their proceedings, the Court finds that the Bankruptcy Court did not abuse its discretion in disqualifying Appellant.
Moreover, Judge Gerber was not limited in the manner in which he disciplined Appellant. Appellant provides no legal authority or factual basis why, if the Bankruptcy Court had the authority to discipline her, its authority would not have extended to disqualification of Appellant. The Court notes that the disqualification of an attorney is a serious sanction that is not to be doled lightly. However, Judge Gerber clearly found that her ethical violations were of such a troubling nature that she should be disqualified and not given a lesser sanction.
2. The Bankruptcy Court's Finding that the Criminal Case was Substantially Related to the Bankruptcy Proceeding
The Bankruptcy Court found that the Rigases' criminal matter was substantially related to the Bankruptcy. Appellant argues that the Bankruptcy Court's finding is erroneous.
At the end of the hearing, Judge Gerber found that there was "substantial factual overlap" between the criminal case and the civil case, and that "the outcome of the criminal case can reasonably be expected to have at least an arguable major effect on the civil case, by reason of parties' efforts to invoke collateral estoppel." (APLNT 00300.)
Appellant states that the Bankruptcy Court erred in coming to its conclusion because her involvement in the Rigases' criminal defense was "strictly limited to the criminal proceedings before Judge Sands[sic], not the bankruptcy proceeding before Judge Gerber. The criminal case is separate and distinct from either the civil case filed by Adelphia or the Adelphia bankruptcy proceedings." (Appellant's Brief at 9.)
Appellant does not provide any support for this argument in her brief. Indeed, Appellant states in her "Statement of the Case" that the case in front of Judge Sand involves charges "arising out of Rigases' management and control of Adelphia." (Appellant's Brief at 2.) And in her reply, Appellant admits that "the criminal matter and the Adelphia bankruptcy are related." (Appellant's Reply at 6.) It seems very clear to this Court, which has had relatively little exposure to the facts of the criminal and civil cases against the Rigases, that the issues in both matters deal with the Rigases' wrongdoing while at Adelphia. Appellant's statement that the two cases are "separate and distinct" seem to be rather too literal a distinction and ignores the substance of the cases. Her argument that "her work was limited to the criminal trial" also seems to belie reality when it is more than probable that the documents involved in both the criminal and civil matters are identical. Accordingly, the Bankruptcy Court's ruling that there was a "substantial factual overlap" between the bankruptcy proceeding and the criminal matter was not erroneous.
C. The Bankruptcy Court's Findings that Appellant Violated the Pennsylvania Rules of Professional Conduct
The Bankruptcy Court determined that Appellant violated the Pennsylvania Rules of Professional Conduct, specifically Rule 1.9(b).
Rule 1.9 states that:
A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after a full disclosure of the circumstances and consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information has become generally known.
Rule 1.9 was amended on August 23, 2004 and now reads:
(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or substantially related matter in which that person's interest are materially adverse to the interests of the former client unless the former client gives informed consent.
(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client (1) whose interests are materially adverse to that person; and (2) about whom the lawyer had acquired information protected by Rule 1.6 and 1.9(c) that is material to the matter; unless the former client gives informed consent.
The amended rule took effect on January 1, 2005.
The pre-August 23, 2004 Rule 1.9 applied at the time of the December 22, 2003 hearing. Because the Court is reviewing the Bankruptcy Court's application of Rule 1.9 at the time of the hearing, the previous version of Rule 1.9 governs this Court's analysis.
Judge Gerber did not find subsection (a) of Rule 1.9 to be applicable. (APLNT 00306.) However, the Judge had "serious subsection (b) concerns." The Court stated:
I am very troubled by her giving information to Michael Snyder, who was the Rigases' lawyer at the time, which appears to be a blatant violation of the attorney-client privilege, and her giving up the real estate list which was a kind of work product to Tim Rigas. It is not satisfactory to me that these were confusing times; that is exactly when she should have been sensitized to her ethical concerns and if she was not sure about something, she should have stopped, looked and listened to think about what her professional responsibilities were and to act accordingly, or alternatively, to get express authorization for doing something which was a questionable ethical priority. After the Rigases left ACC [Adelphia], Ms. Brown Horn's access to information was diminished but not eliminated, and it looks like she gave the Rigases information that she provided which seems to me to be information of potential value to her adversary. I find her affidavit to explain herself to be unpersuasive.
This affidavit was submitted by Appellant to the Bankruptcy Court. In the affidavit, Appellant states that she sent the e-mail containing, among other things, a memorandum from the law firm Fried, Frank, Harris Shriver, because "it had already been sent to the Rigases directly," and because another law firm, Clifford Chance, had been copied on the e-mail. She also states that "it was likely I asked Leslie Brown's permission to forward the e-mail to Mr. Snyder prior to actually forwarding it." (APLNT 00131.)
(APLNT 00307-308.)
Appellant argues that the Bankruptcy Court committed clear error in finding that she was an attorney at Adelphia, and in applying the standard for disqualification under the Pennsylvania Rules of Professional Conduct. Specifically, Appellant states that the Bankruptcy Court incorrectly applied the "substantial relationship analysis" for Rule 1.9 of the Pennsylvania Rules of Professional Conduct. Appellant also argues that the Bankruptcy Court erred in finding that she violated the Rules of Professional Conduct when she passed along confidential information because the information was not privileged, that Adelphia waived any privilege, and that the property list she sent to Timothy Rigas did not qualify as work product. The Court will take each issue in turn.
1. The Bankruptcy Court's Finding that Appellant Acted as an Attorney for Adelphia.
The Court will not address Appellant's argument that the Bankruptcy Court incorrectly applied the "substantial relationship analysis" for Rule 1.9 of the Pennsylvania Rules of Professional Conduct. Appellant made this argument in her initial brief. However, as Appellee correctly points out, the "substantial relationship" test is only relevant to Rule 1.9(a); Appellant does not raise this "substantial relationship" test issue again in her reply.
The Bankruptcy Court stated that he had "serious subsection (b) concerns." (APLNT 00307.) His decision was based solely on Rule 1.9(b), as laid out in the pre-August 23, 2004 version of that rule. Therefore, there is no basis for an appeal based on a misapplication of the Rule 1.9(a) standard.
The Court notes that the current Rule 1.9(b) bears the "substantial relationship" language that previously was contained only in Rule 1.9(a). However, as stated previously, the issue before the Court is whether the Bankruptcy Court correctly applied Rule 1.9(b) as it existed at the time of the hearing, and not at this present time.
Appellant argues that the Bankruptcy Court erred in finding that she acted as an attorney when she was employed at Adelphia.
Appellant states that she "served in a business capacity at the firm" and did not address any legal issues while at Adelphia; she states also that she was not a member of the legal department and never reported to them. Her use of the title "Staff Attorney" was only to "bolster her reputation to those outside the company." (Appellant's Brief at 8.) Appellant quotes Judge Gerber to further support her argument: "I find that the work she did on the spreadsheet does not appear to have involved any information that would require the skill of a lawyer, or access to information of the type that lawyers obtain. Nor do I believe that her fetching of information triggered her role as a lawyer." (APLNT 00307.) Appellant argues that this quote amply demonstrates that the Bankruptcy Court simply assumed she was an attorney and then "jumped into its `subsection (b) concerns.'" (Appellant's Brief at 3.)
However, a review of the record in this case, shows that the question of whether Appellant acted as an attorney for Adelphia is not as simple a matter as portrayed by Appellant. In fact, the record shows that there were statements made by Appellant that led the Bankruptcy Court to conclude, and not assume as Appellant argues, that Appellant acted as an attorney for Adelphia.
Appellant used the title "Staff Attorney" while at Adelphia, and would use that title when she signed her name. (APLNT 00034.) Appellant also stated in her deposition that in connection with the real estate work she was responsible for at Adelphia, she relied upon her professional training and experience as an attorney. (Id. at 00039.) She also performed due diligence for Adelphia. (Id. at 00043.) Appellant also stated that she began to prepare the spreadsheet compiling the properties owned by the Rigases and Adelphia "because the legal department didn't do it." (Id.) This suggests to the Court that Appellant was asked to work on the spreadsheet because she was considered a lawyer at Adelphia, and not in name only.
In her reply, Appellant argues that her reliance in part on her training and experience as an attorney does not transform her into an attorney for Adelphia. Appellant states that relying on skills learned in law school, such as negotiation and analytical reasoning, do not mean that a person is acting as a lawyer. (Appellant's Reply at 3.) However, this is not what Appellant stated during her deposition. The deposition is excerpted as follows:
Q: . . . The work that you did on real estate transactions relied at least in part on your professional training as an attorney?
A: Sure.
Q: And your experiences as an attorney?
A: Sure.
Q: I don't mean to limit it to just any training you got, but your training and experience?
A: Sure.
Appellant did not make any limitations on her reliance on her legal training during her time at Adelphia. The argument she presented much later in her reply brief, is entirely unpersuasive.
It appears that Appellant picks and chooses when she is an attorney and when she is not. Certainly, it seems that at times when she was at Adelphia, she acted as an attorney; now that she is being sanctioned as an attorney for Adelphia, she states that she merely used the title "Staff Attorney" to bolster her reputation. The fact that she was not in the legal department appears to be a formal distinction, and contrary to the actual situation at Adelphia. In light of the facts that were contained in the record and before the Bankruptcy Court, the Bankruptcy Court's was not in error in finding that Appellant acted as an attorney for Adelphia.
2. The Bankruptcy Court's Finding that Appellant Violated the Pennsylvania Rules of Professional Conduct When She Sent the Two E-mails to Michael Snyder and Timothy Rigas
Appellant argues that the Court erred in finding that she violated the Pennsylvania Rules of Professional Conduct when she sent the two e-mails at issue.
Rule 1.9(b) of the Pennsylvania Rules of Professional Conduct prohibits not only the disclosure of privileged information, but information "relating to the representation" of a former client, that is used to the disadvantage of the former client except when the information has become generally known. The comment following Rule 1.6 states that a "fundamental principle in the client-lawyer relationship is, that . . . the lawyer must not reveal information relating to the representation." In addition, the Comment states that Rule 1.6 "thus imposes confidentiality on information relating to the representation even if it is acquired before or after the relationship existed. It does not require the client to indicate information that is to be confidential, or permit the lawyer to speculate whether particular information might be embarrassing or detrimental."
Appellant states that the two e-mails she sent to Michael Snyder and Timothy Rigas did not constitute a violation of the Pennsylvania Professional Rules of Conduct for the following reasons: (1) any confidential information belonging to Adelphia was also known to Rigases, because such information existed prior to their leaving Adelphia; (2) Adelphia waived its attorney-client privilege by sending e-mails to John Rigas's secretary and employee, Ms. Lindsay and Ms. Heusner, giving Appellant a disk containing confidential e-mails after she left Adelphia, and voluntary waiving privilege in connection with the criminal investigation by the United States Attorney's Office; and (3) she received authorization to forward the e-mail to Michael Snyder from the General Counsel of Adelphia.
As a threshold matter, the Pennsylvania Professional Rule in question does not only address privileged information, as it very clearly lays out that the information it protects from disclosure is all information "relating to the representation" of the former client.
However, even though the Bankruptcy Court was not required to find that the information revealed to the Rigases was privileged, such a finding is subject to the clearly erroneous standard since the "[w]aiver of an attorney-client privilege is a question of fact." United States v. International Brotherhood of Teamsters, 961 F.Supp. 665, 673 (S.D.N.Y. 1997).
It is unclear to the Court how the Rigases' previous knowledge of the information disclosed in the two e-mails sent by Appellant affects the privileged nature of the information contained in the e-mails. Appellant offers no legal basis for this allegation. Presumably, the Rigases were aware of a lot of the work product at Adelphia, as they were in management positions at the company and on the board of directors. The fact that they were aware of the information prior to their resignations does not excuse any disclosure made to them by Appellant after the Rigases left Adelphia.
Furthermore, the allegation that the e-mail marked "privilege and confidential" was sent to the Rigases through John Rigas's secretary at Adelphia, and another non-Adelphia employee, does not excuse Appellant's passing along that same information. First, John Rigas's secretary at Adelphia, Ms. Lindsay, was still an employee of Adelphia, not John Rigas, when she received the e-mail. Her receipt of the e-mail did not waive Adelphia's privilege. Second, the issue of Ms. Heusner was raised by Appellant for the first time in this appeal, and is thus procedurally barred. However, even if it were not barred from consideration, as Appellee notes, the e-mail was sent to over 100 people. That fact, along with the time at which Appellant has chosen to first raise this issue, suggests to the Court that Appellant is now seeking various explanations to justify her actions.
The disk given to Appellant after she left Adelphia, which contained confidential e-mails, and Adelphia's alleged voluntary waiver of privilege in connection with the federal criminal investigation of the Rigases, also does not waive privilege. These events took place months after Appellant sent the e-mail to Timothy Rigas and Michael Snyder.
Appellant also states in her reply brief that she was given authorization to forward the e-mail to Michael Snyder from the General Counsel for Adelphia. However, her deposition testimony does not support this statement (APLNT 00050), and the document she refers to as support for this statement does not refer to the e-mail in question. This Court finds that Appellant has not submitted anything to substantiate this argument.
Lastly, Appellant provides no support or legal precedent for her argument that there is no Rule 1.9(b) violation because she did not gain any information during her time at Adelphia, which could be used to the detriment of Adelphia. As previously stated, the Bankruptcy Court did not err in finding that Appellant acted as an attorney for Adelphia. It is more likely than not that she came upon information during her time at Adelphia that would be detrimental to Adelphia in the Rigas Adversary Proceeding.
The information passed on to the Rigases by Appellant was confidential and covered by the attorney-client privilege. The Bankruptcy Court clearly found that there was no waiver in this case and found that Appellant violated Rule 1.9(b). That court's findings were not erroneous.
3. The Bankruptcy Court's Finding that the Property List Qualified as Work Product or Privileged
Appellant argues that the Bankruptcy Court erred in finding that the property list she e-mailed to Timothy Rigas constituted work product and was privileged.
The scope of the work product doctrine is laid out in Rule 26(b)(3) of the Federal Rules of Civil Procedure. Work product, as defined in Rule 26(b)(3), includes "documents and tangible things . . . prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including the other party's attorney, consultant, surety, indemnitor, insurer or agent)." See, e.g., In re Grand Jury Proceedings, No. M-11-189 2001 WL 1167497, at *19 (S.D.N.Y. Oct. 3, 2001) (stating that the work product protection includes the work product of an attorney's agents) (citing United States v. Nobles, 422 U.S. 225, 238-39 (1975)).
Appellant argues that the information contained in the property list sent to Timothy Rigas was not work product because she was not working as an attorney for Adelphia, and because the Bankruptcy Court stated that the list did not "appear to have involved any information that would require the skill of a lawyer, or access to information of the type that lawyers obtained." (APLNT 00307.) In addition, Appellant argues that the information contained in the list was publicly available and "generally known", and hence, Appellant did not violate Rule 1.9(b) of the Pennsylvania Rules. In her reply, Appellant further argues that she did not violate any ethical rules because the information contained in the list was already known to the Rigases since she began work on it before the Rigases left the company.
As a preliminary matter, it is clear that under the law, whether the work was done by an attorney, or required the skill of an attorney is irrelevant for the purposes of determining work product.
It is also clear that Appellant's argument that no ethical violation can be had because the Rigases already knew about the property list does not exempt her from her professional responsibilities, as stated previously. This fact does not mean that any information known to them prior to their resignation is no longer privileged.
Turning to Appellant's argument that the information contained in the property list was publicly available and thus "generally known," we look again to Rule 1.9 of the Pennsylvania Rules. Rule 1.9(b) provides an exception for "generally known" information. The rule, however, does not provide a definition for what constitutes "generally known" information. In Cohen v. Wolgin, Civ. A. No. 87-2007, 1993 WL 232206 (E.D. Pa. 1993), after finding no case law providing analysis of what is generally known under Rule 1.9(b), the court adopted the following definition provided by the American Law Institute:
Information is generally known when the information is so public that a person interested in knowing the information could obtain it in a reliably authentic form without special knowledge or substantial difficulty or expense. Special knowledge includes the whereabouts or identity of a person who knows the information or a document containing it, if those facts themselves are not themselves generally known.1995 WL 33095, at *1.
As Appellant has provided no legal precedent or definition for the term "generally known," the Court adopts the Cohen court's definition. The list contained information regarding properties owned by the Rigases and by Adelphia. The list included "the location of the real estate, the seller, the purchaser, the tax ID number, and the parcel number." (Appellant's Brief at 6.) However, although this information might have been publicly available, any person who would seek to obtain that information would have to go through "substantial difficulty or expense" to compile a list of all the properties owned by Adelphia, its related entities, and the Rigases.
Furthermore, it is apparent that this information is significant to Adelphia in its civil case against Rigases, as property holdings by Adelphia, its related entities and the Rigases, are clearly relevant to the issue of mismanagement and other misconduct by the Rigases while at Adelphia. The Bankruptcy Court's finding that the property list constituted work product and thus, was a basis for a violation of Rule 1.9(b), was not erroneous.
III. CONCLUSION
For the foregoing reasons, the Court finds that the Bankruptcy Court did not abuse its discretion when it found that it had the authority to disqualify Appellant, and that the Bankruptcy Court did not commit clear error in finding that the Pennsylvania Rules of Professional Conduct applied to Appellant and that she had violated them when she sent the two e-mails to Michael Snyder and Timothy Rigas.
The Bankruptcy Court's Order of January 27, 2004 is AFFIRMED.
The Clerk of the Court is DIRECTED to close this case and remove it from the docket.
SO ORDERED.