Opinion
No. CV 08 6000954 S
October 30, 2008
MEMORANDUM OF DECISION RE MOTION TO DISQUALIFY COUNSEL (106.00)
Background and Facts
In this action the plaintiff, a non-managing member of Sagecrest LLC, an investment fund, sues Windmill LLC, the manager of Sagecrest and three individuals who are the principals of Windmill for, inter alia breach of fiduciary duty, breach of contract and for violation of the Connecticut Unfair Trade Practices Act, General Statutes §§ 42-110a et seq. (CUTPA) alleging that the fund's assets and business have been mismanaged in various ways.
The individual defendant Richard Weyand has moved to disqualify two attorneys who appeared on the plaintiff's complaint as "of counsel," Paul Kaplan and Richard Schulman, respectively identified as a partner of, and counsel to, the law firm of Bryan Cave LLP, as well as the firm itself. The pro hac vice admissions of Messrs. Kaplan and Schulman to represent Westerly Capital were granted in early July 2008. Weyand's motion to disqualify is based on Rule 1.7(a) of the Rules of Professional Conduct adopted in Connecticut. Rule 1.7(a) prohibits a lawyer from representing a client if the representation involves a "concurrent conflict of interest." A concurrent conflict exists if the representation of one client "will be directly adverse to another client." Rule 1.7(a)(1).
Mr. Weyand contends that the firm of Bryan Cave was representing two entities of which he was the principal owner at the time the complaint against him in this action was filed in this court on June 10, 2008 with Mr. Kaplan's and Mr. Schulman's names on it as "of counsel." According to Weyand this constituted a "concurrent conflict." Westerly Capital contends that Mr. Kaplan is no longer a partner of Bryan Cave, and has been a partner in the law firm of Arent Fox LLP, since July 28, 2008 "just days after he filed his motion" to be admitted pro hac vice to represent Westerly Capital. Furthermore, Westerly Capital contends that Bryan Cave did not represent Weyand personally and Kaplan had no knowledge of Weyand's affairs on those of the two entitles represented by Bryan Cave.
The parties agree that the motion to disqualify Schulman and Bryan Cave are moot. Schulman has withdrawn his appearance and no attorney of Bryan Cave is presently representing Westerly Capital.
The facts set forth in the record of this case are as follows. While at Bryan Cave in May 2008, Kaplan was approached to represent Westerly Capital in this action. A conflicts check request was submitted and no conflict with Weyand appeared. Kaplan Affidavit, August 15, 2008, ¶¶ 5-6 and Ex. A thereto. Weyand states in his affidavit that he is the 95% owner of Discovery Resources Group for which Bryan Cave provided a tax opinion in early 2008 and that he is the 95% owner of an entity known as W Properties which Bryan Cave presently represents in connection with a private placement. Weyand Affidavit, July 16, 2008, ¶¶ 5-6. Kaplan drafted the complaint which was filed in this court on June 10, 2008. Kaplan's and Schulman's motions for admission to represent the plaintiffs were dated June 10, 2008 and granted on July 1, 2008. On June 19, 2008 an e-mail was sent to Kaplan who practiced litigation in Bryan Cave's New York City office from Daniel Cullen a partner in Bryan Cave's Chicago office. The e-mail read as follows:
Please note that we currently represent two companies, W Properties, LLC and Discovery Resources and Development, LLC (the "Companies").
Our main contact at the Companies is Peter Thiessen, the CFO. Peter sent me the attached e-mail and complaint, which names Richard Weyand as an additional defendant. Peter has informed me that Richard Weyand is an owner of the Companies — our clients. Peter believes there is a conflict and feels we should withdraw from representing the plaintiff in the attached case.
Please let me know when you might be available to discuss.
Kaplan Affidavit, September 26, 2008, ¶ 2 and Ex. A thereto. After discussion, the Bryan Cave conflicts committee advised Kaplan that Weyand's membership in the two LLC's represented by Bryan Cave did not make Weyand a client of Bryan Cave, and there was no conflict of interest in the firm's representation of Westerly Capital in this case. Id., ¶ 3.
On July 28, 2008 Kaplan became a partner of Arent Fox. While he was at Bryan Cave, he was primarily a commercial litigator and worked little in tax and private placement matters. Kaplan, August 15, 2008 Affidavit, ¶¶ 3-4. There is no evidence that he had or has any confidential information of Weyand, and no evidence that the work of Bryan Cave for the two LLC's is in any way related to this litigation.
1. Discussion
Westerly Capital contends that Weyand was not a client of Bryan Cave and even if he was, Bryan Cave no longer represents Westerly Capital because Kaplan is not a partner of Bryan Cave. The court is not persuaded. First, courts have not been bound by a strict construction of the attorney client relationship. In Glueck v. Jonathan Logan, Inc., 653 F.2d 746 (2d Cir. 1981), Judge Newman, in connection with a motion to disqualify, stated that [t]he issue is not whether . . . the relationship . . . is in all respects that of attorney and client, but whether there exists sufficient aspects of an attorney-client relationship for the purposes of triggering inquiry into the potential conflict involved . . ." Id. 748-49; see also Colorpix Sys. of American v. Broan Mfg. Co., 131 F.Sup.2d 331, 336 (D.Conn. 2001). In Glueck the Second Circuit referred to a party who was not a "traditional" client, but who nevertheless was entitled to an inquiry into a potential conflict as a "vicarious" client. This court is not bound by Bryan Cave's determination that Weyand was not a client, and it concludes that Weyand's super majority interest in the two LLC's represented by Bryan Cave qualifies him for consideration as a vicarious client of Bryan Cave. Therefore, there was a concurrent conflict of interest between Bryan Cave's client Westerly Capital and vicarious client Weyand, and Weyand is entitled to an inquiry into the potential conflict. Second, the conflict lasted more than two months, rather than the "few days" intimated by Westerly Capital. Indeed, the conflict existed when the pro hac vice motions were filed and when they were granted. Having said all of that, the court is mindful that there are strong policy reasons for allowing a party to select its own counsel. Moreover, in two well regarded decisions involving vicarious clients the courts have looked for something more than a violation of the Code of Professional Responsibility to support an attorney disqualification. In Glueck, supra, the Second Circuit held that the heavy burden to avoid disqualification placed by Canon 5 [similar to Rule 1.7(a)] "is properly imposed when a lawyer undertakes to represent two adverse parties both of which are his clients in the traditional sense. But, when an adverse party is only a vicarious client by virtue of membership in an association, the risks against which Canon 5 guards against will not inevitably arise." Glueck, supra, 653 F.2d 749. Therefore, the Second Circuit imposed a "substantial relationship test" to the effect that whenever a lawsuit is sufficiently related to the matters which the representation of the association covers so as to create a realistic risk that one of the parties will not be represented with vigor, or that unfair advantage will be taken of another party, there should be disqualification. The Second Circuit's concern was focused on whether a trial might be tainted or the free flow of information from a client to the law firm be inhibited. This substantial relationship test is akin to the more relaxed conflict provisions relating to former clients. See Connecticut Rules of Professional Conduct, § 1.9.
Westerly Capital concedes it misread the docket sheet when stating that Kaplan's pro hac vice motion was granted on July 25, 2008.
The Rules of Professional Conduct based on Model Rules promulgated by the American Bar Association in 1983 have been adopted by Connecticut and most other jurisdictions, supplanting the Canons and Code of Professional Responsibility discussed in Glueck. However, as will be seen, cases construing the older Code remain relevant today.
Similarly in Westhinghouse Elec. Corporation v. Ken-McGee Corporation, 580 F.2d 1311 (7th Cir.), cert. denied, 439 U.S. 955 (1978), a law firm represented an association on legislative business and was prosecuting an antitrust case against three members of the same association. The Seventh Circuit chose not to decide whether every association member was a law firm client, but found the dual representation was barred under the circumstances of the case because association members had divulged confidential information to the law firm, and the legislative matter and antitrust suit were substantially related. Id., 1319, 1321-22.
The United States District Court for the District of Connecticut has adopted the Connecticut Rules of Professional Conduct. In two quite recent cases that District Court has referred approvingly to the statement in Glueck that because of the serious impact attorney disqualification has on a party's right to counsel of its choice, such relief ordinarily should be granted only when a violation of the Canons of the Code of Professional Responsibility "poses a significant risk of trial taint." See Vincent v. Essent Healthcare of Connecticut, 465 F.Sup.2d 142, 144 (D.Conn. 2006); Data Capture Solutions Repair Remodeling Inc. v. Symbol Technologies, Inc., 3:07 CV 0237 (JCH) 2008 U.S. Dist. Lexis 83595 (October 17, 2008).
This court follows the path charted by Glueck. In this case there is no evidence that Kaplan obtained or had access to any confidential information of Weyand held by Bryan Cave, and little possibility he would have such access in the future since he no longer is a Bryan Cave partner. Therefore, there should be no impediment placed on free communication between Weyand and Bryan Cave and no evidence that the trial of this case would be tainted. While Weyand argues to the contrary, this court also finds there is no substantial relationship between the litigation commenced by Westerly Capital and tax and securities work undertaken by Bryan Cave for Weyand. Hence, the court finds there to be an insufficient basis to disqualify Kaplan.
The portion of motion seeking to disqualify Attorney Kaplan is denied. The remaining portions of the motion are denied as moot.