Opinion
Civil Action No. 03-232.
March 15, 2005
ORDER-MEMORANDUM
AND NOW, this 15th day of March, 2005, upon consideration of Plaintiffs' "Motion to Disqualify Defendants' Counsel From Further Participation in this Action" (Docket No. 89) and Defendants' Response thereto, IT IS HEREBY ORDERED that the Motion is GRANTED in part and DENIED in part as follows:
1. The Motion to Disqualify is GRANTED with respect to Plaintiffs' request that Jeffrey Schwab, Esquire be disqualified from acting as Defendants' attorney at the trial of this matter pursuant to Pennsylvania Rule of Professional Conduct 3.7. Mr. Schwab is hereby disqualified from representing Defendants at the trial of this matter.
2. The Motion is DENIED in all other respects.
Plaintiffs filed this action to correct the name of the inventor on patents relating to inventions of certain Russian scientists, including Dr. Vadim A. Davankov, and for equitable title to those patents, misappropriation of trade secrets, tortious interference with contract and other common law claims arising from Defendants' alleged interference with the relationship between Plaintiffs and those Russian scientists on January 16, 2003. Jeffrey Schwab, Esquire has represented Defendants in this action since April 21, 2003. Plaintiffs recently learned, through discovery, that Mr. Schwab has knowledge which predates his representation of Defendants in this litigation and which Plaintiffs allege supports their claims that Defendants misused Plaintiffs' confidential information, tortiously interfered with Plaintiffs' contractual relations, misappropriated Plaintiffs' trade secrets, and wrongfully induced third-parties to breach contracts with Plaintiffs. Defendants produced, in discovery, handwritten notes taken by Mr. Schwab of an August 11, 1994 telephone conversation with a member of RenalTech's Board of Managers, and notes of an August 13, 1997 meeting with officers of RenalTech and Dr. Davankov. These notes indicate that Mr. Schwab was aware that Dr. Davankov had a consulting agreement with one of the Plaintiffs in this action. Mr. Schwab has been deposed regarding his notes and these meetings, and Plaintiffs claim that he will be a necessary witness in support of their claims at the trial of this matter. Consequently, Plaintiffs have moved to disqualify Mr. Schwab and his law firm, Abelman, Frayne Schwab, from further representation of Defendants in this action.
"A district court derives the power to disqualify an attorney `from its inherent authority to supervise the professional conduct of attorneys appearing before it.'" George v. Wausau Ins. Co., No.Civ.A. 99-6130, 2000 WL 276915, at *1 (E.D. Pa. Mar. 13, 2000) (quoting United States v. Miller, 624 F.2d 1198, 1201 (3d Cir. 1980)). Motions to disqualify opposing counsel are usually disfavored because of the longstanding tradition that a party's choice of counsel is entitled to substantial deference and because the courts "must prevent litigants from using motions to disqualify opposing counsel for tactical purposes." Hamilton v. Merrill Lynch, 645 F. Supp. 60, 61 (E.D. Pa. 1986). "At the same time the court has a duty to assure that attorneys observe the ethical obligations set forth in the ABA Code of Professional Responsibility." Id. The local rules of this Court incorporate the rules of professional conduct adopted by the Supreme Court of Pennsylvania. See E.D. Pa. Local R. 83.6(IV)(B). "Violations of these rules, however, do not necessarily provide grounds for disqualification." George, 2000 WL 276915, at *1 (citingMaritrans GP Inc. v. Pepper, Hamilton Scheetz, 602 A.2d 1277, 1284 (Pa. 1992). Consequently, a court should disqualify an attorney only:
when it determines, on the facts of the particular case, that disqualification is an appropriate means of enforcing the applicable disciplinary rule. It should consider the ends that the disciplinary rule is designed to serve and any countervailing policies, such as permitting a litigant to retain the counsel of her choice and enabling attorneys to practice without excessive restrictions.Commonwealth Ins. Co. v. Graphix Hot Line, Inc., 808 F. Supp. 1200, 1203 (E.D. Pa. 1992) (citing Miller, 624 F.2d at 1201). Although "[d]oubts should be resolved in favor of disqualification . . . it is the burden of the party arguing for disqualification to demonstrate clearly that continuing representation would be impermissible." Shade v. Great Lakes Dredge Dock Co., 72 F. Supp. 2d 518, 520 (internal quotation marks and citations omitted).
Plaintiffs contend that the continued representation of Defendants by Mr. Schwab and his law firm violates Pennsylvania Rule of Professional Conduct 3.7, which prohibits a lawyer from representing his client at a trial in which he is likely to be a necessary witness. Pa. R. Prof. Cond. 3.7. Rule 3.7 provides as follows:
(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal services rendered in the case; or
(3) disqualification of the lawyer would work substantial hardship on the client.
(b) A lawyer may act as advocate in a trial in which another lawyer in the lawyer's firm is likely to be called as a witness unless precluded from doing so by Rule 1.7 or Rule 1.9.
Pa. R. Prof. Cond. 3.7 (Thomson/West 2005). "This rule, however, only bars representation at trial. An attorney may continue to represent a client in an action in which he will be called as a witness up to the actual trial in the case." George, 2000 WL 276915, at *2 (citing Lebovic v. Nigro, No.Civ.A. 96-319, 1997 WL 83735 (E.D. Pa. Feb. 26, 1997)).
The Court finds that Plaintiffs have established that they will call Mr. Schwab as a necessary witness at trial, to testify regarding the August 11, 1994 telephone conversation and the August 13, 1997 meeting. Consequently, the Court grants Plaintiffs' Motion to the extent that it requests that Mr. Schwab be disqualified from representing Defendants at the trial of this action. Defendants have, however, established that the immediate disqualification of Mr. Schwab and his firm would work substantial hardship upon them as they are likely to face substantial difficulty in obtaining substitute counsel. Rule 3.7 does not bar an attorney who will be called as a witness from representing his client prior to the beginning of trial. Mr. Schwab may, therefore, continue to represent Defendants until the trial of this action and Plaintiffs' Motion is denied to the extent that it requests Mr. Schwab's immediate disqualification.
Plaintiffs also seek the disqualification of Mr. Schwab's law firm pursuant to Rule 3.7. However, Rule 3.7 provides that another lawyer in Mr. Schwab's firm may represent Defendants at trial unless precluded from doing so by Pennsylvania Rules of Professional Conduct 1.7 or 1.9. Plaintiffs have failed to establish that the law firm of Abelman, Frayne Schwab's continued representation of Defendants would involve a concurrent conflict of interest with another client in violation of Pa. R. Prof. Cond. 1.7, or that Abelman, Frayne Schwab has undertaken the representation of a new client whose interests are materially adverse to a former client in violation of Pa. R. Prof. Cond. 1.9. Plaintiffs' Motion is, accordingly, denied to the extent that it seeks to disqualify the law firm of Abelman, Frayne Schwab from continuing to represent Defendants in this litigation up to and including trial.
Pennsylvania Rule of Professional Conduct 1.7 prohibits an attorney from representing a client if the representation would involve a concurrent conflict of interest, i.e., a conflict of interest with another client, with certain exceptions. Pa. R. Prof. Cond. 1.7. Pennsylvania Rule of Professional Conduct 1.9 prohibits an attorney from representing a client if the representation would involve a conflict of interest with a former client, with certain exceptions. Pa. R. Prof. Cond. 1.9.