Summary
hearing necessary where record does not establish whether joint representation is appropriate
Summary of this case from Artandi v. BuzackOpinion
99 Civ. 0275 (RWS)
July 24, 2002
KAMING KAMING, JOSEPH S. KAMING, ESQ., New York, NY., Attorney for Plaintiff.
LAW OFFICES OF ROBERT G. DEL GADIO, East Meadow, NY., ROBERT G. DEL GADIO, ESQ., LESTER SCHWAB KATZ DWYER New York, NY., JONATHAN A. MURPHY, ESQ. TROY TROY, Centereach, NY., EDWARD TROY, ESQ., Attorney for Defendants and Second/Third-Party Defendants, Xerxes Corporation.
OPINION
Plaintiff Kara Holding Corp. ("Kara") has moved to strike the answer of defendants Getty Petroleum Marketing, Inc. ("Getty Marketing"); Getty Properties Corp. ("Getty Properties"); Getty Realty Corp. ("Getty Realty") (collectively "Getty"); Leemilt's Petroleum Inc. ("Leemilt's"); and The Tyree Organization, Ltd. ("Tyree") pursuant to Fed.R.Civ.P. 37(b)(2) and to disqualify the Law Offices of Robert G. Del Gadio from representing any defendant or second/third-party defendant in this action. The third-party defendants, Island Transportation Corp. ("Island") and Xerxes Corporation ("Xerxes") have moved for dismissal of the defendants' third-party complaint against them if Kara's motion is granted.
For the following reasons, Kara's motion to strike is denied and the third-party defendants' motion to dismiss is rendered moot. Further, Kara's motion to disqualify will be postponed until after a hearing, to be held prior to commencement of trial.
Facts
The instant action arises out of a petroleum spill that occurred on April 2, 1997 at Getty Service Station #329, a gas station located in Bronx, New York. Plaintiff, the owner of a building situated adjacent to the gas station, contends that a gasoline spill or spills at the station have resulted in considerable soil and groundwater contamination, as well as contamination of the Bronx River. Defendants are, variously, the alleged owner(s) and operator(s) of the Getty Station, or related corporate entities.
The complaint in this action was filed on January 14, 1999, and asserts federal and state causes of action, for which Kara requests injunctive relief, declaratory relief, the imposition of civil penalties, and an award of both costs and attorneys' fees.
Kara alleges that the defendants have not complied with Kara Holding Corp. v. Getty Petroleum Marketing Inc., 2002 WL 475125 (S.D.N.Y. March 26, 2002) as they have not produced documents they were ordered to produce. The various discovery disputes are discussed at greater length in that opinion, familiarity with which is presumed.
Defense counsel Robert G. Del Gadio ("Del Gadio") states that he contacted plaintiff's counsel Joseph Kaming ("Kaming") by letter dated April 4, 2002, and requested that Kaming list the documents that he had requested at depositions by reference to the deposition page and line number that Kaming contends have not been produced, and Del Gadio would inquire to determine if such documents exist. Del Gadio also asked Kaming to advise if there were any directive in the March 26, 2002 order that defendants had not yet fulfilled. He also offered to produce Stephen Tyree ("Tyree") for a limited deposition on May 1, 2002 as ordered by the Court.
Kaming did not respond to the letter.
By letter dated April 24, 2002, Kaming produced some discovery that the defendants had requested and stated that unless Kara received by April 29, 2002 the materials as required by the March 26, 2002 order, Kara would move for the Court's intervention. Kaming also stated that Kara would be unable to proceed with the Tyree deposition because the defendants had failed to produce documents.
Del Gadio responded by letter dated April 25, 2002, to advise Kaming that Tyree could not change the May 1, 2002 date. He also noted that he went through all the deposition transcripts and that all discovery requests had been produced. In addition, Del Gadio advised Kaming that because Kaming had not paid photocopying charges during the period of June 18, 2001 to October 25, 2001, totaling approximately $200, Del Gadio did not provide copies to Kaming but instead provided the documents for inspection at his office.
By letter dated April 30. 2002, Kaming sent a check to pay for the photocopying charges and adjourned the Tyree deposition without consent.
On May 1, 2002, Del Gadio delivered by overnight delivery to Kaming nine categories of documents that had been earlier produced at his office but had not been copied and sent to Kaming due to the failure of Kaming's office to pay the photocopying charges. Del Gadio also informed Kaming that he had not attended the deposition of Tyree. He also confirmed with Kaming his request that Kaming identify what documents he claims that have been requested and have not been produced.
Oral argument was heard on May 22, 2002, and the motion was considered fully submitted at that time.
Discussion
I. Rule 37(b)(2) Sanctions Are Not Warranted
Plaintiff's motion for sanctions is brought under Fed.R.Civ.P. 37(b)(2), which provides the framework for the imposition of sanctions for failure to comply with a court's discovery orders. The Rule provides that the court may make such orders in regard to a discovery failure "as are just," including (1) an order striking out the pleadings or rendering a judgment by default; (2) an order of contempt; and (3) an order requiring the disobedient party to pay the reasonable expenses, including attorney's fees, caused by the disobedient party's failure. Fed.R.Civ.P. 37(b)(2). "Rule 37(b)(2) sanctions must be applied diligently both to penalize those whose conduct may be deemed to warrant such a sanction, [and] to deter those who might be tempted to such conduct in the absence of a deterrent." Roadway Express Inc. v. Piper, 447 U.S. 752, 763-64, 100 S.Ct. 2455, 2463 (1980) (quoting Nat'l Hockey League v. Metro. Hockey Club, 427 U.S. 639, 643, 96 S.Ct. 2778, 2781 (1976)); see also Update Art, Inc. v. Modin Publ'g Ltd. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1066 (2d Cir. 1979).
The Court has wide discretion in imposing sanctions. Strong sanctions should be imposed only for serious violations of court orders, however, such as "when the failure to comply with a court order is due to willfulness or bad faith or is otherwise culpable." Id. at 1367; see also New Pacific Overseas Group (USA) Inc. v. Excal Int'l Dev. Corp., Nos. 99 Civ. 2436, 99 Civ. 3591 (DLC), 2000 WL 97358, at *4 (S.D.N.Y. Jan. 27, 2000) ("Courts ordinarily impose such extreme sanctions only where there has been willfulness, bad faith, or any fault in the course of discovery." (citations and internal quotation marks omitted)).
With respect to plaintiff's request to strike defendants' answer, which in effect would result in a default judgment, the following considerations are relevant: (a) willfulness or bad faith on the part of the noncompliant party; (b) the history, if any, of noncompliance; (c) the effectiveness of lesser sanctions; (d) whether the noncompliant party had been warned about the possibility of sanctions; and (e) the client's complicity. American Cash Card Corp. v. ATT Corp., 184 F.R.D. 521, 524 (S.D.N.Y. 1999); see also New Pac. Overseas Group, 2000 WL 377513 at *7 (looking to the duration of the party's failures; whether the party received notice of possible sanctions; prejudice to party seeking relief arising from the noncompliant party's actions; due process considerations; and the efficacy of lesser sanctions); Yucvco, Ltd. v. Ljubjanska Banka D.D., No. 96 Civ. 4274, 2001 WL 699135, at *4 (S.D.N.Y. June 20, 2001) (same).
It appears that the defendants have complied with the March 26, 2002 order to the extent that they were able. While defense counsel at first only produced the documents at his office, rather than copying them to plaintiff's counsel, defense counsel did produce what he believed the defendants were required to produce and had not yet done so. Plaintiff's counsel failed to identify to defense counsel any specific documents that had not been produced prior to the filing of this motion. Any intervention by the Court at this time would be premature.
The parties should, however, arrange for a deposition of Tyree as required by the March 26, 2002 Order. The deposition should be at a time and place convenient to the parties.
II. Disqualification
Kara also moves to disqualify the Law Offices of Del Gadio from representing any of the defendants due to a purported actual conflict of interest. Del Gadio states that the defendants have orally consented to the representation and that this consent permits his joint representation of the parties.
As a general rule, motions to disqualify counsel are disfavored, and the movant bears the burden of demonstrating that the disqualification is warranted by satisfying "a high standard of proof." Evans v. Artek Systems Corp., 715 F.2d 788, 791 (2d Cir. 1983); see also Mercedes v. Blue, No. 00 Civ. 9225, 2001 WL 527477 (S.D.N.Y. May 17, 2001) ("[T]he Second Circuit has repeatedly noted that caution is to be exercised against too readily granting disqualification motions which "`are often interposed for tactical reasons' and . . . `even when made in the best of faith . . . inevitably cause delay.'" (quoting Evans (quoting Board of Education v. Nyguist, 590 F.2d 1241, 1246 (2d Cir. 1979)) However, any doubts must be resolved in favor of disqualification. Hull v. Celanese Corp., 513 F.2d 568, 571 (2d Cir. 1975); Sauer v. Xerox Corp., 85 F. Supp.2d 198, 199 (W.D.N.Y. 2000).
Kara argues that each of the defendants represented by Del Gadio confronts conflicting exposure to punitive damages and civil penalties, and that each party's exposure is separate, independent and adversarial. Del Gadio argues that this is not the case.
The most pertinent provisions of the Code of Professional Responsibility are found in Ethical Consideration 5-14 and 5-15. The latter states:
Maintaining the independence of professional judgment required of a lawyer precludes his acceptance or continuation of employment that will adversely affect his judgment on behalf of or dilute his loyalty to a client. This problem arises whenever a lawyer is asked to represent two or more clients who may have differing interests, whether such interests be conflicting, inconsistent, diverse, or otherwise discordant.
EC 5-14. Ethical Consideration 5-15 speaks to what the attorney should do if requested to represent multiple clients:
If a lawyer is requested to undertake or to continue representation of multiple clients having potentially differing interests, he must weight carefully the possibility that his judgment may be impaired or his loyalty divided if he accepts or continues the employment. He should resolve all doubts against the propriety of the representation. A lawyer should never represent in litigation multiple clients with differing interests. and there are few situations in which he would be justified in representing in litigation multiple clients with potentially differing interests. If a lawyer accepted such employment and the interests actually did become differing, he would have to withdraw from employment with likelihood of resulting hardship on the clients; and for this reason it is preferable that he refuse employment initially. On the other hand, there are many instances in which a lawyer may properly serve multiple clients having potentially differing interests in matters not involving litigation. If the interests vary only slightly, it is generally likely that the lawyer will not be subjected to an adverse inference and that he can retain his independent judgment on behalf of each client; and if the interests become differing, withdrawal is less likely to have a disruptive effect upon the causes of his clients.
EC 5-15.
Ethical Considerations are "couched in terms of guidance to attorneys and do not purport to mandate specific rules of conduct." Mercedes, 2001 WL 527477 at *3. Instead, case law has utilized the mandatory directives pertinent to this issue, found in Disciplinary Rule 5-105(B) of the Code, in determining when disqualification may be appropriate. Id. (collecting cases). Disciplinary Rule 5-105(B) provides:
A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, or if it would be likely to involve him in representing differing interests, except to the extent permitted under DR 5-105(C).
DR 5-105(B). DR 5-105(C) permits joint representation even if the lawyer's professional judgment "will or is likely to be adversely affected" provided that (1) "it is obvious that he can adequately represent the interest of each" client and (2) that each client consents to such joint representation after a full explanation by the lawyer of "the possible effect of such representation on the exercise of his independent professional judgment on behalf of each."
In assessing the affect of these provisions on the assumed authority of the federal courts to disqualify counsel appearing in cases in this courts, the Second Circuit has sounded a strong note of caution:
[W]ith rare exceptions disqualification has been ordered only in essentially two kinds of cases: (1) where an attorney's conflict of interests in violation of Canons 5 and 9 of the Code of Professional Responsibility undermines the court's confidence in the vigor of the attorney's representation of his client, or more commonly
(2) where the attorney is at least potentially in a position to use privileged information concerning the other side through prior representation, for example, in violation of Canons 4 and 9, thus giving his present client an unfair advantage. . . . But in other kinds of cases, we have shown considerable reluctance to disqualify attorneys despite misgivings about the attorney's conduct.Nyguist, 590 F.2d at 1246 (citations and footnote omitted).
Keeping this "reluctance" in mind, it is necessary first to determine whether Del Gadio's representation of all the defendants and second/third-party defendants does or likely will "adversely affect" the exercise of Del Gadio's independent professional judgment. DR 5-105(B). Del Gadio represents numerous co-defendants, who have differing exposure to punitive damages and civil penalties. If one of the defendants should want to settle to avoid such exposure, Del Gadio would be placed on the horns of a dilemma: the settlement could adversely affect the interests of the remaining co-defendants. Such a situation could adversely affect the exercise of Del Gadio's independent judgment.
Del Gadio may nonetheless represent the defendants if they consent and "it is obvious that he can adequately represent" all of their interests. DR 5-105(C). The defendants have already given the proper consent, although they appear to have only done so orally rather than in writing. Therefore, the only question is whether the adequacy of Del Gadio's representation is "obvious." Based on the record before the Court, it cannot be said that it is obvious that Del Gadio can adequately represent all the defendants. However, there is also nothing on the record to demonstrate that it is obvious that Del Gadio may not adequately represent the interests of all defendants.
Therefore, it is necessary to hold a hearing on the issue to determine whether it is obvious that Del Gadio may adequately represent all of the defendants. The hearing will be held prior to the commencement of trial.
III. Extension of Deadlines
By separate letter motion dated July 3, 2002, Kara sought to extend deadlines. Currently, discovery was set to end on July 15, 2002, and a pretrial order is to be submitted on August 15, 2002. Kara sought to extend the discovery cut-off to November 15, 2002, and the deadline for a pretrial order to December 16, 2002. The defendants oppose this motion.
Discovery must be completed by October 30, 2002, and a pretrial order submitted by November 27, 2002.
Conclusion
Kara's motion to strike is denied and the third-party defendants' motion to dismiss is denied as moot. The motion to disqualify the Law Offices of Del Gadio will be decided after a hearing is held. Further, the deadlines for the completion of discovery and the submission of a pretrial order are extended to October 30, 2002, and November 27, 2002, respectively.