Opinion
Case No: 2:04 CV 543 TS.
December 13, 2004
ORDER DENYING MOTION TO DISQUALIFY
Plaintiff asserts direct contractual claims against RAMP International Incorporated (RAMP) and also asserts derivative claims as a shareholder of RAMP against William A. Poce (Poce), a director and the CEO of RAMP. In this unusual situation of suing a corporation while also claiming to represent its best interests, Plaintiff complains that counsel for Defendants has a conflict of interest. "[S]ome of [Plaintiff's] claims are against RAMP and Poce, [but] RAMP's position in the derivative action is in direct opposition to that of Poce. . . ." Plaintiff created this conflict by suing the corporation and purporting, on its behalf, to sue its CEO. For their part, Defendants RAMP and Poce see no conflict in their positions, though they have separate counsel since the filing of the motion to disqualify.
Memorandum in Support of the Motion for Disqualification, docket no. 25, filed August 30, 2004, at 2.
Order, docket no. 36, filed October 15, 2004; Appearance, docket no. 44, filed November 12, 2004.
Even though RAMP has retained separate counsel, Poce continues to be represented by the firm which is target of the disqualification motion. Plaintiff is not satisfied, asserting that the firm may have had access to confidential RAMP information during the joint representation.
Plaintiff cannot know what confidential information Holland Hart has had access to but the specter of this unfair advantage [over RAMP] should raise doubts about Holland Hart's fair representation in any defenses he might raise against RAMP.
Plaintiff's Reply in Support of Motion for Disqualification, docket no. 37, filed October 15, 2004, at 5.
Plaintiff stands by its motion.
Plaintiff's ethical protestations ring hollow, and seem intended to achieve tactical advantage more than maintain the purity of the justice system. If RAMP, now separately represented, has a concern about improper access to confidential information, it may raise the issue. The magistrate judge is not inclined to let the derivative shareholder Plaintiff speak authoritatively on behalf of the corporation by disqualifying counsel.
Plaintiff also complains that RAMP's conduct of litigation is controlled by a person who is alleged to be harming RAMP, though not a named defendant. Id. at 2. Allowing Plaintiff to speak louder than the persons in nominal control of RAMP would acknowledge Plaintiff to be the effectual representative of RAMP, which the magistrate judge is not prepared to do at this stage of the litigation.
In Parkinson v. Phonex Corp., 857 F.Supp. 1474 (D. Utah 1994) Judge Sam's order, affirming Magistrate Judge Boyce's refusal to disqualify counsel, show how to evaluate motions to disqualify counsel.
First, the legal profession's ethical rules are not necessarily the standard for measure of conduct of litigation. Standards of professional conduct meant to be enforced by professional bodies cannot govern litigation because the considerations in each forum are different. Courts are not to "correct all possible ethical conflicts" because "this laudable goal cannot be attained through rulings in the course of litigation without inviting the wholesale filing of motions for tactical reasons. The result would be needless disruption and delay of litigation, thereby impairing the efficient administration of justice." Therefore, "[w]here a threat of tainting the trial does not exist . . . the litigation should proceed, the remedy for unethical conduct lying in the disciplinary machinery of the state and federal bar." In sum, violation of ethical rules "does not require disqualification as a matter of course."
Parkinson v. Phonex Corp., 857 F.Supp. 1474, 1476 (D. Utah 1994).
Id. (quoting Bodily v. IHC, 649 F.Supp. 468 (D. Utah 1986) (quoting Armstrong v. McAlpin, 625 F. 2d 433 at 444-446 (2d Cir. 1980))).
Id. (quoting Bodily v. IHC, 649 F.Supp. 468 (D. Utah 1986)).
Second, the disqualification should only be ordered "upon a finding that presence of a particular counsel will taint the trial by affecting his or her presentation of a case." That is a fact-sensitive analysis, peculiar to each case. Among the facts Parkinson suggests are pertinent are:
Id. (quoting Bottaro v. Hatton Assoc., 680 F.2d 895, 896-897 (2d Cir. 1979)).
• the egregiousness of the violation;
• the presence or absence of prejudice to the other side;
• whether and to what extent there has been a diminution of effectiveness of counsel;
• equitable considerations, such as the hardship to the other side; and
• the stage of trial proceedings.
These factors are, however, merely illustrative of the facts that may be pertinent. Each case must be examined "on its own specific facts."
Id., quoting Beck v. Board of Regents, 568 F.Supp. 1107 (D. Kan. 1983).
In Poly Software v. Su, 880 F.Supp. 1487 (D. Utah 1995), Judge Winder cited other cases to make it clear that "motions to disqualify counsel in federal proceedings are substantive motions affecting the rights of the parties [and] are decided by applying standards developed under federal law . . . considered in light of the public interest and the litigants' rights." These motions are not decided as matters of ethical theory.
Poly Software v. Su, 880 F.Supp. 1487, 1490 (D. Utah 1995) (citing Cole v. Ruidoso Mun. Sch., 43 F.3d 1373, 1383 (10th Cir. 1994) (quoting In re Dresser Indus. Inc., 972 F.2d 540, 543 (5th Cir. 1992))).
In the current status of this case, if RAMP were making the motion to disqualify Poce's firm, the magistrate judge would be far more inclined to grant the motion. Where the motion is made by a party opponent with only the supposition that confidential information may be improperly accessed, at a stage where the Plaintiff only purports to speak with the best interests of the corporation, the motion cannot be granted. Any violation is speculative; its impact on Plaintiff is equally speculative; counsel's effectiveness is not evidently impaired by duties owed to Plaintiff or RAMP; and there are no compelling equities calling out for judicial intervention.
ORDER
IT IS HEREBY ORDERED that the motion to disqualify is DENIED.