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Reardon v. Marlayne Inc.

Decided: July 17, 1980.

MARGARET REARDON AND DANIEL REARDON, PLAINTIFFS-APPELLANTS,
v.
MARLAYNE, INC., T/A BEAR BRAKE PALISADES AND GENERAL MOTORS CORPORATION, DEFENDANTS-RESPONDENTS



On appeal from the Appellate Division, Superior Court, whose opinion is reported at 167 N.J. Super.. 11 (1979).

For affirmance -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For reversal -- None. The opinion of the Court was delivered by Clifford, J.

Clifford

[83 NJ Page 465] The issue on this appeal is disqualification of counsel. Our decision turns on an attorney's duties to protect the confidences of his client, DR 4-101, and to avoid even the appearance of impropriety, DR 9-101. Defendant General Motors Corporation (General Motors) seeks to prevent plaintiffs' attorney, John E. Patton, and the firm of which he is a member, from participating in this product liability suit on the grounds that Patton formerly represented General Motors while an associate in the law firm of Carpenter, Bennett & Morrissey, defendant General Motors' counsel. Judge Bilder, sitting at the trial level, granted General Motors' motion for disqualification in a comprehensive opinion, 163 N.J. Super. 529 (Law Div.1978), and the Appellate Division affirmed, substantially on the basis of Judge Bilder's reasoning. 167 N.J. Super. 11 (1979). We granted leave to appeal, 81 N.J. 254 (1979), to address this question of first impression in New Jersey. We now affirm.

I

Plaintiffs seek recovery for personal injuries sustained by plaintiff Margaret Reardon when the brakes on her automobile failed, causing the car to hit a pole. The vehicle was manufactured by defendant General Motors. About four months prior to the accident defendant Marlayne, Inc., t/a Bear Brake Palisades (Marlayne), performed a "brake job" on the car. Plaintiffs base defendants' alleged liability on a faulty brake hose.

Defendant General Motors is represented by Carpenter, Bennett & Morrissey (the Carpenter firm), a law firm averaging some 19 partners and 23 associates. Plaintiffs are represented by Gaccione, Pomaco, Patton & Beck (the Gaccione firm), a seven person law firm in which Patton is one of the partners. Prior to joining the Gaccione firm, Patton was employed as an associate of the Carpenter firm for a period of ten years from 1966 to 1976, during which time that firm represented General Motors in the defense of numerous product liability suits. Patton left the Carpenter firm in April, 1976. The present suit, in which Patton has a vital role, was instituted in April, 1978.

During the years 1970 to 1976 the number of attorneys in the Carpenter firm ranged from a low of 34 in 1976 (18 partners, 16 associates) to a high of 48 in 1975 (18 partners, 30 associates). The firm was departmentalized, with Patton being assigned to a specialized group of attorneys identified as the "Product Liability-Negligence/Litigation" group. General Motors was and still is a major client of the Carpenter firm. During Patton's tenure with the firm he assisted in the handling of over 50 actively litigated General Motors cases. Based on a review of the firm's ledger sheets which indicate the type of work done and the hours devoted by each attorney to each client, it is estimated that Patton spent at least 50% of his time from 1970 through 1976 working on General Motors product liability cases and 25% of his time on such matters from 1967 to 1970. Patton's duties at the firm and his exposure to the firm's work product were described in an affidavit by a Carpenter firm partner:

During his association with the firm, Mr. Patton, in working on General Motors product liability litigation, had full access to all file materials including correspondence

from the client, its consultants and experts, internal memoranda obtained in the preparation of the defense, technical engineering materials prepared by the client and its consultants and other materials which would not have been available to him in other than his professional capacity as an attorney representing General Motors. Mr. Patton routinely discussed with me, and those of my partners who were handling General Motors litigation, the Corporation's approach to settlement, its recordkeeping methods and its policies, practices and procedures relating to product liability claims.

Although the General Motors cases involved a variety of alleged vehicle defects and several different fact patterns, two in particular, captioned as Krieger v. General Motors Corporation and Morgan v. General Motors Corporation, had fact patterns and alleged brake defects similar to those at issue in the present litigation. The Plaintiff in Morgan alleged that a defective breaking system in a 1967 GMC truck caused the truck to run into a line of stopped traffic. In Krieger the plaintiff alleged a defective braking system in a 1966 Buick caused the car to go out of control on a steep downgrade and strike a tree. The defect asserted in that case was of the very nature alleged in the instant case -- a defective brake hose -- in a 1966 car, the same year of manufacture as that of the Reardon vehicle. The Carpenter firm considers Patton's work on the Krieger and Morgan cases to have been substantial. His involvement included the taking of party and witness depositions, the preparation of interrogatories and legal memoranda, attendance at settlement conferences and on-site inspection, and the development of possible theories of defense.

Because of Patton's substantial exposure to background information concerning General Motors at the Carpenter firm, that firm contends he should be disqualified from representing the plaintiffs in the instant suit against General Motors. Patton claims that the Carpenter firm affidavits are "exaggerated, misleading, incomplete and inaccurate." His recollections concerning the time he spent on General Motors cases are substantially different. Although he agrees that he had access to all General Motors files while at the Carpenter firm, he contends that he was denied access to any secrets or confidences of General Motors because of his status as an associate. He further argues that the information he was exposed to at the

Carpenter firm is information which would be available to any attorney through the discovery process or secondary sources.

The trial court granted the Carpenter firm's motion and ruled that Patton and his law firm would be disqualified from representing the plaintiffs in the instant suit. 163 N.J. Super. at 541. The disqualification was based on an attorney's obligation to protect the confidences of his client and to avoid even the appearance of impropriety. Id. at 533-34. Following the majority rule the trial court interpreted our Disciplinary Rules to provide that attorneys individually, as well as their firms, may not appear in opposition to former clients in the same litigation or in a different suit if such a case involves "substantially related matters". Id. at 534.

The court found that such a substantial relationship existed between the issues in the present suit and those in the Krieger and Morgan cases in which Patton had been actively involved while associated with the Carpenter firm. Further, the court found that Patton's participation in those two cases, as well as in other General Motors litigation, provided ample justification for the conclusion that Patton had knowledge of General Motors' confidences and secrets. Id. at 537-39. Indeed, the court noted, "Far less than this extensive and meaningful activity should give rise to disqualification." Id. at 538. Because of the nature of the disqualification the court found that it would be inappropriate for any of Patton's work product to be available for use against General Motors. Patton was ordered to furnish the plaintiffs with a blank substitution of attorney.*fn1 Id. at 541.

II

It has been noted that "the Code of Professional Responsibility is not designed for Holmes' proverbial 'bad man' who wants to know just how many corners he may cut, how close to the line he may play, without running into trouble with the law." General Motors Corp. v. City of New York, 501 F.2d 639, 649 (2nd Cir. 1974) (quoting O. W. Holmes, The Path of the Law, in Collected Legal Papers 170 (1920)). Rather, "it is drawn for the 'good man' as a beacon to assist him in navigating an ethical course through the sometimes murky waters of professional conduct." Id. Because an attorney's ethical obligation may often be uncertain, ...


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