Subject to an "ethics screen" which K&S "constructed" to avoid a conflict of interest, London began work at K&S on June 7, 1995. The "ethics screen" was designed to prevent London from having any contact with cases involving GM. The facts surrounding the implementation of the "ethics screen" are fully set forth in Judge Kugler's Opinion and will not be repeated here, except where necessary to explain specific factual findings which are challenged on these appeals.
On August 4, 1995, defendant, General Motors Corporation, moved to disqualify London and the firm of K&S in the cases then pending against GM which were filed after London began work at K&S. Between August 17, and September 15, 1995, Magistrate Judge Kugler conducted five days of hearings on GM's disqualification motion. On December 5, 1995, Magistrate Judge Kugler filed his Opinion and separate Orders disqualifying London and the K&S firm from further representing plaintiffs in the cases then pending before him. In November, 1995, approximately five months after he began working there, London ended his employment with K&S. On December 22, 1995, London and K&S filed these appeals.
II. Standard of Review
A United States Magistrate Judge may "hear and determine any [non-dispositive] pretrial matter pending before the court" pursuant to 28 U.S.C. § 636(b)(1)(A). In all non-dispositive pre-trial matters, a magistrate judge may issue an opinion and order. Under the authority granted by 28 U.S.C. § 636(b)(1)(B), a magistrate also "may conduct hearings, including evidentiary hearings," into dispositive matters, and submit "proposed findings of fact and recommendations for the disposition" of the matter to the district court. See generally 12 Charles A. Wright, et al., Federal Practice and Procedure § 3076.5 (Supp. 1996). The distinction between an order and a recommendation is meaningful to the district court's standard of review. Findings and recommendations of a magistrate are subject to de novo review under § 636(b)(1)(B). On the other hand, under § 636(b)(1)(A), a district court may only "reconsider [a] pretrial matter . . . where it has been shown that the magistrate's order is clearly erroneous or contrary to law." See United Steel Workers of America v. New Jersey Zinc, 828 F.2d 1001 (3d Cir. 1987).
A magistrate judge's ruling is "clearly erroneous when, although there is evidence to support it, the reviewing Court . . . is left with a definite and firm conviction that a mistake has been made." South Seas Catamaran, Inc. v. M/V Leeway, 120 F.R.D. 17, 21 (D.N.J. 1988) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 92 L. Ed. 746, 68 S. Ct. 525 (1948)), aff'd, 993 F.2d 878 (3d Cir. 1993). The party filing the notice of appeal bears the burden of demonstrating that the magistrate judge's decision was clearly erroneous or contrary to law. Exxon Corp. v. Halcon Shipping Co., Ltd., 156 F.R.D. 589, 591 (D.N.J. 1994).
Under the clearly erroneous standard of review, "the magistrate judge's findings should not be rejected even if a reviewing court could have decided the issue differently." Toth v. Alice Pearl, Inc., 158 F.R.D. 47, 50 (D.N.J. 1994)(citing Anderson v. City of Bessemer City, 470 U.S. 564, 573-74, 84 L. Ed. 2d 518, 105 S. Ct. 1504 (1985)("Where there are two permissible views of the evidence, the fact-finder's choice between them cannot be clearly erroneous.")).
In interpreting the Rules of Professional Conduct, the United States District Court for the District of New Jersey is guided by "definitive state court decision[s] interpreting the rules." Allyn Z. Lite, New Jersey Federal Practice Rules, 1996 Edition, cmt. to Rule 6, at 35 (1995). In the absence of such a ruling from the state courts, "the federal Court will proceed to reach its own conclusion." Id.
A. Substantially Related Matters
London contends that his disqualification under RPC 1.9(a)(1) was improper, because the cases presently before the court are not "substantially related" to the matters in which London represented GM while employed at the Lavin and McBreen firms. In support of this argument, appellants rely primarily on an opinion of the New Jersey Supreme Court Advisory Committee on Professional Ethics ("ACPE") interpreting RPC 1.9(a)(1), which bases a finding of a "substantial relationship" upon a "factual nexus" between the side-switching attorney's present case and the cases he or she worked on during the former representation. N.J. Adv. Comm. on Ethics Opinion No. 654, 129 N.J. L.J. 514 (1991). Appellants assert that such a factual nexus is absent in the cases now on appeal. Magistrate Judge Kugler, however, rejected this narrow reading of RPC 1.9(a)(1), choosing to rely on the "substantial relationship" test articulated by the New Jersey Supreme Court in Reardon v. Marlayne, Inc., 83 N.J. 460, 416 A.2d 852 (1980).
In Opinion No. 654, the ACPE found it significant that Reardon was decided before the New Jersey Supreme Court adopted the Rules of Professional Conduct in 1984. The Reardon formulation of the "substantial relationship" test required disqualification when there was a "substantial relationship between the subject matter of the present suit and that of cases worked on during the former representation." Reardon, 83 N.J. at 474. The current rule, however, bans subsequent representation in "the same or a substantially related matter." RPC 1.9(a)(1). The ACPE found the Reardon language to be "somewhat broader" than the current rule. The ACPE noted that, in Dewey v. R.J. Reynolds Tobacco Co., 109 N.J. 201, 536 A.2d 243 (1988), the New Jersey Supreme Court determined that RPC 1.9, in effect, replaced the Reardon three-part test for attorney disqualification. Id. at 212 (citing Reardon, 83 N.J. at 470).
The Dewey court, however, only addressed whether the attorney had "represented" a party with interests adverse to the client of his new firm, within the meaning of RPC 1.9(a). As Magistrate Judge Kugler recognized, there was no discussion in Dewey of the proper standard for finding a "substantial relationship."
The Dewey court did not hold that Reardon was bad law; rather, it held that disqualification motions based on current representation of clients with interests adverse to those of a former client were now to be analyzed under the language of RPC 1.9, as opposed to the three prongs set forth by Reardon. This does not mean that the reasoning of Reardon does not also support the language of the rule. In fact, the Dewey court recognized that much of the discussion in Reardon was consistent with the language of the new rules. And, since the Dewey court did not address the point of what test should be used to determine what is a "substantially related matter," this court is left to conclude that the reasoning of Reardon on this issue survives, if not as black-letter law, then at least for guidance on the factors that this court should consider in a determination of what is a "substantially related matter."
Opinion of Magistrate Judge Kugler at 27-28 (footnote omitted). Magistrate Judge Kugler is correct that Dewey in no way compels the conclusion that the "substantial relationship" analysis articulated in Reardon is no longer good law in New Jersey.
An opinion of the ACPE is not a "definitive state court decision interpreting the rules." Lite, supra. While an ACPE opinion is certainly persuasive, when it conflicts with a decision of a state court, it must give way. Opinion No. 654, in its attempt to narrow the "substantial relationship" test to instances of a "factual nexus," misconstrues Dewey, and is without support in the New Jersey case law. In fact, the broad application of RPC 1.9 has been reaffirmed since the adoption of the Rules. See, e.g., G.F. Indus. v. American Brands, 245 N.J. Super. 8, 13-14, 583 A.2d 765 (App. Div. 1990) (upholding disqualification under RPC 1.9(a), noting that "New Jersey has chosen to strictly construe" RPC 1.9, and quoting Reardon to the effect that all doubts must be resolved in favor of disqualification).
There is no doubt that each lemon law case presents distinct facts concerning the precise defect which is alleged in each instance. It is also undoubtedly true, as Magistrate Judge Kugler pointed out, that "it is illogical to suggest that each new lemon law case is a creature of a different stripe, presenting unfamiliar circumstances to an experienced lemon law attorney." Opinion of Magistrate Judge Kugler at 32. It is equally illogical to demand a factual nexus when the facts, i.e., the alleged mechanical or electrical defect in the vehicle, do not "drive" the decision to settle, or litigate a given case. When the facts, as in lemon law cases, "take the back seat," the absence or presence of a "factual nexus" between the former representation and the current one, cannot be dispositive.
Lemon law cases certainly present almost identical legal issues, regardless of the precise nature of the defect alleged in each case. Yet, a rule that defines "substantial relationship" to require no more than a similarity of legal issues would sweep too broadly. Although "gallons of ink have been consumed" in determining what the "substantial relationship" test compares, "the fundamental idea . . . seems to be information." ABA/BNA Lawyer's Manual on Professional Conduct at 51:215 (1996). Indeed, the case law reveals that disqualification is proper when the "similarity in the two representations is enough to raise a common-sense inference that what the lawyer learned from his former client will prove useful in his representation of another client whose interests are adverse to those of the former client." Id. (emphasis added)
In Kaselaan & D'Angelo Associates, Inc. v. D'Angelo, 144 F.R.D. 235 (D.N.J. 1992), Judge Simandle carefully analyzed the New Jersey case law, relying, in part, on Gray v. Commercial Union Ins. Co., 191 N.J. Super. 590, 468 A.2d 721 (App. Div. 1983).
Recognizing that plaintiff's attorney's longstanding relationship with Commercial Union would necessarily have made him privy to confidential and proprietary information of Commercial Union, including its claims and litigation philosophy, its methods and procedures for defending claims and litigation, and its information regarding the administration of various business operations, the court held that plaintiff's attorney could use such information to the substantial disadvantage of his former client Commercial Union. Thus, a substantial relationship was established even though such general information may not have been specifically relevant to the merits of the employment contract dispute.
Kaselaan & D'Angelo, 144 F.R.D. at 240-41.
London was in the identical position vis-a-vis GM as was Gray vis-a-vis Commercial Union Insurance. It is precisely because GM's claims and litigation philosophy and its methods and procedures for defending claims were known to London, combined with the fact that lemon law cases, while not factually identical, are undeniably similar, that each of the cases pursued by K&S must be deemed a "substantially related" matter to the cases London handled while representing GM in his prior employment. Accordingly, Magistrate Judge Kugler's decision to disqualify London under RPC 1.9(a)(1) was not clearly erroneous or contrary to law.
B. The Appearance of Impropriety
When New Jersey adopted the Rules of Professional Conduct in 1984, it added subsection 1.9(b), incorporating by reference the prohibitions of RPC 1.7(c). RPC 1.7(c), in pertinent part, mandates that:
in certain cases or situations creating an appearance of impropriety rather than an actual conflict, multiple representation is not permissible, that is, in those situations in which an ordinary knowledgeable citizen acquainted with the facts would conclude that the multiple representation poses substantial risk of disservice to either the public interest or the interest of one of the clients.