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Oswall v. Tekni-Plex

April 17, 1997

DONALD OSWALL, PLAINTIFF,
v.
TEKNI-PLEX, INC., DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Ocean County.

Approved for Publication April 17, 1997.

Before Judges Michels, Muir, Jr., and Kleiner. The opinion of the court was delivered by Kleiner, J.A.D.

The opinion of the court was delivered by: Kleiner

The opinion of the court was delivered by

KLEINER, J.A.D.

Plaintiff Donald Oswall, a former employee of defendant, Tekni-Plex, Inc., instituted a breach of contract action against defendant. After filing its answer and a counterclaim, defendant served its former president, Tom Y.C. Tang, with a subpoena to appear at a deposition on December 14, 1995. Tang's attorney, Edwin C. Landis, Jr., a partner in the law firm Meyner and Landis, advised defendant's counsel that Tang would appear provided that he, Landis, was permitted to accompany him. Defendant's counsel objected and filed a motion to compel Tang's appearance and to disqualify Landis and his law firm from representing Tang. The motion Judge ordered that: (1) Tang appear at the deposition; and (2) the deposition be conducted in a court conference room adjoining the Judge's chambers. The Judge decided that if Tang proved to be a hostile witness at the deposition, she would then consider defendant's motion to disqualify Landis.

On February 9, 1996, Tang, accompanied by Landis, appeared at the deposition, which was not completed on that date. *fn1 Afterward, defendant ordered an expedited transcript of the partially completed deposition and renewed its motion to disqualify Landis. Defendant's counsel provided the motion Judge with a copy of the deposition transcript and cited nineteen questions to which Landis had objected and to which he had directed Tang not to answer. Defendant also sought, by separate motion, leave to name Tang as a third-party defendant in the Oswall litigation. *fn2

The motion Judge: (1) denied defendant's motion to name Tang as a third-party defendant; (2) declared that Landis' firm would be disqualified from representing Tang at the Conclusion of his deposition; (3) ordered that Tang appear at that deposition on a date to be scheduled, either with new counsel or without representation; (4) denied Landis' application for a stay pending a motion for leave to appeal to this court; and (5) denied plaintiff's cross-motion for summary judgment. On an emergent application by Tang, we granted leave to appeal to consider the propriety of the disqualification of Tang's counsel and entered an order staying all further proceedings in the underlying litigation pending Disposition of the interlocutory appeal. We now affirm.

I

Tekni-Plex, Inc., which was formed in 1967, produces packaging products for the pharmaceutical and other industries. Tang became the sole shareholder of Tekni-Plex in 1986. At that time, Tang was also president and chief operating officer of the company.

The law firm Meyner and Landis (M&L) represented Tekni-Plex between 1971 and 1994. During those twenty-three years, M&L's representation included a variety of legal matters including litigation and general corporate matters. During the same period, the law firm also represented Tang personally in real estate matters. In 1986, M&L represented both Tang and the old Tekni-Plex in a leveraged buy-out of the other shareholders of Tekni-Plex.

Tang sold Tekni-Plex on March 18, 1994. The sale occurred as follows:

1. The TP Acquisition Company, a shell acquisition company, was formed for the purpose of merging with Tekni-Plex;

2. Pursuant to an "Agreement and Plan of Merger," TP Acquisition Company purchased all of the shares of Tekni-Plex, Inc. from Mr. Tang-for over 43 million dollars.

3. On the closing date, March 18, 1994, TP Acquisition Company became Tekni-Plex, Inc.

4. A certificate of merger was executed prior to the closing date, and the surviving company assumed all of the "tangible and intangible assets, properties and rights" of Tekni-Plex, Inc.

M&L represented Tekni-Plex throughout the negotiations and merger.

Following the sale, the shareholders of the acquisition company became the owners of the new Tekni-Plex, and the directors and officers of the acquisition company became the directors and officers of the new Tekni-Plex. The new Tekni-Plex, using its predecessor's manufacturing facilities, continued to conduct the same business and manufactured the same products as the old Tekni-Plex. Additionally, the new Tekni-Plex inherited all of the contractual rights and liabilities of the old Tekni-Plex. While new Tekni-Plex employed most of the same people, there were some key changes.

The merger agreement contained approximately thirty-three pages of representations and warranties to which Tang attested as a selling shareholder and as president of Tekni-Plex. It also contained a provision that all disputes arising from the agreement would be subject to arbitration in New York.

A.

As a result of an alleged misrepresentation in the merger agreement, new Tekni-Plex filed a claim with the American Arbitration Association. When M&L filed an appearance on behalf of Tang, Tekni-Plex's new counsel sought to disqualify the law firm because the firm had represented Tekni-Plex for over twenty years. Tekni-Plex filed two actions in the New York Supreme Court. The first sought to enjoin M&L from representing Tang in any action against Tekni-Plex; the second sought to disqualify M&L from representing Tang in the then pending arbitration.

Judge Cahn of the New York Supreme Court issued two orders: one enjoined M&L from representing Tang in the arbitration; the other enjoined M&L from disclosing to Tang any information obtained from Tekni-Plex and ...


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