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MAIN EVENTS PRODUCTIONS, LLC v. LACY

September 12, 2002

MAIN EVENTS PRODUCTIONS, LLC. AND NEW JERSEY SPORTS PRODUCTIONS, INC., PLAINTIFFS,
V.
JEFF LACY, JOHN DOES (FICTITIOUS ENTITIES) AND RICHARD ROES (FICTITIOUS ENTITIES), DEFENDANTS.



The opinion of the court was delivered by: Debevoise, Senior District Judge.

OPINION

This matter comes before the court on plaintiffs', Main Events Productions, LLC. and New Jersey Sports Productions, Inc. appeal (collectively hereinafter referred to as "Main Events") from Magistrate Judge Hedges's order disqualifying Patrick English, Esq. from participating as counsel for Main Events. For the reasons set forth below, Magistrate Judge Hedges's order will be reversed.

STATEMENT OF FACTS

This action arises out of a Promotion Agreement (the "Agreement") between Main Events, a boxing promotion company, and Jeff Lacy, ("Lacy"), a professional boxer and former Olympian. The present controversy arises out of Lacy's termination of a promotion agreement entered into in November or December 2000 between himself, Main Events, and Lacy's manager, Shelly Finkel. The right to terminate is located in paragraph 11 of the Agreement. Patrick English, Esq., Main Events's general counsel, negotiated paragraph 11 of the Agreement with Lacy's attorney, Jim Wilkes, Esq. Mr. English and Mr. Wilkes were the only persons directly involved in the negotiation of paragraph 11.

Invoking paragraph 11 of the Agreement, Lacy attempted to terminate the Agreement in June 2002. After Lacy left Main Events, Mr. English was involved with communications with Lacy's counsel regarding the propriety of Lacy's termination. Plaintiffs commenced this action against Lacy on or about June 24, 2002 in the New Jersey Superior Court, Bergen County, Chancery Division, seeking inter alia a temporary restraining order and preliminary injunction. Lacy removed the action to this court on June 25, 2002. In a letter dated July 3, 2002, Lacy first raised the issue of Mr. English's disqualification.*fn1 On July 11, 2002, Mr. English indicated he would be involving Laurence Orloff, Esq. in the proceedings. On July 15, 2002, Mr. Orloff participated by phone on a hearing on the plaintiffs request for a temporary restraining order, which was denied. On that day, the court also scheduled an evidentiary hearing on the application for a preliminary injunction for August 20 and 21, 2002, and urged the parties to take all necessary discovery in anticipation of the hearing.*fn2 At some point after July 15, 2002, it appears that the parties tentatively agreed to conduct depositions the week of August 5, 2002. However, after the depositions where scheduled and during the week of July 22, 2002, Lacy informed Main Events that he intended to seek the disqualification of Mr. English from engaging in pre-trial representation of Main Events. By letter dated July 29, 2002, Lacy again raised the disqualification issue of Mr. English, and the matter was immediately referred to Magistrate Judge Hedges. By letter dated July 30, 2002, Mr. Orloff and Mr. English opposed the disqualification. On July 31, 2002, Magistrate Judge Hedges conducted a telephone conference with the parties, during which he disqualified Mr. English from representing Main Events in any phase of this action. In accordance with his ruling during the July 31, 2002 telephone conference, Magistrate Judge Hedges issued a letter order dated August 1, 2002, setting forth the basis of his July 31, 2002 oral ruling.

The evidentiary hearing on the application for the preliminary injunction was held on August 22 and 23, 2002, and Mr. English testified as to the negotiations surrounding paragraph 11. Mr. Orloff conducted the proceedings on behalf of Main Events. An order staying Magistrate Judge Hedges's order pending this appeal was issued on September 3, 2002, and entered on September 4, 2002. The request for a preliminary injunction was denied by an order and accompanying opinion dated September 4, 2002.

STANDARD OF REVIEW

A district court reviewing a magistrate judge's order on a non-dispositive motion may modify or vacate the order only if the ruling was "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(a); Loc. R. 72.1(c)(1); see Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1113 & n. 5 (3d Cir. 1986). "A finding is clearly erroneous `when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Dome Petroleum Ltd. v. Employers Mut. Liab. Ins. Co., 131 F.R.D. 63, 65 (N.J. 1990), quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948). A ruling is contrary to law if the magistrate judge has misinterpreted or misapplied applicable law. Gunter v. Ridgewood Energy Corp., 32 F. Supp.2d 162, 164 (N.J. 1998).

DISCUSSION

This appeal centers on the interpretation and application of Rule of Professional Conduct (RPC) 3.7(a) which states:

(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness except where:

(1) the testimony relates to an uncontested issue;

(2) the testimony relates to the nature and value of legal services ...

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