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Beilowitz v. General Motors Corp.

October 28, 2002

STEVEN I. BEILOWITZ D/B/A STEVENS BEIL, A SOLE PROPRIETORSHIP, PLAINTIFF,
v.
GENERAL MOTORS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Orlofsky, District Judge

FOR PUBLICATION

OPINION

In this hotly contested New Jersey Franchise Practices Act case, General Motors ("GM") has moved to disqualify Pepper Hamilton LLP ("Pepper Hamilton"), one of the law firms representing Plaintiff, Steven I. Beilowitz ("Beilowitz"). GM contends that Pepper Hamilton's legal representation of Urban Science, Inc. ("Urban Science"), GM's likely fact and expert witness in this case, warrants the disqualification of Pepper Hamilton from representing Beilowitz. For the reasons set forth below, I find that Pepper Hamilton's representation of Beilowitz in this matter does not present a conflict of interest under the New Jersey Rules of Professional Conduct, and I shall deny GM's motion to disqualify Pepper Hamilton.

I. BACKGROUND

Beilowitz brought this action against GM, alleging, inter alia, violations of the New Jersey Franchise Practices Act, N.J.S.A. § 56:10-1, et seq. (2002). This case arises out of GM's implementation of a Dedicated Distribution Agreement with all sellers of AC Delco automotive parts manufactured by GM, including Beilowitz, who contends that the program will "destroy" his business. Compl. ¶ 15; see also Decl. of Steven I. Beilowitz ("Beilowitz Decl.") 10/9/02, ¶ 2.

Two law firms, Pepper Hamilton and Sandals & Langer, LLP, represent Beilowitz in this lawsuit. Pepper Hamilton is a national law firm that has also represented Urban Science, an automotive-industry consulting firm that has worked with GM in developing and implementing the Dedicated Distribution Group ("DDG") program that precipitated this action. See Ex. A, attached to Certif. of Lois Goodman ("Goodman Certif.") 9/30/02; see also Certif. of Mark Riashi 10/14/02, ¶ 3. GM intends to call Urban Science as both a fact witness and an expert witness in this litigation. See Carpenter Letter Br. 9/30/02 at 3.

Two partners at Pepper Hamilton, one of the firms representing Beilowitz, have performed the legal work for Beilowitz and Urban Science that is at issue in this motion to disqualify. René Hansemann ("Hansemann"), a partner in Pepper Hamilton's Detroit office, has represented Urban Science for fourteen years, the last nine of which she has served as its General Counsel. See Decl. of René Hansemann, Esq. (undated) ("Hansemann Decl.") ¶ 2, attached to Certif. of Don P. Foster ("Foster Certif.") 10/10/02. Don Foster ("Foster"), a partner in Pepper Hamilton's Philadelphia office, represents Beilowitz in this action against GM. See Decl. of Don P. Foster, Esq. ("Foster Decl.") 10/10/02, ¶ 2. Before accepting the representation, Foster "confirmed that no one at Pepper Hamilton was representing General Motors in any matter and that no conflict otherwise existed which would preclude the representation." Id.

On August 30, 2002, Foster caused a subpoena to be served on Urban Science, an existing Pepper Hamilton client, on behalf of Beilowitz. See Ex. B, attached to Goodman Certif. This subpoena was soon withdrawn and again served on Urban Science on September 10, 2002 by Sandals & Langer, Pepper Hamilton's co-counsel in this case. See id., Ex. C. On September 16, 2002, Mary K. Pallett, Esq., of Pepper Hamilton's Detroit office, filed an ex parte motion to quash the subpoena, originally issued in the District of New Jersey, Case No. 02-CV-3870(SMO), by Pepper Hamilton's Philadelphia office. See Ex. E, attached to Goodman Certif. Ultimately realizing it was litigating against "itself," Pepper Hamilton withdrew from representing Urban Science in connection with the subpoena, as indicated in its correspondence of September 26, 2002 to GM's counsel. See id., Ex. H. *fn1

GM is represented in this case by the law firm of Carpenter, Bennett & Morrisey, which requested that Pepper Hamilton withdraw from representing Beilowitz because of Pepper Hamilton's representation of Urban Science, GM's intended fact and expert witness. See id., Ex. F. Pepper Hamilton refused to do so, id., Ex. I, and GM now moves to disqualify Pepper Hamilton.

This Court has jurisdiction over this action based on the diverse citizenship of the parties and the requisite amount in controversy, pursuant to 28 U.S.C. § 1332 (2002). I have considered this motion on the papers without oral argument pursuant to Fed. R. Civ. P. 78 (2002). For the reasons set forth below, GM's motion to disqualify Pepper Hamilton shall be denied.

II. LEGAL STANDARDS GOVERNING DISQUALIFICATION

In the United States District Court for the District of New Jersey, "[t]he Rules of Professional Conduct ["RPC"] of the American Bar Association as revised by the New Jersey Supreme Court shall govern the conduct of the members of the bar admitted to practice in this Court, subject to such modifications as may be required or permitted by Federal statute, regulation, court rule or decision of law." L. Civ. R. 103.1 (Gann 2002); see also N.J. Ct. R. 1:14 (Gann 2002). Conflicts of interest are governed by RPC 1.7, which provides, in relevant part:

(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client unless:

(1) the lawyer reasonably believes that representation will not adversely affect the relationship with the other client; and

(2) each client consents after a full disclosure of the circumstances and consultation with the client. . .

(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third ...


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