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Shelly Martin, et al v. Atlanticare

October 25, 2011

SHELLY MARTIN, ET AL., PLAINTIFFS,
v.
ATLANTICARE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Joel Schneider United States Magistrate Judge

[Doc. No. 18]

OPINION

After Lisa Grosskruetz, Esquire, did substantial substantive defense work on this case while employed by defendants' law firm, Morgan, Lewis and Bockius, LLP ("Morgan"), she left Morgan and went to work for plaintiffs' law firm, Costello & Mains, P.C. The question before the Court is whether Costello & Mains should be disqualified because it employed a side-switching attorney.*fn1 Under the circumstances presented herein the answer is an emphatic yes. Accordingly, defendants' Motion to Disqualify Plaintiffs' Counsel is GRANTED.

Discussion Fact Background

Plaintiffs Shelly Martin ("Martin"), Karla Mayfield and Donna Davis filed this lawsuit on October 28, 2010 in the Superior Court of New Jersey. The case was removed to federal court on December 28, 2010. All plaintiffs allege, inter alia, that defendants discriminated and retaliated against them because of their race and ethnicity.*fn2 Plaintiff Martin also alleges that her employer, ARMC, violated the New Jersey Wage and Hour Law and the Fair Labor Standards Act by not paying her for work in excess of forty hours per week. Martin brings this claim on behalf of herself and as a "collective action" on behalf of similarly situated workers.

Plaintiffs are represented by Costello & Mains ("CM"). The managing partner of the firm is Kevin Costello ("Costello" or "KC"). Defendants are represented by Morgan. As noted, the side-switching attorney at issue is Lisa Grosskruetz ("LG"). At the inception of the case, defendants' defense was coordinated by a three-attorney team at Morgan. The supervising partner-in-charge was Richard Rosenblatt, Esquire ("RR"). The other attorneys on the original defense team were LG and Prashanth Jayachandran, Esquire, ("PJ"). LG started working for Morgan on November 22, 2010 after having litigated employment matters in New Jersey for 23 years. PJ has been admitted to practice for 12 years and has extensive experience representing employers in wage and hour class and collective actions.

According to her time records LG started working on this case for Morgan on November 24, 2010. LG left Morgan on March 4, 2011.*fn3 During the approximately 41/2 months she was employed at Morgan LG worked 108.2 hours on the case. During the same time period RR worked only 13.1 hours on the case and PJ worked 49.6 hours. See PJ Declaration ¶3. This motion to disqualify arises from the fact that after LG left Morgan on March 4, 2011, she started working for CM on March 7, 2011.*fn4 See LG Declaration ¶1. LG subsequently left CM on April 15, 2011 and is no longer working for the firm.*fn5 Defendants were not notified of LG's side-switching before LG started working at CM. Defendants first learned that their former defense counsel was employed at their adversary's law firm when PJ noticed LG's name on CM's letterhead.

The parties do not dispute that LG is disqualified from representing plaintiffs pursuant to New Jersey Rule of Professional Conduct ("RPC") 1.9. Defendants argue that since LG is disqualified from representing plaintiffs, the disqualification should be imputed to CM pursuant to RPC 1.10. Defendants argue LG had "primary responsibility" for the defense of this matter while she was employed at Morgan and therefore she cannot be adequately screened. Defendants also argue that even if LG did not have primary responsibility CM still must be disqualified because LG was not adequately screened. In addition, defendants argue disqualification is appropriate because they did not receive timely written notice of LG's side-switching. Plaintiffs dispute that LG had primary responsibility for defendants' defense while she worked at Morgan. Plaintiffs also argue LG was adequately screened and that defendants received timely notice of LG's side-switching. Motions to Disqualify

In the District of New Jersey, issues regarding professional ethics are governed by L. Civ. R. 103. 1(a). This Rule provides that the Rules of Professional Conduct of the American Bar Association as revised by the New Jersey Supreme Court shall govern the conduct of members of the bar admitted to practice in the District. See L. Civ. R. 103.1(a); Carlyle Towers Condo. Ass'n, Inc. v. Crossland Sav., FSB, 944 F.Supp. 341, 344-45 (D.N.J. 1996). When deciding a motion to disqualify counsel the movant bears the burden of proof that disqualification is appropriate. City of Atlantic City v. Trupos ("Trupos"), 201 N.J. 447, 462-63 (2010); Maldonado v. New Jersey, ex rel., 225 F.R.D. 120, 136-37 (D.N.J. 2004). The movant's burden is a heavy one since "[m]otions to disqualify are viewed with 'disfavor' and disqualification is considered a 'drastic measure which courts should hesitate to impose except when absolutely necessary.'" Alexander v. Primerica Holdings, Inc., 822 F.Supp. 1099, 1114 (D.N.J. 1993) (quoting Schiessle v. Stephens, 117 F.2d 417, 420 (7th Cir. 1983) (internal quotation marks and citation omitted)). Nevertheless, "a motion for disqualification calls for [courts] to balance competing interests, weighing the need to maintain the highest standards of the profession against a client's right freely to choose his counsel." Trupos, 201 N.J. at 462 (citing Dewey v. R. J. Reynolds Tobacco Co., 109 N.J. 201, 218 (1988). In weighing this balance the Court is mindful that "there is no right to demand to be represented by an attorney [or law firm] disqualified because of an ethical requirement." Id.

When determining whether to disqualify counsel the Court must closely and carefully scrutinize the facts to prevent unjust results. Montgomery Acad. v. Kohn, 50 F.Supp.2d 344, 349 (D.N.J. 1999). In Steel v. Gen. Motors Corp., 912 F.Supp. 724, 733 (D.N.J. 1995) (citation omitted), the court noted that its balancing "involves a 'painstaking analysis of the facts and precise application of precedent.'" Id. In addition, "[t]he decision whether to disqualify a law firm by imputation is best undertaken on a case-by-case basis, weighing the facts as they exist at the time the motion to disqualify is made. New Jersey courts have consistently eschewed per se rules of disqualification, stressing the 'fact-sensitive nature' of a decision to disqualify counsel." Cardona v. Gen. Motors Corp., 942 F.Supp. 968, 976 (D.N.J. 1996).

Since disqualification issues are intensely fact-specific, it is essential to approach such issues with a sense of practicality as well as a precise understanding of the underlying facts. Murphy v. Simmons, Civ. No. 06-1535 (WHW), 2008 WL 65174, at *5 (D.N.J. Jan. 3, 2008)(citation and quotation omitted). Accordingly, the Court scrutinized the parties' detailed submissions and is deciding defendants' motion based on the extensive written record and oral argument.*fn6 The record includes the Declarations of Rosenblatt, Jayachandran, and Donna Michael-Ziereis, Esquire (defendants' Associate General Counsel). The record also includes the Certifications of Grosskreutz, Costello and Deborah L. Mains, Esquire. In addition, the Court reviewed in camera Morgan's bills from November 22, 2010 to February 28, 2011, which include each timekeeper's contemporaneous descriptions of his or her work. The Court also reviewed in camera a representative sample of LG's privileged e-mails while she worked at Morgan.

In order to decide defendants' motion it was not necessary to hold a formal evidentiary hearing or to hear LG's live testimony. New Jersey case law is quite clear that a motion to disqualify should ordinarily be decided on the basis of affidavits and documentary evidence except where "the court cannot with confidence decide the issue on the basis of the information contained in those papers...." Dewey, 109 N.J. 201, 222 (1988). In Dewey the Court also noted that "a hearing should be held only when it is indispensable to resolution of the [disqualification] issue." Id. This is necessary to protect against the revelation of client confidences which the RPC's are designed to protect. Id. at 222-23. Given the detailed record, the Court determined that live testimony was not necessary.

RPC 1.9 and 1.10(c)

RPC 1.10(c) provides the framework for deciding defendants' motion.*fn7 This RPC reads:

(c) When a lawyer becomes associated with a firm, no lawyer associated in the firm shall knowingly represent a person in a matter in which that lawyer is disqualified under RPC 1.9 unless,

(1) the matter does not involve a proceeding in which the personally disqualified lawyer had primary responsibility;

(2) the personally disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; and

(3) written notice is promptly given to any affected former client to enable it to ascertain compliance with the provisions of this Rule.

As RPC 1.10(c) dictates, the Court must first determine whether LG is disqualified under RPC 1.9, which governs duties to former clients. RPC 1.9 provides:

(a) A lawyer who has represented a client in a matter shall not thereafter represent another client in the same or a substantially related matter in which that client's interests are materially adverse to the interests of the former client unless the former client gives informed consent confirmed in writing.

(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client, (1) whose interests are materially adverse to that person; and

(2) about whom the lawyer, while at the former firm, had personally acquired information protected by RPC 1.6 and RPC 1.9(c) that is material to the matter unless the former client gives informed consent, confirmed in writing.

As has previously been discussed, LG joined CM immediately after leaving Morgan where she worked on the defense of the present case. Although plaintiffs minimize LG's role while at Morgan, they acknowledge that LG is disqualified from working on the case pursuant to RPC 1.9(a) and (b).

Having determined that LG is disqualified from representing plaintiffs pursuant to RPC 1.9, the pertinent issue becomes whether LG's disqualification is imputed to CM. To make this determination the Court must assess the three elements of RPC 1.10(c). First, whether LG had primary responsibility for the case while she worked at Morgan. Second, whether LG was adequately screened upon joining CM. Third, whether timely notice was provided to defendants of LG's side switching. The Court must conduct a ...


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