On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3633-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Sapp-Peterson and Ostrer.
By leave granted, defendants, The Quiznos Franchise Company, The Quizno's Franchise Company, LLC, f/k/a The Quizno's Corporation, Quizno's Franchising, LLC, Quizno's Franchising II, LLC, QFA Royalties, LLC, The Quizno's Master, LLC, Larry Hill, John Barry, and Eli Chediak (collectively "defendants"), appeal from the trial court order denying their motion, pursuant to Rules 1.9 and 1.10 of the Rules of Professional Conduct (RPC), to disqualify the law firm, Marks & Klein, LLP ("M&K"), from representing plaintiffs, Meena Mody, as executrix of the estate of Jasvant Mody, and Mukesh Mody. We reverse.
M&K has represented franchisees of Quiznos, a restaurant chain, for more than seven years. In 2006 and 2007, M&K filed four complaints against Quiznos related to claims by current and former Quiznos operators. The litigation involved allegations related to Quiznos' business model, system, and pre-sale disclosures. During the course of the litigation, M&K sought class certification. The proposed class included all former and current Quiznos franchisees as well as "franchisees who signed franchise agreements but never operated a restaurant." The parties eventually reached a global settlement that resulted in the four complaints being consolidated and a class certified, by agreement, for settlement purposes. On August 13, 2010, the court granted M&K's motion to approve the settlement, and final judgment was entered. Plaintiffs in the present matter, although representatives of the class that was certified, opted out of the class.
The firms Cheng Cohen, LLC, and Perkins Coie, LLP, were counsel for Quiznos during this prior litigation. Andrew Bleiman was an associate at Cheng Cohen during the litigation and was one of the attorneys involved. Within months of the settlement, Bleiman left Cheng Cohen and joined M&K. On May 12, 2011, M&K commenced the underlying action on behalf of plaintiffs. The complaint raises allegations similar to those in the settled matter and included as defendants the same Quiznos defendants named in the settled action.
In a letter to plaintiffs' counsel, Justin M. Klein, dated June 29, 2011, Quiznos' attorney, Leonard H. MacPhee, raised the issue of Bleiman's prior representation of Quiznos-related entities. The letter, in relevant part, stated:
We understand that Marks & Klein, LLP recently hired Andrew Bleiman as the Managing Attorney of its Illinois office. As you know, at his former firm, Mr. Bleiman represented various Quiznos-related entities in litigation relating to franchise disputes, including those raised by your firm in, among other cases, the Siemer, Brunet and Westerfield cases, which obviously raised substantially similar claims and issues as those alleged in the Mody case your firm recently filed.
. . . As part of Mr. Bleiman's representation of Quiznos[,] he was entrusted with confidential, proprietary, attorney-client and work product privileged documents and information, including litigation strategies and defense theories utilized to defend against claims such as those asserted by Mody.
In light of the conflicts of interest described above, Quiznos demands that Marks & Klein, LLP immediately cease further representation of Mody in this matter.
M&K did not voluntarily withdraw. In lieu of filing an answer, defendants, on August 5, 2011, moved to dismiss the complaint, which motion was denied by the court. Thereafter, on September 29, 2011, defendants filed their motion to disqualify M&K.
In ruling on defendants' motion, the motion judge found the underlying matter and the settled matters were substantially related. The judge noted the "similarity in the drafting of the complaints themselves are substantial" and that "Bleiman has represented Quiznos in matters that are nearly identical to the instant action[.]" The judge also found it "clear that Mr. Bleiman acquired information protected by RPC 1.6" and "was entrusted with confidential information, proprietary attorney/client and work product privileged documents and information." The judge thus concluded that all the requirements for Bleiman's personal disqualification pursuant to RPC 1.9 had been met.
Turning to the issue of M&K's disqualification, the judge next found that although Bleiman was substantially involved in the prior litigation, he was "not persuaded that [Bleiman] had primary responsibility in the prior matter." He therefore considered whether there had been compliance with the requirements of screening pursuant to RPC 1.10 and found that M&K complied in part, leading him to conclude: "While the notice in this matter could have been more prompt and detailed, I'm satisfied that there is substantial compliance. And any delay or lack of detail was not unduly prejudicial and does not warrant the sanction of disqualification. ...