Opinion
No. CV 09 5029078
September 3, 2010
MEMORANDUM OF DECISION ON MOTION TO DISQUALIFY
The substitute plaintiff, BAC Home Loans Servicing, L.P., has moved to disqualify Joseph R. Sastre, Esq. and the law firm of William C. Rivera from representing the defendant, Jose Morales, in this matter due to a conflict of interest pursuant to Connecticut Rules of Professional Conduct, Sections 1.6, 1.9 and 1.10.
Factual and Procedural History
This court has previously disqualified Joseph R. Sastre, Esq. and the law firm of William C. Rivera from representing the defendant in the case of U.S. Bank National Association as Trustee v. Jose Morales, Docket No. CV-09-5029670, presently pending in this court. In that case, the court found that the Chinese Wall was ineffective to prevent inadvertent disclosure of confidential information because it had not even prevented Attorney Sastre from appearing for the defendant in connection with a court-annexed mediation several months after he had filed a Motion to Terminate Mediation on behalf of the plaintiff in the same case.
After the decision in the Morales case, the respective plaintiffs who were previously represented by Attorney Sastre have filed motions to disqualify in the following eight cases in which Attorney Sastre (as opposed to another attorney from the firm of Hunt Leibert Jacobson, PC) had actually represented the plaintiff in some aspect of the same action: Countrywide Home Loan v. Bolivar, Docket No. HHD CV-095026873S; Citimortgage, Inc v. Ventura, Docket No. HHD CV-095028462S; Countrywide Home Loan v. Morales, Docket No. HHD CV-095029078S; Chase Home Finance v. Ysabel, HHD CV-095029461S; Bank of America, N.A. v. Aguirre, HHD CV-096003791S; Deutsche Bank National v. Guerrero, HHD CV-096003889S; Residential Credit Solutions, Inc. v. Ramirez, HHD CV-096004361S; Citimortgage, Inc. v. Helena, HHD CV-096004970S.
The plaintiff has alleged that Attorney Sastre was employed by Hunt Leibert Jacobson, PC ("Hunt Leibert") from January 27, 2009 through April 23, 2010. He was hired to attend foreclosure mediations and to handle the foreclosure Short Calendar on an occasional basis. During his employment at Hunt Leibert Attorney Sastre handled hundreds of mediations across the state on behalf of virtually every client of Hunt Leibert.
Attorney Sastre prepared to attend and attended a mediation in this case on September 11, 2009. Attorney Rivera and the defendants concede that Attorney Sastre must be disqualified from representing the defendants.
The following portion of this court's decision in the Morales case is relevant to the present motion and the court takes judicial notice of and adopts the findings made in that case:
A hearing on the present motion was scheduled for June 15, 2010 and was continued for two weeks until June 29, 2010 so that the parties could present evidence, if necessary. That hearing occurred and Attorney Rivera testified that prior to employing Attorney Sastre, he was a solo practitioner. His clients are primarily Spanish speaking. He further testified that 70% of his business is composed of foreclosure defense work and 70% of that business involves Hunt Leibert and its clients. Attorney Rivera is one of only a few Spanish speaking attorneys who do foreclosure work. Attorney Sastre does not speak Spanish. Attorney Rivera further testified that the defendant, Mr. Morales, had been his client for a long time and he (Attorney Rivera) believed that Mr. Morales would be upset if Attorney Rivera could not represent him in this case.
Attorney Rivera became acquainted with Attorney Sastre while Attorney Sastre worked for Hunt Leibert. He and Attorney Sastre had several conversations about the possibility of Attorney Sastre leaving Hunt Leibert and going to work for Attorney Rivera doing foreclosure mediation defense. The issue of conflict of interest never came up in those conversations. It was not until after Attorney Rivera hired Attorney Sastre that the issue of conflict of interest ever arose. Neither Attorney Rivera nor Attorney Sastre ever checked with Hunt Leibert or its clients to determine if the clients would waive any potential conflicts of interest which would arise when Attorney Sastre went to work for Attorney Rivera.
After Attorney Rivera hired Attorney Sastre they agreed that Attorney Sastre would not work on any cases in which Hunt Leibert represented the plaintiff unless those cases were commenced after Attorney Sastre had left the employ of Hunt Leibert. However, there were no measures taken by Attorney Rivera to ensure that Attorney Sastre's work was so limited. It was only after the conflict arose in the present case that Attorney Rivera took any measures to avoid future conflicts of interest: he had his staff go through all of the files and segregate them in a place where Attorney Sastre did not have access to them.
At the hearing Attorney Sastre also testified that he did nothing to check with Hunt Leibert or its clients about potential conflicts of interest before leaving Hunt Leibert. He further testified that Hunt Leibert did not ask him to relinquish any confidential information.
Ruling on Motion to Disqualify, June 30, 2010, pp. 2-3.
A hearing on the Motion to Disqualify in this case and in the other seven cases set forth above occurred on August 5, 2010. At the hearing the parties presented argument. The defendants relied extensively on the decision by this court in Milne v. Ryea, 2004 Conn.Super. LEXIS 313 (January 26, 2004) [ 36 Conn. L. Rptr. 420], where Judge Beach requested that the law firm who was to be disqualified provide a written description of the procedures it would adopt to ensure that no inadvertent disclosure of confidential information occurred. This court requested Attorney Rivera to provide a similar document. He filed an Affidavit dated August 9, 2010 in which he set forth the following procedures:
9. After [Attorney Sastre was sent to a mediation on the Morales file], the files were reorganized and our staff was briefed on the following terms: (1) all files would be clearly marked on their exterior so that the return date and bank's law firm were clearly visible, (2) that all the foreclosure files would be kept in the back office, which remains locked or occupied by office staff at all times, (3) files would be taken out of the office only on an as needed basis, and (4) Attorney Sastre would no longer work on the Morales file and would continue to work only on the "new or not Hunt Leibert" files. The office staff was briefed on how to identify those files Attorney Sastre could work on, and Attorney Sastre vowed to browse the exterior of any file for its identifying information before beginning any work on that file.
10. Now, Attorney Sastre has begun working from our Hartford satellite office, where no files are kept and Attorney Sastre is alone with his work for almost the entire week except Tuesday afternoons when I meet with clients at that location.
11. Attorney Sastre and I have never had a single conversation about the bank's or Hunt Leibert's tactics or theories and I have forbidden Attorney Sastre from having any discussion, doing any work, or giving any advice on Hunt Leibert files, indefinitely.
12. My firm has quarantined Attorney Sastre so that assuming he has confidential information he cannot discuss such information with me or my staff and we cannot inquire about such information. This screening is by way of instruction to Attorney Sastre and my staff regarding the handling of Hunt Leibert files and his physical isolation from those files.
The court notes that notwithstanding the representations in Attorney Rivera's affidavit that Attorney Sastre would have no involvement whatsoever in this case, Attorney Sastre took Attorney Rivera's acknowledgment on the affidavit.
In Klein v. Bristol Hospital, 50 Conn.Sup. 160, 915 A.2d 942 (2006), some of the defendants sought to disqualify the plaintiff's law firm because one of its partners, Attorney Edwards, had worked for the law firm who represented one of the defendants. Attorney Edwards had done no work on the case and had no knowledge of the case. The opinion of the court in Klein stressed the difference between a situation like the present one where the representation involves the same case and one where the attorney with the alleged conflict has no knowledge of and had never worked on the same case:
Because the defendants seek to disqualify the Stratton firm, the principal ethical provision implicated is rule 1.10(b) of the Rules of Professional Conduct which provides: When a lawyer becomes associated with a firm, the firm may not knowingly represent a person in the same or a substantially related matter in which that lawyer, or a firm with which the lawyer was associated, had previously represented a client whose interests are materially adverse to that person and about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(2) that is material to the matter.
It is clear from rule 1.10(b) that not all representation adverse to a migrating lawyer's former clients is forbidden to his new firm. Rather, the lawyer's new firm may not represent a client in the same or a substantially related matter in which its new lawyer, or a firm with which he was previously associated, had represented a person whose interests are materially adverse to the new firm's client, and in which the new lawyer had acquired confidential information about his former client which is material to the new matter.
The Connecticut Supreme Court has succinctly stated the rationale for requiring disqualification in certain cases involving a lawyer's former clients and established a balancing test for the court to apply in considering such a motion: "Disqualification of counsel is a remedy that serves to enforce the lawyer's duty of absolute fidelity and to guard against the danger of inadvertent use of confidential information . . . In disqualification matters, however, we must be solicitous of a client's right freely to choose his counsel . . . mindful of the fact that a client whose attorney is disqualified may suffer the loss of time and money in finding new counsel and may lose the benefit of its longtime counsel's specialized knowledge of its operations . . . The competing interests at stake in the motion to disqualify, therefore, are: (1) the defendant's interest in protecting confidential information; (2) the plaintiffs' interest in freely selecting counsel of their choice; and (3) the public's interest in the scrupulous administration of justice." (Citations omitted; internal quotation marks omitted.) Bergeron v. Mackler, 225 Conn. 391, 397-98, 623 A.2d 489 (1993).
In so doing the court has allied itself with the majority view of the core interest at stake in rules 1.9 and 1.10, the protection of confidential information gained from a former client by the attorney and at risk of disclosure in his subsequent adverse representation. See 1 G. Hazard W. Hodes, The Law of Lawyering (3d Ed. 2001 2005-1 Sup.) § 13.5, p. 13-13.
Sometimes the risk of disclosure of confidential information is clear, as when the new firm seeks to represent a client with interests adverse to its new lawyer's former client in the same legal dispute. Also, when "the relationship between the issues in the prior and present cases is patently clear or when the issues are identical or essentially the same;" (internal quotation marks omitted); Bergeron v. Mackler, supra, 225 Conn. 399; the cases will be found to be "substantially related," and " the receipt of confidential information that would potentially disadvantage a former client is presumed." Id.
Klein v. Bristol Hospital, 50 Conn.Sup. at 163-67. Emphasis added.
Rule 1.9 of the Rules of Profession Conduct provides:
(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.
The defendant has conceded that Rule 1.9 bars his representation of the defendant in this same matter.
Rule 1.10 of the Rule of Professional Conduct provides:
Rule 1.10. Imputation of Conflicts of Interest: General Rule
(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.
(b) When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless:
(1) The matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and
(2) Any lawyer remaining in the firm has information protected by Rules 1.6 and 1.9(2) that is material to the matter.
(c) A disqualification prescribed by this Rule may be waived by the affected client under the conditions stated in Rule 1.7.
(d) The disqualification of lawyers associated in a firm with former or current government lawyers is governed by Rule 1.11.
While the Rules of Professional Conduct in some states specifically provide for the avoidance of disqualification through a conflict screening process, or "Chinese wall," see, i.e., Holcombe v. Quest Diagnostics, Inc., 675 F.Sup.2d 515, 518-19 (E.D.Pa., 2009), Connecticut's Rules of Professional Conduct contain no reference to any conflict screening process.
The defendant relies on Judge Beach's decision in Milne v. Ryea, 2004 Conn.Super. LEXIS 313 (January 26, 2004). In that case, an attorney represented a defendant in a personal injury action for one firm and was then laterally hired by a firm who was representing the plaintiff in that same personal injury action. The defendant in that action thereafter moved to disqualify both the underlying attorney and the new firm. Judge Beach noted in his decision that "if there is an opportunity for accidental disclosure in these circumstances, a breach of confidence will be presumed and disqualification is an appropriate remedy." Id. Judge Beach further stated that "the court, the public and Ms. Ryea need to be satisfied, and indeed guaranteed, that there can be no accidental disclosure. I believe that such guarantee could be made if an adequate `Chinese wall' were constructed." Id.
The court found that there was no specific evidence presented detailing the Chinese wall erected at the new firm. The court thereafter ordered that the underlying lawyer submit an affidavit which described in detail the procedures which were implemented in the construction of the Chinese wall and that the court would review such affidavit to determine if such procedures were considered adequate. There is no record of any subsequent ruling and/or decision on the effectiveness of the screening process erected in this action or the outcome of the Motion to Disqualify.
Judge Beach did not elaborate on what makes a Chinese Wall adequate to overcome disqualification of the underlying firm. However, he cited with approval the procedures set forth in Kala v. Aluminum Smelting Refining Co., 81 Ohio St.3d 1, 688 N.E.2d 258 (1998), and Clinard v. Blackwood, 46 S.W.3d 177 (Tenn. 2001).
In Kala v. Aluminum Smelting Refining Co., 81 Ohio St.3d 1, 688 N.E.2d 258 (1998), the Supreme Court of Ohio dealt with a classic "side-switching attorney" case where there was a lateral hire of an attorney who formerly worked on plaintiff's wrongful termination case at his initial law firm and thereafter took a position with the firm that was handling the defense in that same matter. The court in Kala used a three-part analysis in determining whether an attorney and/or firm may be disqualified:
(1) Is there a substantial relationship between the matter at issue and the matter of the former firm's prior representation;
(2) If there is a substantial relationship between these matters, is the presumption of shared confidences within the former firm rebutted by evidence that the attorney had no personal contact with or knowledge of the related matter; and
(3) If the attorney did have personal contact with or knowledge of the related matter, did the new law firm erect adequate and timely screens to rebut a presumption of shared confidences with the new firm so as to avoid imputed disqualification?
Id. at 13.
The court determined under the first two parts of such analysis that there was a substantial relationship between the matter at issue and the former firm's representation and there was no evidence that the attorney in question had no personal contact or knowledge of the related matter. Under the third part of the analysis the court determined whether the new firm erected adequate and timely screens a/k/a Chinese wall to rebut the presumption of shared confidences with the new firm.
The Ohio Supreme Court referenced the factors to be considered in determining whether the conflict screening procedures erected were adequate:
Factors to be considered in deciding whether an effective screen has been created are whether the law firm is sufficiently large and whether the structural divisions of the firm are sufficiently separate so as to minimize contact between the quarantined attorney and the others, the likelihood of contact between the quarantined attorney and the specific attorneys responsible for the current representation, the existence of safeguards or procedures which prevent the quarantined attorney from access to relevant files or other information relevant to the present litigation, prohibited access to files and other information on the case, locked case files with keys distributed to a select few, secret codes necessary to access pertinent information on electronic hardware, instructions given to all members of a new firm regarding the ban on exchange of information, and the prohibition of the sharing of fees derived from such litigation. Cromley, 17 F.3d at 1065; Schiessle, 717 F.2d at 420-21 (presumption not rebutted because no "institutional mechanisms" were in effect to insulate quarantined attorney from rest of firm); LaSalle Natl. Bank v. Lake Cty., 703 F.2d 252, 259 (C.A. 7, 1983); United States v. Goot, 894 F.2d 231, 235-36 (C.A. 7, 1990).
A very strict standard of proof must be applied to the rebuttal of this presumption of shared confidences, however, and any doubts as to the existence of an asserted conflict of interest must be resolved in favor of disqualification in order to dispel any appearance of impropriety. LaSalle Natl. Bank v. Lake Cty., 703 F.2d 252, 257 (C.A.7, 1983). Id. at 10 (emphasis added).
The court also stated that the additional factor of timing was an important factor in determining whether a screening process is adequate. The court stated:
First, the screening devices must be employed as soon as the disqualifying event occurs. See LaSalle Natl. Bank v. Lake Cty., 703 F.2d 252, 259 (C.A.7, 1983); Cromley, 17 F.3d at 1065. Very few cases address how early the disqualifying event occurs. In the Manning case, a conflict arose with the attorney's former firm only after the attorney, with the former client's knowledge, had moved to an uninvolved law firm. In Cromley, the attorney and the new firm agreed that "`absolutely nothing of a substantive nature regarding the instant lawsuit would occur' until decisions were made and the clients were made aware of them." Cromley, 17 F.3d at 1066. Other cases reviewed have been silent as to the issue of when screening procedures were timely employed, although all cases agree that the screens must be in place when the attorney joins the firm. Instituting screens after a motion to disqualify is too late. LaSalle Natl. Bank v. Lake Cty., 703 F.2d 252, 259 (C.A.7, 1983) (screens instituted only at time of motion to disqualify were too late despite attorney's affidavit that he had shared no information with new firm). Accordingly, a court must weigh the timeliness of the screening devices. Id. at 11 and 12 (emphasis added).
The court also stated that:
In addition, a law firm contemplating hiring counsel who had been directly involved on the opposing side also has a duty to disclose to its own client that such a hiring may place the firm in conflict and could result in disqualification. The law firm may have to subordinate its desire to augment its staff against its duties to its client and avoid placing the firm's interests above the client's interests. Id. at 12 (emphasis added).
The Ohio Supreme Court in Kala ultimately determined that under this set of egregious facts, the appearance of impropriety was so great that the attempts to erect a Chinese wall were insufficient to overcome the appearance of impropriety and affirmed the disqualification of the new firm.
In Clinard v. Blackwood, 46 S.W.3d 177 (Tenn. 2001), the Tennessee Supreme Court found a conflict arising from a former client representation that would prohibit representation of the present client by the new firm based upon the appearance of impropriety. The court's analysis in reaching its decision looked at the three steps used to determine whether counsel's prior representation mandated disqualification of the new firm and the rebuttable presumption of shared confidences. The three-step analysis used in this case was similar to that used in the Kala case. The court found there was a substantial relationship between the representation of the former client and the current representation of the new client and that a presumption of shared confidence existed. The court then looked at the list of factors for an acceptable screening process and what was actually employed in this case. The court considered:
the following non-exclusive list of factors to determine "whether the screening mechanisms reduce to an acceptable level the potential for prejudicial misuse of client confidences" such that the presumption of shared confidences is rebutted:
1) the structural organization of the law firm or office involved,
2) the likelihood of contact between the "infected" person and the specific attorneys and support personnel involved in the present representation,
3) the existence of law firm or office rules which prevent the "infected" person a) from access to relevant files or other information pertaining to the present litigation and b) from sharing in the fees derived from such litigation.
Evidence supporting these factors must be "objective and verifiable."
Id. at 184.
The firm against which disqualification was sought had a written policy entitled "Conflict of Interest Screening Procedure" in place for approximately eight years prior to this issue arising in this case. Such policy stated:
The screening policy provides as follows when a conflict of interest is detected in regard to a newly hired attorney:
(a) the Managing Partner will compile a list of all matters where a potential conflict exists because of previous employment;
(b) all attorneys, summer associates, paralegals, and legal secretaries will be instructed in writing not to discuss the specified matter or matters with, or in the presence of, the newly hired individual or to permit such individual to have access to any files pertaining to such matters;
(c) all attorneys, summer associates, paralegals, and legal secretaries will be instructed in writing to place brightly colored labels on all files pertaining to the specific client or matter which will state the following: The person listed below is not allowed to access this file and no discussions should be had with or around this person regarding this case. This is in accordance with Ethics Opinion 89-F-118 of the Tennessee Board of Professional Responsibility. (Individual's name);
(d) all attorneys in the Firm will be advised that no reference shall be made to the case or matters in the Firm's daily newsletter;
(e) the newly hired attorney . . . shall, if possible, be located on a different floor or on a different part of the floor, than the attorneys, paralegals and secretaries involved in the case(s) under question; and
(f) the Managing Partner will fully inform any affected client of the conflict in writing before the new employee reports to work.
Id. at 185.
In a Connecticut superior court decision which cites to Judge Beach's decision in the Milne case regarding construction of a Chinese wall, the court in Laprise v. Paul, 2007 Conn.Super. LEXIS 3236 (December 7, 2007 (Leuba, JTR) [ 44 Conn. L. Rptr. 643], faced a situation where an associate left a firm which was representing a plaintiff, where that associate had personal knowledge of such file, and thereafter went to work for the firm which was representing the defendant. The court found that upon the discovery of the potential conflict with her new firm, she immediately notified the new firm and that prior to the associate starting her new position, a conflict screening process a/k/a Chinese wall was created. The court further found that:
Before the new associate began work, she was instructed that she was not to see the file in their office, not to talk with anyone about the case and if she was asked about the file to let them know she was not permitted to discuss the file. The Bai firm's activities are divided into two separate divisions: general litigation and medical malpractice. Her assignment in the Bai firm was limited to the medical malpractice division. Her office was in a different location from attorneys or other staff working on the Laprise file. The plaintiff's case was being handled in the general litigation division. She was not permitted to see any files in the general litigation division. She was denied access to the file room used for general litigation files. Also, on the same day as the associate arrived a memo was sent to all employees of the Bai firm informing them of the restrictions on the associate's activities as it related to that case. A special label was placed on the file to inform anyone that the associate was not allowed access to the file. The associate has thus been both organizationally and physically separated from the case at bar in the Bai firm.
Id. at *3
The court stated that the multitude of steps taken by the new firm at the start of her employment to avoid the accidental disclosure of any of the former client's confidential information were sufficient. The evidence of such screening process in place before the new associate began work rebutted the presumption to avoid accidental disclosure of the former client's confidential information.
The defendant has also cited Horch v. United of Omaha Life Insurance Co., 1999 WL 511165 (July 2, 1999, Devlin, J.) [ 25 Conn. L. Rptr. 18]. In Horch, the affidavits concerning the erection of a Chinese wall showed that such screening and protective measures were strictly observed by the new firm and laterally hired attorney. The court also noted as to the timing of the erection of the screening process that "it is apparent that this issue was anticipated and immediate efforts were made to seal off Attorney O'Shea from this case." Id. at *2.
Restatement (Third) Law Governing Lawyers (2000) Volume 2 Section permits screening as a means to avoid imputed disqualification of the entire firm. The Official Commentary (in comment d(ii)) "screening-adequacy of measures" states:
Screening must assure that the confidential client information will not pass from the personally prohibited lawyer to the other lawyers in the firm. The screened lawyer should be prohibited from talking to other persons in the firm about the matter as to which the lawyer is prohibited, and from sharing documents about the matter . . . Further, the screened lawyer should receive no direct financial benefit from the firm's representation, based upon the outcome of the matters, such as a financial bonus or a larger share of the firm income directly attributable to the matter . . . An adequate showing of screening requires affidavits by the personally prohibited lawyer and by the lawyer responsible for the screening measures to be submitted; a tribunal can require that other appropriate steps be taken.
In that same Commentary, the Restatement indicates that "if a lawyer in the law firm assertedly observing screening measures in fact breaches the screen . . . the tribunal should take appropriate corrective measure." The screen should no longer be considered adequate to prevent disqualification of the affiliated lawyers. Contempt might be an appropriate remedy to the extent that the breach of the screen was knowing, deliberate and in violation of direct undertakings to the tribunal.
The size and structure of the law firm employing screening procedures to avoid disqualification is another factor in evaluating the adequacy and effectiveness of such procedures. The decisions in both Kala and Clinard stress the importance of the firm's size and structure to evaluate if an effective screening process can be built in that office. In a recent decision, the United States District Court for the Eastern District of New York issued a decision in Filippi v. Elmont Union, 2010 U.S. Dist. LEXIS 66352 (Bianco, U.S.D.J.) (July 2, 2010) which discussed the relationship between firm size and an effective screening process:
Although the presumption that client confidences are shared within a firm may certainly be rebutted, the presumption is much stronger within a small firm than a large firm. It is possible that the circumstances of a small firm may be such that a court will not be able to determine whether the proposed or implemented screening measures will effectively prevent disclosure. See, e.g., Papanicolaou v. Chase Manhattan Bank, 720 F.Sup. 1080, 1086-87 (S.D.N.Y. 1989) ("This Court doubts whether any Chinese walls, which are meant to be preemptive, can ever function effectively when erected in response to a motion and not prior to the arising of the conflict"). In Cheng v. GAF Corp., 631 F.2d 1052 (2d Cir. 1980), the Second Circuit found that proposed screening measures were not sufficient when the conflicted attorney was "a member of a relatively small firm [35 lawyers]," because there existed "a continuing danger that [the conflicted attorney] may unintentionally transmit information he gained through his prior association with [the plaintiff] during his day-to-day contact with defense counsel." Id. at 1058. Other courts within this Circuit have followed Cheng's guidance, often finding that screening procedures are inadequate in small firms. See, e.g, Crudele v. N.Y. City Police Dep't, Nos. 97 Civ. 6687 (RCC), 97 Civ. 7366 (WHP), 97 Civ. 9515 (JSR), 97 Civ. 9516 (JSR), 2001 U.S. Dist. LEXIS 13779, 2001 WL 1033539, at *4 (S.D.N.Y. Sept. 7, 2001) ("This Court likewise concludes that the danger of inadvertent disclosure and the appearance of impropriety is sufficiently present here so as to require disqualification. Leeds, Morelli Brown is comprised of only 15 lawyers"); Marshall, 952 F.Sup. at 112 ("[T]he relatively small size of the Ruberti Firm (approximately 15 lawyers) raises doubts that even the most stringent screening mechanisms could have been effective in this case"). Even the appearance of impropriety is of particular concern with regards to screening procedures in a small firm, see Cheng, 631 F.2d at 1058-59, and in a firm as small as the Morelli Firm — which has only six lawyers, the appearance of impropriety due to concerns about the efficacy of screening procedures, is heightened.
Id. at *31.
The defendant argues 1) that Attorney Sastre really has no confidential information due to the briefness of his employment at Hunt Leibert and the nature of his relationship with Hunt Leibert's clients, 2) that the Law Offices of William Rivera has now adopted an adequate screening process to prevent the accidental disclosure of confidential information by Attorney Sastre, and 3) Attorney Rivera's clients will be harmed because there are few Spanish speaking attorneys who engage in foreclosure defense.
The first argument ignores the clear prohibition imposed by Rule 1.9 of the Rules of Professional Conduct that "A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client." Attorney Sastre represented the plaintiff in this very matter, and, therefore, his receipt of confidential information is presumed. Moreover, the defendant concedes that Attorney Sastre is disqualified from representing the defendant here.
Has Attorney Rivera erected an adequate Chinese wall? There is a temporal problem with the screening process described in his Affidavit. As the Ohio Supreme Court stated in the Kala decision, timing of the alleged screening process is an important factor. The screening device must be employed as soon as the disqualifying event occurs and the screens must be in place when the attorney joins the firm. Instituting screens after a Motion to Disqualify is too late. In Kala, Clinard, Laprise and Horch the screening processes were put in place on or before the start of employment of the new associate. Such timing was crucial to the courts' conclusions that the presumption of shared confidences was overcome by the screening process.
The screening procedures at issue here were not created until after the first actual conflict occurred in the Morales case. There is nothing in Attorney Rivera's Affidavit which states that the files in question or Attorney Sastre were physically and/or organizationally segregated from non-conflict files prior to or at the time of hire, or that files were specially marked or highlighted in any way to show the conflict at the time of hire. There is nothing in the Affidavit about any investigation done by Attorney Sastre and/or Attorney Rivera to determine and identify files in which a conflict may exist. Attorney Rivera's Affidavit is silent as to any system for maintaining, updating and monitoring the screening process in the future. It also makes no reference as to how Attorney Rivera's firm handles electronic data, including word processing, computer systems and emails and does not mention any protections installed to protect electronic, digital and telephonic information to and from Attorney Sastre concerning the files in which he has a conflict of interest.
The size of Attorney Rivera's firm is a significant and fatal impediment to the existence of a viable Chinese wall. As set forth above, there is authority that a Chinese wall cannot exist in a small law firm, which has been defined to include even a 35-person firm (see Cheng v. GAF Corp., 631 F.2d 1052 (2d Cir. 1980). Those cases note that in a small firm the day-to-day contact between lawyers is necessarily such that the possibility of inadvertent disclosure of confidential information is too great.
Attorney Rivera's firm consists of two attorneys, himself and Attorney Sastre. While Attorney Sastre has his office in a location separate from the Hunt Leibert files, Attorneys Sastre and Rivera clearly have contact with each other.
The defendant filed an affidavit, document #136.00, in this case which relates to another matter, Althea Bryant v. Rene Perez, CV-10-6005540. That affidavit appears to have been filed in this case in error. However, the contents of the affidavit illustrate that the relationship between Attorney Sastre, Attorney Rivera and Attorney Rivera's firm are such that the danger of inadvertent disclosure through contact between counsel is too great permit the court to find that a Chinese wall can exist. The Bryant affidavit states that Attorney Sastre was added by Attorney Rivera to "help supervise my staff and see that files are handled in a timely fashion." This is inconsistent with Attorney Rivera's statement in Paragraph 12 of his Affidavit that Attorney Sastre has been quarantined in the Hartford satellite office away from Attorney Rivera and staff.
The impossibility of the existence of an effective Chinese wall here is also demonstrated by the fact that Attorney Sastre took Attorney Rivera's acknowledgment in the Affidavit submitted in this case at that same time that Attorney Rivera averred that Attorney Sastre would have no contact with this case.
As to the final prong of the defendant's argument, the court appreciates that it is Attorney Rivera's client who will be harmed if he is disqualified from representing her here. However, that harm was clearly avoidable by Attorney Rivera. Unlike the lawyers and law firms who were involved in most of the cases cited above, Attorney Rivera took no steps whatsoever to determine whether the plaintiff here or his own client would waive the clear conflict of interest which would arise upon his hiring of Attorney Sastre. He also failed to advise his client about the potential for conflict of interest prior to hiring Attorney Sastre. Such inaction is inexcusable considering that approximately 50% of Attorney Rivera's cases involve Hunt Leibert.
The potential harm to Attorney Rivera's client is more than offset by the delay which has been caused by his employment of Attorney Sastre in this case. The plaintiff has taken no action to prosecute this case since May 2010 when Hunt Leibert first became aware of Attorney Sastre's employment by Attorney Rivera.
For the foregoing reasons, the Motion to Disqualify the law firm of William C. Rivera is granted.