PATRICIA D. BARKSDALE, Magistrate Judge.
Four months after lawyers with Gordon & Rees Scully Mansukhani LLP ("Gordon & Rees") began representation of Lanard Toys Limited ("Lanard") against Toys "R" Us-Delaware, Inc. ("TRU"), in this Florida federal case, other lawyers with Gordon & Rees began representation of TRU in a California state case. Upon discovering the conflict of interest and failing to get the lawyers to withdraw in this case, TRU filed a motion seeking disqualification. Docs. 176, 176-1, 176-2, 187, S190, S190-1, S191. Lanard opposes the motion and requests oral argument and an evidentiary hearing to present testimony of an ethics expert. Docs. 178, 181, 181-1, 181-2, 181-3, 192, 192-1. TRU contends neither is necessary. Docs. 186, 186-1, 186-2. At the Court's request, Lanard supplemented its response to clarify factual matters. Docs. 193, 194, 194-1, 194-2, 194-3, 194-4, 195, S196, S196-1, S196-2, S196-3, S196-4. Upon receipt of supplemental declarations, TRU filed a motion to compel discovery of related documents. Docs. 197, 197-1. Lanard opposes the motion. Docs. 200, 200-1.
Lanard is suing TRU and others for alleged copyright infringement, patent infringement, trade-dress infringement, and unfair competition based on the development, marketing, and sale of an allegedly infringing children's chalk holder that looks like a giant pencil. Doc. 103.
Lanard filed the initial pleading in the United States District Court for the District of New Jersey in March 2014. Doc. 1. Then, it was represented by Lerner, David, Littenberg, Krumholz & Mentlik, LLP. Doc. 1 at 17. That court transferred the case here in June 2015. Docs. 92, 93. Gordon & Rees replaced the Lerner firm as Lanard's counsel in August 2015. Docs. 100, 101. Due to "human error," an unnamed Gordon & Rees staffer input into its conflict-tracking system only one of the three defendants in this case—not TRU.
Eric Thompson and Robin Symons with Gordon & Rees's Miami office and Holly Heffner and Richard Sybert with Gordon & Rees's San Diego office appeared to represent Lanard in this case. Docs. 100, 106, 108, 109, 130, 131. Mr. Thompson and Ms. Symons are members of the bar of this Court; Ms. Heffner and Mr. Sybert were specially admitted to represent Lanard in this case. Docs. 109, 131.
Mr. Sybert is the co-chair of Gordon & Rees's intellectual property group. Doc. 176-1 at 6. He has represented Lanard for more than three decades and once served as general counsel and vice president of its United States subsidiary. Doc. 194-4 ¶ 4. Ms. Heffner is also in Gordon & Rees's intellectual property group. Doc. 187 at 4 n.4.
In November 2015, a few months after the Gordon & Rees lawyers appeared in this case, the State of California named as defendants TRU and other retailers in People of the State of Cal. v. Intelligender LLC etc., No. 37-2012-00085040-CU-BT-CTL, a case pending in the Superior Court of the State of California, County of San Diego, since November 2012. Doc. 176-2 ¶ 1. There, the State of California alleges violations of California's Business and Professions Code through unfair competition and false advertising concerning urine-based gender-prediction tests. Doc. 181-1 ¶ 2; Doc. 181-2 ¶ 2. The Texas firm Palter Stokley Sims PLLC and Gordon & Rees had been representing the main defendant and its representatives in the California case when the retailer defendants were named. Doc. 176-2 ¶ 3; Doc. 194-2 ¶ 4.
[REDACTED\] Doc. S196-1 ¶ 3; Doc. S196-2 ¶ 3. On December 8, 2015, Kimberly Sims, a lawyer with the Palter firm, [REDACTED\] Tom Watson, the managing partner of Gordon & Rees's San Diego office, [REDACTED\] Doc. 187 at 4 n.4; Doc. S191 at 3; Doc. S196-1 ¶ 3; Doc. S196-2 ¶ 3. The next day, [REDACTED\] Doc. S196-2 ¶ 3. On December 14, Timothy Branson, a lawyer in Gordon & Rees's commercial litigation group, [REDACTED\] Doc. S191 at 5. The next day, [REDACTED\] Doc. 187 at 4 n.4; Doc. S196-1 ¶ 3; S196-2 ¶ 3; Doc. S191 at 4.
On December 16, an unnamed Gordon & Rees associate prepared an undisclosed [REDACTED\] memorandum [REDACTED\] Doc. S196-1 ¶ 4; Doc. S196-2 ¶ 5; Doc. 197 at 2.
On December 28, [REDACTED\] Elizabeth Irwin, in-house counsel for TRU, [REDACTED\] Doc. S191 at 39, 41-56. On December 29, [REDACTED\] Doc. S191 at 13. [REDACTED\] Doc. S191 at 16; Doc. S196-1 ¶ 4; Doc. S196-2 ¶ 5. The next day, [REDACTED\] [REDACTED\] Doc. S191 at 33; Doc. S196-1 ¶ 4; Doc. S196-2 ¶ 5. That same day, Ms. Sims informed Ms. Irwin that the Palter firm had selected Gordon & Rees as local counsel and Gordon & Rees lawyers had begun work on the answer.
The first firm on the signature block of the answer is Gordon & Rees, and, under that, the names of three of its lawyers (Kevin Alexander, Mr. Branson, and Mr. Watson) and the signature of one of them. Doc. S191 at 92.
Gordon & Rees sent no engagement letter to TRU.
TRU disclosed confidential information to lawyers with the Palter firm with the expectation it would be discussed by the entire defense team for the California case, including lawyers with Gordon & Rees. Doc. 176-2 ¶ 12.
Almost two months later, on February 22, 2016, Ms. Irwin realized the conflict when reviewing draft interrogatory responses for the California case that included "Gordon & Rees" on each page.
Ms. Irwin also contacted Lewis Anten, lead outside counsel for TRU in this case. Doc. 176-1 ¶ 3; Doc. 176-2 ¶ 10. By letter dated and emailed February 22, 2016, Mr. Anten informed Mr. Sybert of the conflict and demanded Gordon & Rees cease all actions against TRU in this case. Doc. 176-1 at 8-9.
Before receiving Mr. Anten's letter, Mr. Sybert had not known about the California case. Doc. 194-4 ¶ 2. Because Mr. Anten has represented toy companies in Southern California for years, Mr. Sybert believes Mr. Anten is "well aware" of Mr. Sybert's "deep knowledge and relationship" with Lanard. Doc. 194-4 ¶ 4.
Mr. Sybert emailed, "I find no merit or basis to your letter or its demands, which accordingly are rejected." Doc. 176-1 at 20. He stated that Gordon & Rees had served only as local counsel in the California case, had had no direct contact with TRU, and had only finalized and filed the answer for TRU at the direction of the Palter firm. Doc. 176-1 at 20. He indicated that, for the California case, Gordon & Rees would seek a waiver from TRU or withdraw from representing TRU and would continue to press discovery and motions against TRU in this case. Doc. 176-1 at 20.
Mr. Anten left Mr. Branson a voice message to discuss the conflict. Doc. 176-1 ¶ 9. Mr. Sybert emailed, "I understand you placed a call and left a message for my partner . . . seeking to discuss this matter. As advised . . ., we are attending to it and your involvement is not required. Your call will not be returned. . . . You failed to pick up the Lanard document production which was timely made yesterday. . . . I anticipate that you will claim production was not made. Any such claim would be intentionally false. The production remains available at your disposal." Doc. 176-1 at 22-23.
By email, Mr. Anten replied, "Are you the responsible partner of your Firm handling the conflict matter? . . . I don't understand how you can say I don't need to be involved when I am the lawyer for TRU. Are you intending to communicate directly with my client?" Doc. 176-1 at 22. Mr. Anten added that he was withdrawing notices of depositions of the inventors of Lanard's chalk holder until the conflict could be resolved. Doc. 176-1 at 22.
By email, Mr. Sybert responded, "I have made explicitly clear to you that we are substituting out of the [California case], in which for a single ministerial pleading matter we acted as local counsel and have had no direct contact whatsoever with TRU. This is simply a mechanical process, as you are well aware." Doc. 176-1 at 22. He contended, "There is no conflict, certainly none that has any bearing on either case nor one that calls for `disqualification.' Again, you are transparently trying to use this improperly for litigation advantage." Doc. 176-1 at 22. He threatened that if Mr. Anten cancelled the depositions, Lanard would not voluntarily produce the inventors again. Doc. 176-1 at 22, 29, 36. He added, "We didn't `sue one of our current clients.' A party we've sued asked us, through their lead counsel, to act as a local mail drop for a single pleading. We have no `ethical dilemma' but are withdrawing anyway.. . . It would be so refreshing if you guys would just play it straight for once, but I see no prospect of that happening." Doc. 176-1 at 25.
Within days of Mr. Anten's letter demanding cessation of acts against TRU in this case and with no consent from TRU, Gordon & Rees filed a motion in the California case asking to be relieved as TRU's counsel. Doc. 181-1 ¶ 4. To support the motion, Mr. Branson represented that Gordon & Rees "was recently retained as local counsel for TRU at TRU's request" and Gordon & Rees "merely filed an answer provided by lead defense counsel." Doc. 176-2 at 7.
Meanwhile, TRU asked this Court to stay this case pending resolution of whether Gordon & Rees and its lawyers should be disqualified from representing Lanard. Doc. 166. At oral argument on whether a stay was warranted, Mr. Sybert contended the withdrawal motion in the California case was the type of motion "granted as a matter of course, because the only thing we've done is basically act as a mail drop for an answer that was drafted by the lead counsel." Doc. 168 at 24. He added, "It's the most minor sort of representation one can imagine. . . . We were provided with an answer for the defendants from the lead law firm in Dallas. We red-lined it to conform to local practice and we filed it. That's it." Doc. 168 at 28, 36. To a remark by TRU's counsel in this case that discovery on the disqualification motion may be needed, the Court responded that it would expect Lanard's counsel to provide all facts to decide the motion, making formal discovery unnecessary. Doc. 168 at 37.
This Court stayed this case. Doc. 167. The California court granted Gordon & Rees's motion to withdraw. Doc. 172 at 2; Docs. 172-1, 172-2; Doc. 181-1 at 3, 7-8; Doc. 181-2 at 3, 7-8; Doc. 181-3 at 2. TRU filed a motion in the California case asking that court to disqualify Gordon & Rees from representing Lanard in this case. Doc. 172-4; Doc. 176-1 ¶ 13. In June 2016, the California court denied the motion, reasoning it lacked jurisdiction to disqualify Gordon & Rees in a case in a different court in a different state. Doc. 188 at 3; Doc. 192-1 at 2. It emphasized its ruling should not be construed "as an indication of the propriety" of Gordon & Rees's continued representation of Lanard in this case. Doc. 188 at 3; Doc. 192-1 at 2.
In a declaration to support the disqualification motion, Ms. Irwin states, "It is believed that confidential information from or related to TRU was learned by [Gordon & Rees] during the course of [Gordon & Rees's] representation of TRU in the California Case, for example, but without limitation, confidential information relating to TRU's strategic approach for defending against unfair competition cases." Doc. 176-2 ¶ 13.
In declarations in opposition to the disqualification motion, Messrs. Branson and Watson each state:
Doc. 181-1 ¶ 3; Doc. 181-2 ¶ 3.
In response to Lanard's motion for an evidentiary hearing to present testimony of an ethics expert, Mr. Anten asked Mr. Thompson for the name and anticipated testimony of the expert, whether he had shown the expert any of TRU's privileged communications, and whether he sought to present the live testimony of anyone else. Doc. 186 at 5; Doc. 186-2 at 2-7. Mr. Thompson refused to provide the information. Doc. 186 at 5; Doc. 186-2 at 2-7.
After Lanard's filing of the supplemental declarations, Mr. Anten emailed Mr. Sybert asking Gordon & Rees to provide TRU with unredacted bills for any work its lawyers had performed in the California case from December 2015 to February 2016, the [REDACTED\] memorandum [REDACTED\] the Gordon & Rees associate had prepared for the retailers, and "all other materials [that had been] generated, received or reviewed by [Gordon & Rees] during the period [Gordon & Rees] represented TRU." Doc. 197 at 1-2. Mr. Sybert emailed back, "You will receive appropriate service copies of filings. To the extent your email seeks anything else, it is rejected." Doc. 197-1 at 2.
TRU argues this Court should disqualify Gordon & Rees and its lawyers from continuing to represent Lanard against TRU in this case (and revoke the pro hac vice admissions of Ms. Heffner and Mr. Sybert) based their violation of Rule 4-1.7 of the Rules Regulating The Florida Bar. Doc. 176 at 1. TRU contends they breached their duty of undivided loyalty to their client and compounded the problem by responding cavalierly to the conflict, treating their client antagonistically when its counsel in this case asked them to cease prosecuting this case against it, accusing their client and its counsel in this case of engineering the conflict while admitting that their own mistake caused it, accusing their client and its counsel in this case of harassing them in response to emails regarding the conflict, blurring lines by having Mr. Sybert— involved in this case—respond regarding the California case, dropping their client like a "hot potato" in the California case, continuing to vigorously pursue this case against their own client (including by insisting on moving forward with depositions of the inventors and refusing to join the request to stay this case pending a resolution of the conflict), misrepresenting the extent of their representation of their client in the California case, and refusing to provide their client information about the work they had performed on its behalf in the California case. Doc. 176 at 2-3, 6-9, 18-19; Doc. 197 at 2-3.
TRU contends that withdrawing from representing TRU in the California case did not cure the conflict and that disqualification is mandated based on a mere finding that Gordon & Rees and its lawyers violated Rule 4-1.7 or based on a balancing of interests. Doc. 176 at 3-4, 13-20. TRU asserts Ms. Irwin's belief that they learned confidential information based on TRU's disclosure of confidential information to the Palter firm with the expectation the Palter firm would share it with the entire defense team, explains it "does not want confidential information it shared with the Palter firm used against it by its former attorneys in this case," and contends it "should not be in a position where this is a concern." Doc. 176 at 7, 17-18.
Lanard does not dispute that Gordon & Rees and its lawyers violated Rule 4-1.7 or that the conflict is imputed to all Gordon & Rees lawyers.
In the motion for oral argument and an evidentiary hearing, Lanard contends both "will be useful in addressing for the Court the issues raised in TRU's Motion, including inaccuracies asserted in that Motion (as discussed in Plaintiff's Response to TRU's Motion), and so that Plaintiff can present . . . the testimony of an expert witness regarding the pertinent Rules Regulating [T]he Florida Bar." Doc. 178 at 1.
TRU responds the material facts are undisputed and the Court should not permit Lanard to transform the matter into a "secondary case within a case," observing an evidentiary hearing would require depositions, with TRU's confidential information and strategies the primary subjects. Doc. 186 at 1-3. TRU observes, "Lanard has not explained why an expert is needed when this Court is capable of determining and interpreting the law and facts, including the Rules Regulating [T]he Florida Bar." Doc. 186 at 4-5.
In the motion to compel discovery, TRU contends it is entitled to the requested documents because it had been Gordon & Rees's client when they were generated. Doc. 197 at 2-3. It observes Gordon & Rees has provided only "heavily redacted bills in which over 90% of the work on the bills was concealed, including the identit[ies] of the lawyers who worked on the file, the amount of time they spent, the topics on which they worked, and the nature of the work performed." Doc. 197 at 2. It argues the discovery "may shed more light on the various inconsistent positions taken by [Gordon & Rees] on the scope of the work performed by [Gordon & Rees] for TRU and may provide additional support for why disqualification is necessary to protect" confidences presumably passed from TRU to Gordon & Rees. Doc. 197 at 3.
Lanard responds TRU's counsel failed to properly confer with its counsel before filing the motion, TRU has failed to show how the documents "relate to any particular issue" in the current motion, and the catchall request is "harassing, vague and ambiguous, unjustifiably broad," and seeking documents that could contain confidential information. Doc. 201 at 1-3. Lanard contends it has no document containing confidential TRU information. Doc. 201 at 6-7. Lanard summarily requests expenses under Federal Rule of Civil Procedure 37(a)(5)(B) that it incurred in having to respond to the discovery motion. Doc. 201 at 3, 7.
"[L]awyers are essential to the primary governmental function of administering justice, and have historically been officers of the courts." Goldfarb v. Va. State Bar, 421 U.S. 773, 792 (1975) (internal quotation marks omitted). A court thus has the "power and responsibility to regulate the conduct of attorneys who practice before it." United States v. Kitchin, 592 F.2d 900, 903 (5th Cir. 1979).
"A motion to disqualify counsel is the proper method for a party-litigant to bring the issues of conflict or breach of ethical duties to the attention of the court." Musicus v. Westinghouse Elec. Corp., 621 F.2d 742, 744 (5th Cir. 1980). A party may also or instead pursue bar disciplinary proceedings or sue for malpractice. Prudential Ins. Co. of Am. v. Anodyne, Inc., 365 F.Supp.2d 1232, 1237 (S.D. Fla. 2005). A court generally will not disqualify counsel because of a conflict unless a party moves for disqualification. In re Yarn Proc. Patent Validity Litig., 530 F.2d 83, 88 (5th Cir. 1976).
A disqualification motion is governed by local rules and federal common law. Herrmann v. GutterGuard, Inc., 199 F. App'x 745, 752 (11th Cir. 2006). The movant must prove the grounds for disqualification. In re BellSouth Corp., 334 F.3d 941, 961 (11th Cir. 2003). If a court bases disqualification on an ethical violation, "the court may not simply rely on a general inherent power to admit and suspend lawyers, without any limit on such power." Schlumberger Techs., Inc. v. Wiley, 113 F.3d 1553, 1561 (11th Cir. 1997). Instead, the court must identify a rule and find the lawyer violated it. Id.
Because a litigant is presumptively entitled to counsel of its choosing, only a compelling reason will justify disqualification. BellSouth, 334 F.3d at 961. Because disqualification is a "harsh sanction, often working substantial hardship on the client," it "should be resorted to sparingly." Norton v. Tallahassee Mem'l Hosp., 689 F.2d 938, 941 n.4 (11th Cir. 1982). And because a disqualification motion may be used to harass or for tactical advantage, it should be viewed with caution. Herrmann, 199 F. App'x at 752.
Disqualification is not mandatory, even if a court finds a lawyer is violating a conflict-of-interest rule. Prudential, 365 F. Supp. 2d at 1236. Instead, a "court should be conscious of its responsibility to preserve a reasonable balance between the need to ensure ethical conduct on the part of lawyers appearing before it and other social interests, which include the litigant's right to freely chosen counsel." Woods v. Covington Cnty. Bank, 537 F.2d 804, 810 (5th Cir. 1976).
In undertaking the balancing, pertinent factors may include the nature of the ethical violation, the age of the case, the prejudice to the parties, the effectiveness of counsel in light of the violation, the public's perception of the profession, whether the attempt to disqualify is a tactical device or a means of harassment, and whether any screening measures have been implemented. See Cox v. Am. Cast Iron Pipe Co., 847 F.2d 725, 731-32 (11th Cir. 1988) (considering some of those factors); v. Sea Star Line, LLC, No. 3:12-CV-1180-J-32JBT, 2013 WL 5460027, at *12 (M.D. Fla. Apr. 30, 2013) (unpublished) (same); Prudential 365 F. Supp. 2d at 1237 (same).
This Court's Local Rules provide that the Rules Regulating The Florida Bar govern members of this Court and lawyers specially admitted to appear before this Court. Local Rule 2.04(d).
Rule 4-1.7 of the Rules Regulating The Florida Bar "concerns conflicts of interests with current clients." Young v. Achenbauch, 136 So.3d 575, 581 (Fla. 2014). It prohibits a lawyer from representing a client if the representation of one client will be directly adverse to another client unless the lawyer obtains informed consent. Rule 4-1.7. "Thus, a lawyer ordinarily may not act as advocate against a person the lawyer represents in some other matter, even if it is wholly unrelated." Rule 4-1.7, Comment ("Loyalty to a Client"). The rule contemplates no "mechanical" representation of a client, see Doc. 176-1 at 22 (quoted), or "technical" representation of a client, see Doc. 168 at 28 (quoted), and does not except a lawyer serving only as local counsel.
Under Rule 4-1.7, a lawyer is ethically obligated to avoid any conflict, such as undertaking a representation when the lawyer either knows or should know of a conflict prohibiting the representation. Young, 136 So. 3d at 582; Public Def., Eleventh Jud. Cir. of Fla. v. State, 115 So.3d 261, 267 (Fla. 2013). A lawyer may withdraw from representation when a conflict arises after representation begins but must decline representation if the conflict exists before representation begins. Young, 136 So. 3d at 581. The lawyer "may not avoid this rule by taking on representation in which a conflict already exists and then convert a current client into a former client by withdrawing from the client's case" (the "hot potato" rule). Id.
Rule 4-1.7 is based on two principles. Hilton v. Barnett Banks, Inc., No. 94-1036-CIV-T24(A), 1994 WL 776971, at *3 (M.D. Fla. Dec. 30, 1994) (unpublished). "First, a client is entitled to his lawyer's undivided loyalty as his advocate and champion." Id. (internal quotation marks omitted); accord Rule 4-1.7, Comment. ("Loyalty to a Client") ("Loyalty and independent judgment are essential elements in the lawyer's relationship to a client."); Chapman v. Klemick, 3 F.3d 1508, 1512 (11th Cir. 1993) (a lawyer's duty of loyalty to his client is "very nearly sacred"); Gerlach v. Donnelly, 98 So.2d 493, 498 (Fla. 1957) (a lawyer must represent a client and handle the client's affairs with the "utmost degree of honesty, forthrightness, loyalty and fidelity"). "Second, a lawyer should never place himself in a position where a conflicting interest may, even inadvertently, affect the obligations of an ongoing professional relationship." Hilton, 1994 WL 776971, at *3.
Here, balancing the interests and mindful that Lanard is presumptively entitled to counsel of its choosing and disqualification is a harsh sanction to be resorted to sparingly, disqualification is unwarranted.
By undertaking representation of TRU in the California case while undertaking representation against TRU in this case, Gordon & Rees plainly violated Rule 4-1.7. But an inadvertent input error—not a deliberate disregard of the duty of loyalty—caused that violation. The case has been pending for more than two-and-a-half years—much longer than the 12- to 18-month goal set by the Court for this type of case, see Doc. 98 at 1—and disqualification would further delay a merits decision. Lanard chose Gordon & Rees to represent it once the case was transferred here presumably because of its longstanding relationship with Mr. Sybert, his expertise, and that Gordon & Rees has an office in Florida. Lanard played no part in causing the violation. Insofar as Gordon & Rees had undertaken "hundreds of hours of document review" and "numerous depositions (in Florida and Tennessee)," Doc. 181 at 12, Lanard would suffer a substantial hardship by having to retain new counsel to repeat or review that work. The Gordon & Rees lawyers did not directly communicate with TRU or, as stated in the declarations, receive any TRU confidences. With no sharing of TRU confidences and able counsel on both sides, the violation will not diminish counsel's effectiveness. And Gordon & Rees's active representation of TRU lasted less than a month, during which it was not TRU's primary counsel.
Public perception of the legal profession cuts both ways. On one hand, the public perception of the legal profession will not be negatively affected by allowing Gordon & Rees to continue to represent Lanard in this case to the extent Lanard lacks culpability, the mistake that caused the violation was inadvertent, Gordon & Rees lawyers were unaware of the conflict until informed of it by Mr. Anten, and no TRU confidences were shared with Gordon & Rees lawyers.
Each party cites cases to support its position. Doc. 176 at 2-4, 10-16; Doc. 181 at 6-13; Doc. 187 at 8. Each party contends the other side's cases are factually distinguishable. Doc. 176 at 16-17, 21; Doc. 181 at 14-19; Doc. 187 at 2-8. Both parties are correct. Given the fact-specific nature of the balancing, discussion of all of the cases is unwarranted.
The Court is unpersuaded by TRU's argument that a violation of Rule 4-1.7 creates an irrefutable presumption that confidences had been shared and mandates disqualification absent a rare happenstance exception inapplicable here. See Doc. 176 at 15-16 & 15 n.5. As the Florida Supreme Court has recognized, federal courts undertake the balancing approach when deciding whether to disqualify lawyers appearing before them. See Young, 136 So. 3d at 581. Eleventh Circuit cases reflect approval of that approach and the need for a decision tailored to the circumstances. See Bayshore Ford Truck Sales, Inc. v. Ford Motor Co., 380 F.3d 1331, 1338 (11th Cir. 2004) (district court did not abuse its discretion in denying a motion to disqualify counsel upon finding violation of Georgia conflict-of-interest rule; counsel testified he did not obtain or share confidential information); Tipton v. Canadian Imperial Bank of Commerce, 872 F.2d 1491, 1499 (11th Cir. 1989) (same). Whether the Supreme Court of Florida would use a different approach to addressing a conflict is not dispositive; "[a]lthough highly persuasive, the decisions of the Supreme Court of Florida are not binding upon the United States District Court for the Middle District of Florida in interpreting the Rules Regulating [T]he Florida Bar because this court must retain the right to interpret and apply the rules in a federal setting." Town of Ponce Inlet, 267 F.Supp.2d 1240, 1243 (M.D. Fla. 2003) (internal quotation marks omitted).
TRU relies heavily on the "hot potato rule." Doc. 176 at 13-14; Doc. 187 at 1 & n.1. Had Gordon & Rees sought to withdraw from representing Lanard in this case to represent TRU in the California case, the rule would be more apt. The rule does not appear to require withdrawal from representation of both the original client (Lanard) and subsequent client (TRU) upon discovery of a conflict caused by an inadvertent error. Even if it did, disqualification would not be mandatory, at least in federal court.
TRU argues it will suffer prejudice by being forced to litigate against counsel presumed to have learned confidences and contends uncomfortable issues "could continue to ensnare this litigation," like "whether Lanard would be able to introduce evidence at trial of the California Case to show other unfair competition claims against TRU, and whether [Gordon & Rees] could seek to elicit deposition or trial testimony from TRU relating to other unfair competition cases." Doc. 176 at 19. Messrs. Branson's and Watson's declarations establish no TRU confidences were obtained or shared. See Doc. 181-1 ¶ 3; Doc. 181-2 ¶ 3. The email exchanges and the nature of Lanard's representation of TRU in the California case corroborate those declarations. See Doc. S191 at 13, 16, 33, 57, 94. Lanard represents it has no intent to introduce the California case in this case, Doc. 181 at 13 n.6, and the Court will hold it to that representation.
TRU contends Gordon & Rees's San Diego office lacks boundaries, pointing to Mr. Sybert's email responding to Mr. Anten's message to Mr. Branson concerning the conflict, which indicates the Gordon & Rees lawyers for this case talked to the Gordon & Rees lawyers for the California case. Doc. 176 at 8. Given that no TRU confidences were obtained or shared, see Doc. 181-1 ¶ 3; Doc. 181-2 ¶ 3, Mr. Sybert's interaction with the Gordon & Rees lawyers working on the California case to address the conflict is of no consequence.
Because the parties have provided adequate briefing on the issues presented by the disqualification motion, denial of Lanard's request for oral argument, Doc. 178, is warranted. Because disqualification is unwarranted and for the reasons in TRU's response to Lanard's motion for an evidentiary hearing, Doc. 186, including the failure of Lanard's counsel to properly confer by providing no information on what would be presented at the requested evidentiary hearing, denial of Lanard's request for an evidentiary hearing, Doc. 178, is warranted.
Based on the facts in footnote 11 of this order and for the reasons in TRU's discovery motion, see Docs. 197, 197-1, granting TRU's request for discovery of the unredacted billing records for December 2015 to February 2016 and the [REDACTED\] memorandum prepared by the Gordon & Rees associate on December 16, 2015, see Doc. S196-1 ¶ 4; Doc. S196-2 ¶ 5, is warranted. Failure to confer is not a basis for denying the discovery motion; the statement, "You will receive appropriate service copies of filings. To the extent your email seeks anything else, it is rejected," Doc. 197-1 at 2, placed in context of previous interactions, does not lend itself to continued resolution efforts without court intervention. Although Gordon & Rees has specified no information in the documents that should not be seen by TRU (its client when they were created) due to privilege or protection, production is limited to viewing by TRU's outside counsel only under the terms of the stipulated protective order, see Doc. 152.
Mindful of Federal Rule of Civil Procedure 1 (rules "should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every case and proceeding") and TRU's own position that the matter should not be transformed into a secondary case within a case, see Doc. 186 at 1, discovery of "all other materials generated, received or reviewed by [Gordon & Rees] during the period of time that [Gordon & Rees] represented TRU," see Doc. 197 at 2 (quoted), is unwarranted. If the produced documents contain information material to the disqualification motion, TRU may request reconsideration of the disqualification decision. Because the Court is granting the discovery motion in large part, denial of Lanard's request for expenses, see Doc. 201 at 3, 7, is warranted.
The Court has redacted the sentences in this order that cite the documents filed under seal (and contain information not already on the public docket) and will direct the clerk to file a redacted version on the public docket sheet and an unredacted version under seal, for viewing by the parties and the Court only. However, no sealing of this order appears necessary given the general phrasing used. Any party may file a motion to maintain the seal by
The Court:
In response to the Court's request to clarify what work Gordon & Rees had performed for TRU in light of a billing entry by Gordon & Rees for drafting and reviewing a memorandum concerning "strategies for handling" the answer, Doc. S190-1, Messrs. Branson and Watson each state in supplemental declarations that, on December 16, 2015, a Gordon & Rees associate also prepared a memorandum [REDACTED\] Doc. S196-1 ¶ 4; Doc. S196-2 ¶ 5. Work on that memorandum is not reflected in the redacted billing records Gordon & Rees provided to TRU and the Court, which reflect entries on December 29, 30, and 31 only. See Doc. S190-1 at 9-10.
Editing a draft answer is more than just serving as a "mail drop," participating in a "mechanical process," or filing an answer provided by lead counsel, even if the editing was done to conform the pleading to local practice. Drafting a [REDACTED\] memorandum [REDACTED\] is more still.
From the representations to Lanard, the California court, and this Court, the public could perceive the legal profession as inattentive at best, intentionally misleading at worst.
Rule 4-1.9 provides that a lawyer who previously represented a client in a matter may not 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." Matters are "substantially related" if they involve the same transaction or legal dispute or if the current matter would involve the lawyer attacking the work that the lawyer had performed for the former client. Young v. Achenbauch, 136 So.3d 575, 583 (Fla. 2014). A party seeking disqualification under Rule 4-1.9 does not have to demonstrate actual prejudice to the former client from the later representation because the existence of the lawyer-client relationship creates an irrebuttable presumption that confidences were shared. Id.
Rule 4-1.9 does not apply in this case because this case is not substantially related to the California case. Although both allege unfair competition, this case involves an intellectual property dispute, while the California case involves a consumer protection dispute. The pleadings in the cases reflect how different the cases are from one another. Compare Doc. 103 (second amended complaint in this case) with Doc. 348 in People of the State of Cal. v. Intelligender LLC etc., No. 37-2012-00085040-CU-BT-CTL (amended complaint in the California case).
