Risk Update

DQ News — Lawyer Disqualification Affirmed on Appeal, Lawyer-as-Witness Survives DQ

Recycler attorney disqualification stands” —

  • “A pair of attorneys who had represented two competing metal recyclers will remain disqualified from representing one in an ongoing dispute between the companies.”
  • “Northern Metals last year sued competitor Crow Wing Recycling and the Minnesota Pollution Control Agency (MPCA), claiming violations of the Minnesota Environmental Rights Act and the public-trust doctrine. The complaint alleged that Crow Wing Recycling was releasing pollutants into the environment without proper permitting and pollution controls in place and that the MPCA didn’t take sufficient action.”
  • “Crow Wing hired three attorneys from Taft Stettinius & Hollister to represent it in the suit: Jack Y. Perry, Jason R. Asmus and Brayanna J. Smith. Perry and Asmus had previously represented Northern Metals on behalf of a firm that was later acquired by Taft.”
  • “Northern Metals notified Crow Wing Recycling that it did not consent to its counsel arrangement and asked its lawyers in the case to withdraw. When they declined to do so, Northern Metals moved to disqualify counsel under Minnesota Rules of Professional Conduct 1.9 and 1.10, which spell out duties owed by attorneys to former clients. After a hearing, Ramsey County District Court granted the motion and disqualified counsel from representing Crow Wing Recycling in the matter. Crow Wing appealed the disqualification order.”
  • “Crow Wing’s answer to Northern Metals’ complaint identified the attorneys it was using in the matter. When it later moved to disqualify counsel from representing Crow Wing, Northern Metals asserted that two of its competitors’ attorneys had previously represented Northern Metals ‘on substantially related issues’ from 2012 to 2016, during which time counsel ‘obtained confidential information as part of the prior representation that has neither become public since then nor rendered obsolete over the passage of time.'”
  • “Northern Metals further claimed that there was factual and legal overlap between counsel’s former representation of Northern Metals and the later matter. In support of the motion to disqualify, Northern Metals submitted the affidavit of an attorney expert, who opined that counsel was disqualified due to a conflict of interest.”
  • “After a hearing on Northern Metals’ motion to disqualify counsel, the district court granted the motion in a written order. The court concluded that there was significant overlap, indicating a substantial relationship, between the two Taft attorneys’ former representation and the facts alleged in two of the three counts in the motion. Crow Wing and its counsel appealed the order.”
  • “The Minnesota Court of Appeals affirmed the lower court decision in an unpublished opinion.”
  • “Citing a number of disputes with the appellate court’s findings, Perry said Taft is likely to petition the Minnesota Supreme Court to review the case.”
  • “‘One thing we’re concerned about is whether the district court has subject-matter jurisdiction on the issue of disqualification,’ Perry said. ‘We take our ethics seriously, and disqualification motions are a very big deal. The district court did not have the authority to rule on that issue.'”

No Disqualification Under Lawyer As Witness Rule” —

  • “The Delaware Court of Chancery has denied a disqualification motion:”
    • “Brex seeks to disqualify Su’s trial counsel under Rule 3.7(a) of the Delaware Lawyers’ Rules of Professional Conduct (the “DLRPC”). That rule states that “[a] lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless . . . disqualification of the lawyer would work substantial hardship on the client.” Because Su’s lawyer is not likely to be a necessary witness, Rule 3.7(a) does not require disqualification.”
    • “Patterson has represented Su in this litigation since it was filed in August 2022. He was admitted pro hac vice on September of 2022. On July 21, 2023, Brex raised its belief that Patterson was ‘a material witness in this case.'”
      “Patterson was undeterred, and continued to serve as Su’s lead counsel. Brex sought to depose Patterson, and Su resisted; addressing Brex’s motion to compel, the special discovery master in this case concluded Patterson’s knowledge about his communications with Su warranted a limited deposition. No party took exception. At his deposition, Patterson testified that he does not remember the May 2022 call with Marsh, and that if he did say he spoke to Su three to four months before the call, he ‘was wrong.'”
    • “Su does not intend to call Patterson in his case-in-chief. Brex intends to call Patterson in its case-in-chief to bolster evidence that Patterson told Marsh that Patterson spoke with Su during the due diligence period, which Brex claims goes to whether Su was terminated for cause. Certainly, the reasons why Brex’s board terminated Su are central to this case. But Patterson’s testimony is cumulative of and peripheral to Marsh’s: Marsh shared his own impression with the board. Patterson’s testimony is further peripheral to the issue of what the board did with Marsh’s impression. And Patterson’s testimony that he does not remember the call, and if he said he spoke to Su during that period he was wrong, does nothing to bolster the conflict between Marsh’s and Su’s testimony.”
    • “Brex also intends to call Patterson to demonstrate that in this litigation, he contradicted his statement to Marsh. Patterson has not done that: he testified he does not remember the call, and that if he said he spoke to Su in that time period he was wrong. And the argument that someone is a necessary witness because they can be impeached presupposes that his testimony is necessary. As explained, it is not.”
    • “Brex also intends to call Patterson to demonstrate the board investigation Su is attacking as inadequate was deficient because Patterson gave Marsh “wrong” information. This is a peripheral rebuttal argument, not a central case-in-chief argument.”
    • “I cannot conclude that Patterson is likely to be a necessary witness under DLRCP 3.7(a) at trial.”