Childress v. Trans Union, LLC, CASE NO. 1:12-cv-00184-TWP-DML

• Decision Date: 28 December 2012
• Docket Number: CASE NO. 1:12-cv-00184-TWP-DML
• Parties: ANDREA M. CHILDRESS, on behalf of herself and others similarly situated, Plaintiff, v. TRANS UNION, LLC, Defendant.
• Court: U.S. District Court — Southern District of Indiana

ANDREA M. CHILDRESS, on behalf of herself and others similarly situated, Plaintiff,

v.TRANS UNION, LLC, Defendant.

CASE NO. 1:12-cv-00184-TWP-DML

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION

Date: December 28, 2012

Order on Motion to Disqualify Counsel and Related Matters

Plaintiff Andrea Childress has brought this action against Trans Union, LLC ("Trans Union") under the Fair Credit Reporting Act ("the Act"). She seeks to represent a nationwide class of consumers as to whom Trans Union allegedly violated the Act by reporting their bankruptcies as "dismissed" when they in fact had been voluntarily withdrawn.¹ Ms. Childress is represented by two lawyers at separate firms—John Cento at Riley Bennett & Egloff LLP and Eric Pavlack at Pavlack Law LLC. From 2001 through mid 2005, Mr. Cento represented Trans Union in around 250 cases, defending it against claims brought by individuals under the Act. Shortly after the filing of this case, Trans Union filed a motion to disqualify Mr. Cento from representing Ms. Childress and the putative class in this case. (Dkt. 15)² Trans Union maintains that Mr. Cento should be disqualified because the matter on which he now represents the putative class is substantially related to his former representation of Trans Union, thus rendering his current representation in violation of Rule 1.9 of Indiana's Rules of Professional Conduct.

The motion to disqualify is now fully briefed and has been referred to this magistrate judge for decision. Trans Union and Mr. Cento (through counsel retained to address only the disqualification motion) presented oral argument on May 17, 2012, after which the court took the matter under advisement.

Facts Pertinent to Analysis

Whether a successive representation is substantially related to a former representation turns, of course, on the nature and scope of those representations. In this case, that inquiry will focus on Mr. Cento's prior representation of Trans Union, because he defines it narrowly in terms of a number of individual, distinct cases, and Trans Union defines it as something broader than the simple sum of its individual parts.

Mr. Cento represented Trans Union during the course of his employment at Katz & Korin, P.C. ("Katz & Korin") and Schuckit & Associates, P.C. ("Schuckit"), with that representation beginning sometime in 2001 and ending in July 2005.³ During Mr. Cento's tenure, the firms handled approximately 25% of Trans Union's consumer-related litigation across the United States.⁴ Mr. Cento himself billed more than 4,200 hours defending Trans Union in over 250 cases.⁵

His work for Trans Union almost exclusively involved defending claims brought under sections 1681e(b) and 1681i of the Act.⁶ Section 1681e(b) requires a reporting agency to take"reasonable procedures" to ensure the accuracy of a consumer credit report. 15 U.S.C.A. § 1681e. Closely related, section 1681i sets forth certain steps a reporting agency must follow whenever a consumer disputes something on his or her report, a process defined by the Act as a "reinvestigation." 15 U.S.C.A. § 1681i.

These "reasonable procedures" and "reinvestigation" cases by nature task a lawyer with different priorities, discovery needs, and potential lines of argument, all turning on the factual particularities of each claim. Those facts include how the inaccuracy originated, who or what is responsible for the inaccuracy, and what reinvestigation steps the reporting agency did or did not take.⁷ Notwithstanding each case's particularities, Mr. Cento's representation of Trans Union involved certain common denominators, primarily in terms of Trans Union's approach to handling consumers' disputes, conducting reinvestigations, and defending claims arising out of its handling of those disputes. He received a significant volume of internal Trans Union documents relating to the defense of claims brought under the Act. And he did not simply work on individual cases; he supervised other attorneys. Moreover, a review of the evidence⁸ reveals that Mr. Cento's representation of Trans Union in cases brought under the Act took him into its inner circles. In addition to interacting with executives, board members, employees, and outside counsel, he worked closely with in-house counsel to determine case strategies, identify strengths and weaknesses of cases, develop settlement and discovery strategies, and both evaluate andprepare witnesses.⁹ For example:

• Trans Union FCRA Litigation In-House Counsel communicated with Mr. Cento and several other outside counsel about a new internal process for sharing information regarding the defense of claims brought against Trans Union. Trans Union solicited Mr. Cento's input on the new process.

• Mr. Cento communicated with Trans Union personnel, including a Trans Union Senior Attorney, about Trans Union's reasonable procedures and reinvestigation cases computer system and the usefulness of this information in defending cases.

• Mr. Cento and some other outside counsel were copied on several emails among Trans Union personnel, including its FCRA Dispute Processing-Priority Department, which is responsible for lawsuit coordination. The emails discussed reinvestigations, coordination with the Legal Department, and direction from a Trans Union Senior Attorney about how to handle a broad category of cases.

• A Trans Union Senior Attorney communicated with Mr. Cento and other outside counsel about a potential outside expert witness who could testify in certain types of cases.

Trans Union also provided memos and letters that show Mr. Cento's extensive and generalized involvement with its litigation. For example:

• Mr. Cento received information from Trans Union's General Counsel documenting the status of 39 reasonable procedures and reinvestigation cases, including whether the case was dismissed or settled and the settlement amounts.

• Mr. Cento prepared a memo for discussion with Trans Union on the average attorneys' fees on settled cases and the average settlement per case.

• Mr. Cento received a memo summarizing the procedures discussed at the Fall 2003 Trans Union meeting, including specific litigation strategy for making offers of judgment. The memo also directed Mr. Cento (1) to follow up on a particular aspect of a California class action and (2) to settle a certain category of files.

• Mr. Cento worked with in-house attorneys from Trans Union and supervised lawyers in his own law firm on Trans Union matters. On one occasion, Mr. Schuckit sent a letter to Trans Union's General Counsel to introduce her to three new associates who would be working on Trans Union cases. Notably, the letter says that Mr. Cento would be supervising the associates' work.

• Mr. Cento attended a meeting with Trans Union's General Counsel and other in-house counsel.

• Mr. Cento worked on Trans Union case procedures for Trans Union associates.

• Mr. Cento attended a two-day Trans Union's FCRA Counsel Conference. The agenda for the conference included sessions on handling offshore disputes, system features, technology issues, FACTA compliance readiness, and reasonable procedures and reinvestigations for defense counsel discussions.

Trans Union's billing records for individual cases show that Mr. Cento prepared Trans Union 30(b)(6) witnesses for and defended them at depositions on at least twenty-one occasions. Preparation for these depositions included discussions of confidential and proprietary information, much of which was not revealed at depositions.¹⁰ Additionally, Mr. Cento preparednumerous confidential settlement statements for submission to the court, which were not publicly filed or served on opposing counsel.¹¹ He also attended settlement conferences on behalf of Trans Union.¹²

Finally, during his representation of Trans Union, Mr. Cento did defend it in at least two matters related to bankruptcy reporting.¹³ He also did research related to a class action alleging inaccurate bankruptcy information reporting.¹⁴

Analysis

The question presented is whether Mr. Cento should be disqualified because the matter on which he now represents the putative class is substantially related to his former representation of Trans Union, thus rendering his current representation in violation of Rule 1.9 of Indiana's Rules of Professional Conduct. Rule 1.9 is grounded in the presumption that attorneys receive client confidences during the course of a representation and that a subsequent representation threatens the compromise of those confidences. Mr. Cento maintains that the current and prior representations are not substantially related and that even if they are, he is entitled to rebut and has rebutted the presumption that he received confidential information in connection with his representation of Trans Union.

As to Mr. Cento's latter argument—that the rules permit him to rebut the presumption he received confidential information from Trans Union during the course of representing it—the parties have a fundamental legal disagreement. Trans Union contends that if it has shown thatthe two representations are substantially related, the presumption is irrebuttable and it is inappropriate for the court to examine the actual communications between Mr. Cento and Trans Union and to permit Mr. Cento to attempt to rebut the presumption of shared confidences.¹⁵ Therefore, if the court determines that the two representations are substantially related, it will then be required to resolve this issue as well.

As noted above, the threshold question presented is whether Mr. Cento's representation of Trans Union while at Katz & Korin and the Schuckit firm is substantially related to his current representation of a putative class against Trans Union. If they are substantially related, the court must then determine whether the disqualifying presumption can be rebutted—first from a legal standpoint and then as a factual matter. But before beginning that analysis, the court will address a...