Chrysler Corp. v. Carey

• Decision Date: 26 May 1998
• Docket Number: No. 4:96CV591 CDP.,4:96CV591 CDP.
• Parties: CHRYSLER CORPORATION, Plaintiff, v. John J. CAREY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

Page 1023

5 F.Supp.2d 1023

CHRYSLER CORPORATION, Plaintiff, v. John J. CAREY, et al., Defendants.

No. 4:96CV591 CDP.

United States District Court, E.D. Missouri, Eastern Division.

May 26, 1998.

COPYRIGHT MATERIAL OMITTED

Ronald A. Norwood, Sr., Barry A. Short, Gary M. Smith, John E. Hall, Julia J. Lilly, Lewis and Rice, St. Louis, MO, Jacqueline Glassman, Chrysler Corp., Highland Park, MI, for Chrysler Corp.

Richard C. Wuestling, IV, Wuestling and James, St. Louis, MO, Louis J. Basso and Krup, Ballwin, MO, for John J. Carey, Joseph P. Danis, Carey & Danis, L.L.C.

MEMORANDUM AND ORDER

PERRY, District Judge.

This matter is before the Court on cross-motions for summary judgment filed by the parties in this case. This case pits plaintiff Chrysler Corporation against two attorneys who formerly worked at a law firm that represented Chrysler in defending various class action lawsuits involving alleged defects in certain Chrysler vehicles. While at this firm, both attorneys did a significant amount of work on several of these lawsuits. After leaving the firm, the two attorneys formed their own firm and agreed to serve as plaintiff's counsel in a putative class action against Chrysler, albeit involving an alleged defect different from the defects claimed to exist in the cases on which they had worked while at their former firm. Claiming that the conduct of the attorneys was not only unethical but also tortious, Chrysler filed the instant suit. The defendants are the two attorneys and their law firm. Because its claims are based entirely on Missouri law, Chrysler has invoked the court's diversity jurisdiction. In its second amended complaint,¹ Chrysler alleges breach of fiduciary duty/constructive fraud (count I), tampering with computer data in violation of a Missouri statute (count II), and breach of contract (count III). In count IV, Chrysler seeks injunctive relief against defendants. For the reasons set forth below, the Court will deny the motions of both plaintiff and defendants in all but one respect: the Court will enter summary judgment in favor of defendant Carey on Chrysler's breach of contract claim.

I. Facts²

Defendants John Carey and Joseph Danis³ are former associates at the St. Louis law firm Thompson & Mitchell ("T & M") (now Thompson Coburn). They are both graduates of the St. Louis University Law School and members of the Missouri and Illinois bars. Carey worked at T & M from August 3, 1987, to January 13, 1995. Danis worked at T & M from August 1993 until January 14, 1995. During Carey and Danis' time at T & M, Charles Newman, then a senior partner with the firm, represented plaintiff Chrysler Motor Corporation as lead counsel on most of its product liability class action litigation. Under Newman's direction, Carey and Danis worked on the five Chrysler class action lawsuits described below.

Osley v. Chrysler Corp., No. 92-424-JPG (S.D.Ill.), was a class action suit in which the plaintiffs claimed that two Chrysler vehicle models, the Renault Alliance and Encore, had defective heater cores. Plaintiffs sought actual and punitive damages. In particular, plaintiffs demanded that Chrysler compensate them for the alleged diminution in value of their vehicles. In Osley, Carey, working under Newman's supervision, drafted motions and briefs, conducted discovery, and communicated frequently with Chrysler and with plaintiffs' attorneys. Specifically, his Osley-related work included researching the feasibility of removing the case from state to federal court, drafting a third-party complaint against the supplier, locating and identifying potential experts to testify regarding plaintiffs' damage claims, working on the opposition brief to the plaintiffs' class certification motion, and participating in discussions with Chrysler regarding class action defense issues and settlement strategy. In connection with the settlement of the case, Carey redrafted the plaintiffs' amended complaint in order to make it as broad as possible and thereby achieve the greatest res judicata effect. During his time at T & M, Carey billed 616 hours on the Osley matter. Danis's involvement in the case was much less significant. While a summer associate at T & M, he performed a limited amount of legal research on the case. Osley was settled on September 3, 1993.

Carey and Danis also worked on four state court class actions involving allegedly defective rear door latches in Chrysler minivans: Larpenteur v. Chrysler Corp., No. 44366 (18th Judicial Dist. La.), Peterson v. Chrysler Corp., No. CV-94-001377 (Cir. Ct. of Mobile County, Ala.), Drake v. Chrysler Corp., No. 94-0552 (Cir. Ct. of Harrison County, Tex.), and Mann v. Chrysler Corp., No. CV746017 (Sup.Ct. of Santa Clara County, Cal.) (collectively, the "Latch class actions"). The plaintiffs in these cases sought damages for the cost of remedying the claimed defect. In Drake and Mann, the plaintiffs also specifically sought diminution in value damages. Under Newman's direction, both Carey and Danis worked on these four cases at some time during 1994. Carey performed essentially the same type of work as he had in the Osley case. According to T & M's time records, Carey billed 188.6 hours on Larpenteur, 202.2 hours on Peterson, and 137.4 hours on Drake. Danis's tasks included performing research, writing briefs, and drafting discovery requests and responses. After Newman became dissatisfied with Danis's work ethic, he removed Danis from working further on Chrysler matters.

In connection with both Osley and the Latch class actions, regular exchanges of confidential information between Chrysler and T & M took place. During the period in which Carey and Danis worked on Chrysler matters, they had complete access to T & M's files pertaining to these cases and to the firm's local area network ("LAN"). The LAN contained drafts and final versions of pleadings, research, memoranda, and communications with Chrysler. The LAN also contained a gateway via which T & M and personnel in the office of Chrysler's general counsel could communicate by electronic mail.

During the time that they spent working on Chrysler's matters at T & M, Carey and, to a lesser extent, Danis frequently participated in conferences with Newman and Chrysler's in-house counsel regarding defense strategy. In a typical week, Carey would speak by telephone with Chrysler's lawyers several times. Carey and Danis toured Chrysler manufacturing facilities, met with Chrysler officials, and learned about Chrysler's organizational structure. However, while at T & M, neither Carey nor Danis did any work on a Chrysler class action in which the allegedly defective component was an anti-lock braking system.

Carey billed in excess of 1,100 hours to Chrysler matters during 1993 and 1994, his last two years at T & M. Approximately twenty-seven percent of his total billable hours were spent working on Chrysler cases. During 1994, Danis' only full year at T & M, he charged over 400 hours to Chrysler matters, or approximately twenty-three percent of his billable hours.

As T & M associates, Carey and Danis each signed written confidentiality agreements with T & M. Carey's agreement stated that T & M expected his "professional conduct to be guided by the highest standards of the legal profession." It further provided, "In carrying out matters assigned to you or in connection with matters that otherwise come to your attention as an associate of the firm, you shall maintain complete confidentiality." Danis's agreement, which he signed on August 16, 1993, shortly after arriving at the firm, was more formal. It provided, in relevant part:

Thompson & Mitchell represents its clients regarding matters which are sometimes quite complicated and sensitive. Even the slightest reference to such a matter could have a major adverse impact on the client and, in turn, the Firm.

. . . . .

A client's confidence is not expected to be shared with persons within the office who do not have a need to know nor anyone outside the office, including family members or friends.

To emphasize the importance of the Firm's position regarding this policy, you are asked to sign this statement indicating that ... you will treat all information confidentially during and after your association with the Firm.

In November 1994, Carey and Danis gave notice to T & M that they intended to resign from the firm. They left T & M in mid-January 1995. Before their departure, Carey and Danis each took with them copies of various pleadings and memoranda. Carey took fourteen Chrysler-related documents totaling 195 pages. Danis took sixty-six Chrysler-related documents totaling 801 pages. Some of these documents pertained to Chrysler cases on which Danis had done no work. For example, Danis took a copy of a memorandum opposing class certification filed by T & M in Jones v. Chrysler, a case brought against the company in the Eastern District of Missouri. The certificate of service attached to this memorandum is dated August 21, 1987. Danis also took two memoranda authored by Newman which are specifically labeled "Confidential and Privileged." One of these documents is a June 15, 1994, memorandum to "File" concerning the Drake case. Some of the documents taken by Danis were not in hard copy form, but were copied off of T & M's LAN. Danis obtained these latter documents by accessing that LAN and saving the documents onto floppy disks. Among the documents taken by Danis in this manner was the second amended complaint in Osley that Carey had drafted in connection with the settlement of that case. T & M's computer records show that Danis saved this document to his "home area" on or after December 19, 1994. Neither Carey nor Danis informed T & M that he was taking any of the aforementioned documents.

Shortly after leaving T & M, Carey and Danis formed the law firm of Carey & Danis, L.L.C. ("Carey & Danis"), which, as mentioned above, is also a defendant in this case. The firm shares...