City of Kalamazoo v. Michigan Disposal Service

• Decision Date: 30 April 2001
• Docket Number: No. 1:99-CV-338.,1:99-CV-338.
• Citation: 151 F.Supp.2d 913
• Parties: CITY OF KALAMAZOO, et al., Plaintiffs, v. MICHIGAN DISPOSAL SERVICE, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

Page 913

151 F.Supp.2d 913

CITY OF KALAMAZOO, et al., Plaintiffs, v. MICHIGAN DISPOSAL SERVICE, et al., Defendants.

No. 1:99-CV-338.

United States District Court, W.D. Michigan, Southern Division.

April 30, 2001.

John A. Ferroli, Dykema Gossett, PLLC, Grand Rapids, MI, Robert H. Cinabro, Office of the City Attorney, Kalamazoo, MI, for City of Kalamazoo.

John A. Ferroli, Dykema Gossett, PLLC, Grand Rapids, MI, Scott S. Brinkmeyer, Mika, Meyers, Beckett & Jones, PLC, Grand Rapids, MI, for Cork Street Landfill Group.

Gary A. Trepod, Hubbard, Fox, Thomas, White, et al, Lansing, MI, for Michigan Disposal Service Corporation, MDS Liquidating Trust, Dell View Corporation, and James J. Dekruyter.

Mark F. Miller, DeNardis, McCandless & Muller, PC, Detroit, MI, for Parker Hannifn Corporation.

Todd R. Dickinson, Fisher & Dickinson, PC, Ada, MI, for Brunswick Corporation.

Christopher E. Tracy, Janice N. Pavel, Zevnik, Horton, Guibord, Chicago, IL, for Pneumo Abex Corporation.

OPINION

QUIST, District Judge.

This Court has before it Plaintiffs' Appeal of Magistrate Judge Joseph G. Scoville's December 22, 2000, order disqualifying Plaintiffs' counsel, Dykema Gossett, PLLC ("Dykema Gossett"), from representing Plaintiffs in this case. Disqualification was sought by Defendant Brunswick Corporation ("Brunswick") on the basis that Dykema Gossett served as common counsel to a group of defendants, including Brunswick (referred to herein as the "Joint Defense Group" or "Group"), in a prior action related to this case for recovery of response costs incurred in connection with the release or threatened release of hazardous substances from the West KL Avenue Landfill (the "West KL Litigation"). In a lengthy and thorough Opinion, Magistrate Judge Scoville reached the following conclusions: (1) Pursuant to the Joint Defense Agreement (the "Agreement") signed by the members of the Joint Defense Group, Dykema Gossett had a direct attorney-client relationship with Brunswick, as a member of the Joint Defense Group; (2) Dykema Gossett's representation of Plaintiffs in this case is materially adverse to Brunswick; (3) the instant litigation, involving the Cork Street Landfill, is substantially related to the West KL Litigation; (4) because of the previous direct representation by Dykema Gossett, there was an unrebuttable presumption that Brunswick and members of the Joint Defense Group had shared confidential information with Dykema Gossett, or alternatively, applying a rebuttable presumption, Dykema Gossett failed to demonstrate that no confidential information was shared; (5) Brunswick did not waive the conflict; and (6) Plaintiffs failed to show that other considerations weighed against requiring disqualification of Dykema Gossett.

This appeal is before this Court by reason of an Order of Temporary Reassignment issued on February 27, 2001, by Chief Judge Enslen, reassigning the instant appeal from Judge McKeague to this Court on the basis that Judge McKeague may have a conflict of interest in the resolution of this appeal. This appeal is subject to the "clearly erroneous" standard set forth in 28 U.S.C. § 636(b)(1)(A). Plaintiffs raise several arguments in support of their claim that Magistrate Judge Scoville's order of disqualification must be reversed. The Court will address each issue separately below. Because the essential facts are adequately set forth in the magistrate judge's opinion, the Court will incorporate those facts by reference.

Issues

Plaintiffs raise the following issues on appeal:

1. Whether the magistrate judge applied incorrect legal standards and improperly interpreted the Agreement in concluding that Dykema Gossett had a direct attorney client relationship with Brunswick?

2. Whether the magistrate judge applied an incorrect legal standard with regard to the issue of shared confidential information?

3. Whether the magistrate judge incorrectly concluded that Brunswick transferred confidential information to Dykema Gossett in Joint Defense Group meetings in the West KL Litigation that is substantially related to the instant case?

4. Whether, in the absence of a direct attorney-client relationship, Brunswick presented sufficient evidence to carry its burden of demonstrating an implied attorney-client relationship?

5. Whether Brunswick would be prejudiced by Dykema Gossett's current representation, even assuming the existence of a conflict of interest?

6. Whether, assuming the existence of a conflict of interest as to Brunswick, the magistrate judge improperly disqualified Dykema Gossett with respect to the remaining Defendants?

Discussion

I. Existence of Direct Attorney-Client Relationship

Plaintiffs cite two reasons why the magistrate judge erred in concluding that Dykema Gossett had an attorney-client relationship with Brunswick. First, they contend that the magistrate judge failed to properly apply Michigan Rule of Professional Conduct ("MRPC") 1.13(a), which applies to an attorney's representation of an organization, including unincorporated associations. Second, Plaintiffs contend that the Magistrate Judge erred in concluding that the provisions of the Agreement supported the existence of a direct attorney-client relationship between Dykema Gossett and Brunswick. The Court notes that Plaintiffs do not argue that Dykema Gossett did not have a direct attorney-client relationship with the Joint Defense Group.¹

Plaintiffs contend that had the magistrate judge correctly applied MRPC 1.13(a), he could not have concluded that Dykema Gossett had an attorney-client relationship with Brunswick. That rule provides:

A lawyer employed or retained to represent an organization represents the organization as distinct from its directors, officers, employees, members, shareholders, or other constituents.

Mich. Rules Of Prof'l Resp. R. 1.13(a). The comments to MRPC state that the rule applies to unincorporated associations. Magistrate Judge Scoville cited Rule 1.13 in noting that the once generally accepted rule that an attorney representing an unincorporated association also represents the individual members solely by virtue of their membership in the association has been replaced by rules that treat unincorporated associations like corporations for purposes of determining an attorney's ethical responsibility. Although Magistrate Judge Scoville acknowledged that a straightforward application of Rule 1.13 makes sense in the case of a trade association or union, he found that limiting the attorney-client relationship to the Group makes little sense in this case because, unlike the typical union or trade association, the association at issue here was not an ongoing concern but rather was formed by a group of defendants for the limited purpose of presenting a joint defense on issues common to the defendants.

Plaintiffs contend that Rule 1.13 does not provide an exception for an unincorporated association under any circumstance, including joint defense groups, as demonstrated by more recent case law. This Court disagrees because even recent cases recognize that Rule 1.13(a) is not an absolute. For example, in Willig, Williams & Davidson v. Walters, No. CIV. A. 93-0642, 1993 WL 224723 (E.D.Pa. June 22, 1993), the court stated: "Pursuant to [the entity theory of representation adopted by Rule 1.13], an attorney who represents an organization does not automatically represent its individual members. A case by case review on the representation issue is appropriate." Id., 1993 WL 224723, at *3. Similarly, in United States v. American Society of Composers, Authors and Publishers ("ASCAP"), 129 F.Supp.2d 327 (S.D.N.Y.2001), while observing that "[t]he mere status of being a member of an unincorporated association no longer makes one a client of the association's attorneys," the court found that the particular circumstances of each case must be examined to determine whether an attorney-client relationship existed between the association's attorney and a member. Id. at 337-38 (quoting N.Y.C. Ass'n B. Comm. Prof'l Ethics Formal Op. 1 (1999)("Formal Op. 99-1")). The court identified the following factors as relevant to the determination: (1) the nature of disclosures to the attorney; (2) the member's expectations of the attorney; (3) the reasonableness of those expectations; (4) whether the attorney affirmatively assumed a duty to represent the member; (5) whether the member had independent representation; (6) whether the attorney representing the association represented the member prior to representing the association; and (7) whether the member relied upon the attorney's representation of its individual interest. Id. at 338 (citing Formal Op. 99-1).

In Shadow Isle, Inc. v. American Angus Association, No. 84-6126-CV-SJ-6, 1987 WL 17337 (W.D.Mo. Sept.22, 1987), the plaintiff sued, among others, an incorporated, not-for-profit trade association of which the plaintiff was a member. The association was represented by the law firm that served as corporate counsel to the association. The plaintiff moved for disqualification of the association's counsel on the grounds that representation of the association by its counsel created a conflict of interest because the plaintiff had an attorney-client relationship with the association's counsel by virtue of the plaintiff's membership in the association. The court found that disqualification was unnecessary because of Rule 1.13 and the fact that the association's counsel had never considered the plaintiff or the individual members of the association to be clients. Id., 1987 WL 17337, at *3. In rejecting various cases cited by the plaintiff for the proposition that members of an unincorporated association are to be considered clients of the association's lawyers, the court specifically distinguished the case of Glueck v. Jonathan Logan, Inc., 653 F.2d 746 (2d Cir.1981). In Glueck, the plaintiff's counsel represented a not-for-profit incorporated trade association of manufacturers in...