Cobb Publishing, Inc. v. Hearst Corp., 93-CV-71771-DT.

Decision Date31 January 1995
Docket NumberNo. 93-CV-71771-DT.,93-CV-71771-DT.
Citation907 F. Supp. 1038
CourtU.S. District Court — Eastern District of Michigan
PartiesCOBB PUBLISHING, INC., and Joseph T. Cobb, Plaintiffs, v. HEARST CORPORATION, and Dow Jones & Co., Defendants.

Mark Cantor, Ernie L. Brooks, Southfield, MI, for plaintiffs.

Marjory G. Basile, Gregory L. Curtner, Michael Fayz, Detroit, MI, for defendants.

OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR DISQUALIFICATION OF DEFENSE COUNSEL

BORMAN, District Judge.

I. Introduction

On April 28, 1993, Plaintiffs Cobb Publishing, Inc. and Joseph T. Cobb (hereinafter Cobb), by their attorneys, Brooks and Kushman (hereinafter BK), filed suit charging Defendants Hearst Corporation, and Dow Jones and Co., with, inter alia, violation of copyright protection laws, and breach of contract. Defendants Hearst and Dow Jones retained the law firm of Miller, Canfield, Paddock and Stone (hereinafter MC) to represent them. The case was assigned to Chief Judge Julian Abele Cook, Jr.

On August 22, 1994, Plaintiff Cobb filed a Motion to Disqualify Defendants' Counsel as a result of MC's hiring of BK attorney Steven Cohen on August 8, 1994, during the pendency of this litigation. On September 7, 1994, this case was reassigned from Chief Judge Cook to the undersigned Judge. On October 27, 1994, this Court held an evidentiary hearing on Plaintiff's Motion to Disqualify, at which Cohen, and MC attorney Marjorie Basile testified.

Plaintiff Cobb was initially represented by three BK attorneys: Ernest Brooks, Mark Cantor, and Cohen. Cohen spent the greatest amount of time on the case, approximately 300 hours, and had an extensive amount of contact with Plaintiff Cobb. (Cantor, October 27, 1994 Hearing ((hereinafter Hearing)) TR.5); (Cohen, Hearing TR.45).1 Cobb continues to be represented by Brooks and Cantor of BK.

Defendants Hearst and Dow Jones have been represented by three MC attorneys: Gregory Curtner, Marjorie Basile, and Michael Fayz. Messrs. Curtner and Fayz practice in MC's commercial litigation group; Ms. Basile's expertise is in intellectual property.

II. Issue for Decision

The principal issue before the Court is whether to disqualify MC from further representation of defendants. This requires the application of Sixth Circuit precedent, and Michigan Rule of Professional Conduct 1.10(b) (hereinafter MRPC 1.10(b)), which has been adopted by the Federal District Court for the Eastern District of Michigan, Local Rule 111.1(d). MRPC 1.10(b) states in pertinent part:

Rule 1.10 Imputed Disqualification: General Rule.
. . . . .
(b) When a lawyer becomes associated with a firm, the firm may not knowingly represent a person in the same ... matter in which that lawyer, or a firm with which the lawyer was associated, is disqualified under Rule 1.9(b) unless:
(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and,
(2) written notice is promptly given to the appropriate tribunal to enable it to ascertain compliance with the provisions of this rule.
III. Material Facts

On June 23, 1994, BK attorney Steven Cohen sent a letter seeking employment to Ms. Keitha Vanderkloot, MC's recruiting coordinator. (Cohen, Hearing, TR.44). Cohen did not inform BK or Plaintiff Cobb of his interest in employment at MC (Id.).

During the first week of July, 1994, Vanderkloot and Cohen, by phone, discussed his coming to interview at MC. During that conversation, Cohen specifically informed Vanderkloot, "the recruiting coordinator that I was working on a case in which MC's Mr. Curtner and Mr. Fayz were defense counsel." (Cohen, Hearing, TR.44-46).

Cohen first interviewed at MC on July 22, 1994, and had a second interview on July 29, 1994. Cohen testified that he did not believe he raised the conflict issue at the first interview, but as to the second interview, stated, "I seem to recall I may have raised it, but I can't be sure." (Cohen, Hearing, TR.47). None of the three MC attorneys involved in the instant case, Curtner, Fayz or Basile, were aware, at that time, of Cohen's communications with Vanderkloot, or of his two employment interviews at MC.

On August 3, 1994, after consultation between the Chair of MC's Public Finance Group, Joel Piell, and its Hiring Principal, Thomas Parachini, the firm mailed to Cohen an offer of employment in its Public Finance Group. (Affidavit of Keitha Vanderkloot, October 4, 1994, P. 3.)

On Monday, August 8, 1994, Cohen called Vanderkloot to accept the MC offer, and informed Cantor of BK of his intention to join MC. On August 12, 1994, Cohen terminated his employment at BK (Cohen, Hearing, TR.48).

On August 12, 1994, Cohen's last day of employment at BK, MC attorney Basile phoned him at BK to discuss a different federal case in which BK and MC were also representing the plaintiffs and defendants, respectively, Advance Watch Co. v. American Licensing Group, 94-CV-71069. Cohen informed Basile that he couldn't talk to her because he was joining the MC firm "starting next week." (Basile, Hearing, TR.66;2 Cohen, Hearing, TR.55).

On August 15, 1994, Cohen began employment with MC in the Public Finance Group. MC did not utilize an intake interview procedure or debriefing to determine potential conflicts of interest (Cohen, Hearing, TR.54-55). Cohen testified that the first time anyone from MC talked to him "about the possible conflict on the Cobb case" was "two to three weeks after my starting date," when he received a phone call from Parachini, MC's Hiring Principal. (Cohen, Hearing, TR.48).

On August 16, 1994, Chief Judge Cook held a motion hearing in Cobb v. Hearst; Cohen was not in attendance. The issue of Cohen's transfer from BK to MC was not raised by either party.3 Curtner stated at the instant hearing, that he first learned from Ms. Basile "that Steven Cohen now works for us", as he was leaving that August 16th hearing (Curtner, Hearing, TR. 18). Ms. Basile testified that she first realized that Cohen had changed employment, after that August 16th hearing when MC Attorney Fayz said that Cohen "took a position with the MC public law department, and Greg Curtner looked at me and said, did you know that, and I said, I know he started with the firm this week because he told me that last week when talking to him on another matter." (Basile, Hearing, TR.67-68). Curtner stated at the instant hearing, that he "immediately said to Basile and Fayz, don't talk to him, none of you are to talk to him" (Curtner, Hearing, TR.9), and "instructed Fayz to get a copy of the rules to check it." (Curtner, Hearing, TR. 18).

On August 18, 1994, three days after Cohen had begun practicing at MC, MC's Fayz mailed a Cobb v. Hearst pleading to BK, listing Cohen as the BK attorney upon whom service was made. (MC Supplemental Response, Oct. 4, 1994, p. 6)

On August 22, 1994, the instant Plaintiff's Motion for Disqualification, which had been mailed to the Federal District Court on August 19, 1994, was received and filed by the Court.

On August 26, 1994, MC's Parachini, sent out a "Notice: Chinese Wall" e-mail to all MC staff regarding Steven Cohen's joining the firm. (Curtner, Hearing, TR. 19).

On August 31, 1994, Parachini, as MC's Hiring Principal, sent a letter (ATTACHMENT I) to Chief Judge Cook notifying him, pursuant to MRPC 1.10 of MC's hiring of Cohen, and attaching a copy of MC's August 26, 1994 Chinese Wall Notice (ATTACHMENT II).

Curtner provided the following explanation for the delay from August 16th, when he first learned of Cohen's hiring, until MC's August 26th Chinese Wall E-mail:

The reason for that was that it took us that long to check the rule, and I also attempted to communicate with Mr. Piell, who is the chair of the public law group, to ascertain the facts from him regarding the employment of Mr. Cohen, and Mr. Piell was on vacation, and I also had to do the communicating through channels. I didn't want to speak to Mr. Cohen directly. (Curtner, Hearing, TR.19).

Curtner stated that the August 31st letter to Chief Judge Cook came from Parachini, rather than himself, because "I asked him to take charge of things because I thought that was the most appropriate thing to do as head of recruiting." (Curtner, Hearing, TR.20). Curtner further stated:

It is reasonable to assume that Ms. Vanderkloot kept him Parachini generally apprised, and it is accurate that he knows before an offer is made. (Curtner, Hearing, TR.14).

Based upon the preceding information, this Court finds the following facts:

(1) Cohen, while at BK, had extensive involvement in the representation of, and direct contact with Plaintiff Cobb regarding the identical case presently before this Court. Accordingly, there is a substantial relationship between the subject matter of Cohen's prior representation of Plaintiff Cobb and MC's present representation of Hearst Corporation and Dow Jones.

(2) During the first week of July 1994, Cohen informed Vanderkloot, MC's recruiting coordinator, that his practice at BK created a conflict of interest since MC represented an adversary party on a case.

(3) No comprehensive firm-wide screen or wall was erected at MC and noticed to all MC attorneys and staff when Cohen was hired on August 8, 1994.

(4) No such MC screen or wall was erected and noticed on August 12th, when Cohen told MC attorney Basile that he couldn't talk to her because he was joining MC.

(5) No such MC screen or wall was erected and noticed on August 15th when Cohen began work at MC.

(6) MC did not conduct an intake interview of Cohen to determine conflicts of interest, prior to, or when he began work there on August 15, 1994.

(7) MC did not notify Chief Judge Cook, pursuant to MRPC 1.10(b)(2), prior to or at the Cobb v. Hearst hearing on August 16, 1994.

(8) No such MC screen or wall had been erected and noticed on August 16, 1994, when MC attorneys appeared before Chief Judge Cook, nor was such a screen or wall erected on that date after the...

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