Dewey v. R.J. Reynolds Tobacco Co.

• Decision Date: 01 February 1988
• Citation: 109 N.J. 201,536 A.2d 243
• Parties: , 56 USLW 2538 Claire E. DEWEY, Individually and as Executrix of the Estate of Wilfred E. Dewey, Deceased, Plaintiff-Respondent, v. R.J. REYNOLDS TOBACCO COMPANY, R.J. Reynolds Industries, Inc., and American Brands, Inc., Defendants, and Brown & Williamson Tobacco Corporation, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 201

109 N.J. 201

536 A.2d 243, 56 USLW 2538

Claire E. DEWEY, Individually and as Executrix of the Estate of Wilfred E. Dewey, Deceased, Plaintiff-Respondent, v. R.J. REYNOLDS TOBACCO COMPANY, R.J. Reynolds Industries Inc., and American Brands, Inc., Defendants and Brown & Williamson Tobacco Corporation, Defendant-Appellant.

Supreme Court of New Jersey.

Argued Nov. 9, 1987.

Decided Feb. 1, 1988.

Martin London, New York City, a member of the New York bar, for defendant-appellant (Norris, McLaughlin & Marcus, Somerville, attorneys; M. Karen Thompson, Somerville, on the brief).

Michael P. Ambrosio, for plaintiff-respondent, Claire E. Dewey, Individually and as Executrix of the Estate of Wilfred E. Dewey, Deceased (Wilentz, Goldman & Spitzer, attorneys; Alan M. Darnell, Frederick J. Dennehy, Woodbridge, and Roger H. McGlynn, Mendham, of counsel and on the briefs).

Peter N. Perretti, Jr., Morristown, on behalf of R.J. Reynolds Tobacco Company (Riker, Danzig, Scherer, Hyland & Perretti, attorneys; Peter N. Perretti, Jr., Nicholas deB. Katzenbach, and Alan E. Kraus, on the brief).

The opinion of the Court was delivered by

CLIFFORD, J.

This is an action for damages based on theories of products liability and fraud. Plaintiff claims that her husband's death was caused by his cigarette smoking. Defendants are several tobacco and cigarette companies, including Brown & Williamson Tobacco Corporation. The appeal arises from Brown & Williamson's motion to disqualify one of the two firms that represent plaintiff, because of that firm's conflict of interest. The trial court concluded that there was in fact a conflict. We now review that conclusion in keeping with the provisions of our previous order granting leave to appeal, 108 N.J. 198, 527 A.2d 1391 (1987). See infra at 246-247.

The question presented is one of first impression under the Rules of Professional Conduct (RPCs) adopted by this Court in 1984. Resolution of the issue requires us to balance "the need to maintain the highest standards of the [legal] profession" against "a client's right freely to choose his counsel." Government of India v. Cook Indus., Inc., 569 F.2d 737, 739 (2d Cir.1978). We have engaged in the required "painstaking analysis of the facts," Reardon v. Marlayne, Inc., 83 N.J. 460, 469, 416 A.2d 852 (1980) (quoting United States v. Standard Oil Co., 136 F.Supp. 345, 367 (S.D.N.Y.1955)), and conclude that although counsel's disqualification ordinarily would be required, such a drastic result in this case would produce undue prejudice to the plaintiff as well as to the judicial system in general. Therefore, despite the most unfortunate departure from the requirements of the RPCs, we order that the challenged representation will be allowed to continue.

I

Plaintiff, Claire Dewey (Dewey), individually and as executrix of her husband's estate, brought this action against several tobacco and cigarette companies, including defendant Brown & Williamson. As indicated, the gist of the action is that Dewey's husband, Wilfred, died of lung cancer, having developed the disease as a result of smoking the defendants' cigarette products.

The complaint was filed in August 1982 by the law firm of Budd, Larner, Gross, Picillo, Rosenbaum, Greenberg & Sade (the Budd, Larner firm). Subsequently, the firm of Wilentz, Goldman & Spitzer (the Wilentz, Goldman firm) became co-counsel with Budd, Larner. At all relevant times, Alan Darnell, a shareholder of the Wilentz firm, has been the attorney primarily responsible for representing plaintiff's interest. A third firm, Porzio, Bromberg & Newman (the Porzio, Bromberg firm), also became co-counsel at the same time, although its involvement ended when the attorney in that firm who was responsible for this case left Porzio, Bromberg and became affiliated with Budd, Larner. These three firms, as co-counsel, have filed eight actions against tobacco companies in the state and federal courts in New Jersey. Brown & Williamson is named as a party in some but not all of those lawsuits.

The instant matter has been actively litigated, including the pursuit of a partially successful motion for summary judgment by Brown & Williamson, see 216 N.J.Super. 347, 523 A.2d 712 (Law Div.1987), and an interlocutory appeal therefrom. As of September 30, 1986, attorneys in the Wilentz, Goldman firm had devoted over 1,100 hours to the preparation of this case for trial, and the firm's paralegals had devoted more than 700 additional hours.

As a third-party defendant in two other products liability actions venued in New Jersey, Brown & Williamson previously had been represented by the firm of Rosen, Weiss, Slattery & Burstein (the Rosen firm, since dissolved). In September 1982 Brown & Williamson retained the Rosen firm to represent it in this, the Dewey case. That law firm was also retained to represent Brown & Williamson as a defendant in a second case with allegations similar to those made in this one, and to monitor and assist in the defense of other tobacco cases in which it was not a party.

As of September 1982, the Rosen firm consisted of four partners--Howard Rosen, Sidney Weiss, William Slattery, and George Gelman--and twelve associates. Although it appears that Gelman produced Brown & Williamson as a client initially, Slattery eventually assumed responsibility for this and the other tobacco cases. Weiss primarily handled corporate and commercial transactions, as well as administrative law and utilities cases. As Slattery admits, Weiss "had no direct responsibility for the smoking and health litigations."

During the period 1982 through 1985, the Rosen firm employed a total of twenty-one attorneys. At any one time, the firm consisted of no more than sixteen and no fewer than eight attorneys. Fifteen attorneys, including Weiss, billed time for legal services to Brown & Williamson during that period, as did six law clerks and five paralegals. Of those fifteen attorneys, four partners and four associates had "significant involvement" with Brown & Williamson files. At least two attorneys devoted a "substantial amount" of time to Brown & Williamson files at all times. There is nothing in the record before us to indicate what is meant by "significant involvement" or a "substantial amount" of time, other than Slattery's certification indicating that he devoted more than half of his time to Brown & Williamson matters in 1984, and more than three-quarters of his time to that client in 1985.

From March 1981 through November 1985, Brown & Williamson paid the Rosen firm substantial fees. During the calendar years 1983, 1984, and 1985 the Brown & Williamson billings represented approximately five, ten, and twenty per cent, respectively, of the firm's revenues. The firm divided its net profits among its members, and Weiss shared accordingly in those profits.

On November 15, 1985, more than three years after the instant litigation was commenced, Slattery left the Rosen firm and became a partner at the firm of Norris, McLaughlin & Marcus (the Norris, McLaughlin firm), taking Brown & Williamson with him as a client. Appropriate Substitutions of Attorneys were filed, and the Norris, McLaughlin firm has remained as defense counsel for Brown & Williamson in this and other cases since that date.

In May 1986 Weiss left the Rosen firm and became a partner in the Wilentz, Goldman firm. Since joining that firm, Weiss has had no involvement in tobacco cases, nor has he had any discussions with anyone in the firm regarding the merits of any tobacco cases.

There is some dispute about whether Slattery learned of Weiss's intended affiliation with the Wilentz, Goldman firm prior or subsequent to Weiss's relocation. At no time did Weiss or anyone at the Wilentz, Goldman firm seek Brown & Williamson's consent to the Wilentz, Goldman firm's continuing as counsel for plaintiff.

On September 3, 1986, New York counsel for Brown & Williamson sent a letter to Darnell requesting that the Wilentz, Goldman firm voluntarily withdraw as counsel for plaintiff because of Weiss's affiliation with that firm. Following Wilentz, Goldman's refusal to withdraw, Brown & Williamson moved for that firm's disqualification. After oral argument on the motion the trial court ruled that an evidentiary hearing was required.

After granting Brown & Williamson's motion for leave to appeal, the Appellate Division summarily affirmed, directing that the evidentiary hearing proceed but that "any inquiry be limited to determine whether the former client [Brown & Williamson] has established the requisites of criteria (2) and (3)" set forth in Reardon v. Marlayne, Inc., supra, 83 N.J. at 474, 416 A.2d 852. In Reardon we devised a three-part test for determining whether an attorney should be disqualified from successive representation of an adverse interest. We summarized the disqualifying circumstances as follows:

(1) a prior attorney-client relationship between the former client and the attorney sought to be disqualified;

(2) a substantial relationship or a reasonable perception, from the public's perspective, of a substantial relationship between the subject matter of the present suit and that of cases worked on during the former representation;

(3) access to relevant confidences of the former client, which may be proved by other than direct evidence, leading to a conclusive presumption of the attorney's knowledge of such confidences. [Ibid.]

Thereafter the trial court, without a hearing, ordered the disqualification of the Wilentz, Goldman firm. Plaintiff obtained leave to appeal in the Appellate Division, and a different panel of that court remanded the matter to the trial court for factual findings on "whether Mr. Weiss * * * had actually acquired information protected by confidentiality which is material to the matter. See RPC 1.10(b)." The Appellate Division granted Brown & Williamson's motion to stay its order remanding the case, after which this Court granted Brown &...