Doe v. Perry Community School Dist.

• Decision Date: 05 September 2002
• Docket Number: No. 01-1883.,01-1883.
• Citation: 650 N.W.2d 594
• Parties: Jane DOE, by John DOE and Mary Doe, Her Father and Mother and Next Friends, and John Doe and Mary Doe, Individually, Appellants, v. PERRY COMMUNITY SCHOOL DISTRICT, Arthur Pixler, and Russell Gronewold, Appellees.
• Court: Iowa Supreme Court

650 N.W.2d 594

Jane DOE, by John DOE and Mary Doe, Her Father and Mother and Next Friends, and John Doe and Mary Doe, Individually, Appellants, v. PERRY COMMUNITY SCHOOL DISTRICT, Arthur Pixler, and Russell Gronewold, Appellees.

No. 01-1883.

Supreme Court of Iowa.

September 5, 2002.

Paige Fiedler of Fiedler & Townsend, P.L.C., Johnston, for appellants.

Larry D. Spaulding and Samara R. Sarno of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellees.

STREIT, Justice.

Litigants in a civil sexual abuse case against a school district want the court to stop their lawyer's new law firm from representing the school district in the litigation. The law firm, Bradshaw, Fowler, Proctor & Fairgrave, P.C., argues it has implemented a screening mechanism sufficient to prevent the disclosure of confidential information between the disqualified associate, Jason Palmer, and the other members of the firm. The district court found adequate screening procedures were in place to ensure there was no actual conflict between the other members of the firm and its client. Because the representations by Palmer for the plaintiffs and the Bradshaw law firm for the defendants bear a substantial relationship to each other, we reverse and remand.

I. Facts and Background

Russell Alan Gronewold, an eighth-grade teacher at Perry Middle School was convicted of sexually abusing Jane Doe, one of his fourteen-year-old students. Attorney Brent Cashatt of Smith, Schneider, Stiles, Hudson, Serangeli, Mallaney & Shindler served as Doe's guardian ad litem in the criminal case. Attorney Jason Palmer was an associate with the Smith law firm at that time and appeared as the Does' attorney.

Doe and her parents retained Cashatt, Palmer, and Jan Mohrfeld to represent them in their civil suit against Gronewold, the Perry Community School District, and principal Arthur Pixler. Palmer attended a pre-petition conference with the clients. He prepared a draft of the petition using the clients' file, including internal memoranda. Palmer signed the petition and it was filed on February 26, 2001.

On March 21, 2001, members of Bradshaw, Fowler, Proctor & Fairgrave, P.C., appeared on behalf of the school district and Pixler. Palmer joined the Bradshaw firm in August 2001. Because of the conflict between Bradshaw's current representation of the defendants and Palmer's prior representation of the Does, Palmer filed a motion to withdraw as counsel for the Does.

The Does filed a motion to disqualify the Bradshaw firm based upon Palmer's prior representation of the Does in the same lawsuit. The district court denied the motion. The court presumed confidences were divulged by the Does to Palmer in the prior representation which may be relevant to the current representation. However, the court found it was clear Bradshaw ensured there was no actual conflict by creating a "Chinese Wall." The court further noted to disqualify Bradshaw at this stage of the proceedings would deny the defendants counsel of their choice and place them at a disadvantage in the lawsuit. We granted the Does' application for interlocutory appeal.

II. Scope of Review

We review a ruling on an attorney disqualification motion for abuse of discretion. Richers v. Marsh & McLennan Group Assocs., 459 N.W.2d 478, 481 (Iowa 1990). An abuse of discretion exists when the court's ruling is based on clearly untenable grounds. Id.

III. The Merits

This case presents an issue of first impression in Iowa. We must determine whether a screening mechanism known as a Chinese Wall is sufficient to allow a law firm to eliminate the conflict of an attorney who switched sides of representation during the same case. In general, an attorney must be disqualified from representing a party against a former client if the two representations bear a "substantial relationship" to each other. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Walters, 603 N.W.2d 772, 777 (Iowa 1999). Here, Bradshaw contends its implementation of a Chinese Wall is sufficient to avoid disqualification of the entire law firm. Before we turn to the main issue, we briefly address the use of screening mechanisms to allow a law firm to continue its representation of a client even though a conflict may exist.

In Iowa, we have not specifically dealt with the use of Chinese Walls in the attorney disqualification context.¹ However, the Iowa Supreme Court Board of Professional Ethics and Conduct has endorsed the use of screening procedures. The Board first approved the use of screening procedures where appropriate in Formal Opinion 87-33, June 10, 1988. It stated,

Screening is the process through which a disqualified lawyer is isolated from other lawyers in the firm so that the firm can try to avoid disqualification. Some courts have modified the imputed disqualification rule [that any knowledge a disqualified attorney holds is imputed to the members of his or her law firm so as to disqualify the entire firm] by holding that in some instances the presumption of shared confidences may be rebutted by use of an effective screening mechanism to cordon off the disqualified lawyer, thereby preventing that lawyer from tainting the other members of the law firm. The screening procedure is commonly referred to as a "Chinese Wall."

Id. (quoting ABA/BNA Lawyer's Manual on Professional Conduct 51:2004 (1986)). The Board of Professional Ethics and Conduct stated in appropriate situations carefully monitored screening policies and procedures can be effective. The Board has approved the use of the Chinese Walls to prevent disqualification of the entire law firm in various circumstances. See, e.g., Formal Op. 98-18 (Feb. 25, 1999) (Chinese Wall sufficient where conflict was fully disclosed and the clients consented); Formal Op. 98-09 (Dec. 3, 1998) (Chinese Wall sufficient to prevent disqualification of firm attorneys from practicing in juvenile court in same county where associate previously worked as assistant county attorney in adult and juvenile courts); Formal Op. 91-47 (May 18, 1992) (Chinese Wall sufficient where an associate could be shielded from the firm's cases over which the associate's husband, the Iowa Commissioner of Insurance, had jurisdiction); Formal Op. 87-33 (June 10, 1988) (Chinese Wall sufficient to screen new associate who is the wife of a department or division head in a state agency from the other members of the firm). Bearing in mind the purpose and use of a Chinese Wall, we now turn to the main issue.

We must determine whether the circumstances of this case require the Bradshaw firm's disqualification from its representation of the school district and principal. Once the Does prove there is a substantial relationship between the former and current representations, there is a presumption the attorney must be disqualified. Any knowledge a disqualified attorney holds is imputed to the members of his or her law firm so as to disqualify the entire firm. Hoffmann v. Internal Med., P.C., 533 N.W.2d 834, 836 (Iowa Ct.App.1995); Iowa Code of Prof'l Responsibility for Lawyers DR 5-105(E) ("If a lawyer is required to decline employment or to withdraw from employment, no partner or associate of the lawyer or the lawyer's firm may accept or continue such employment."); 7A C.J.S. Attorney & Client § 164, at 238 (1980).

The Does do not need to show confidences were actually disclosed by Palmer to prove a conflict exists. Walters, 603 N.W.2d at 778; 7A C.J.S. Attorney & Client § 162, at 236. To show the Bradshaw firm must be disqualified, the Does must only prove there is a substantial relationship between the former and the present representation. Richers, 459 N.W.2d at 481. In determining whether a substantial relationship exists, we consider: (1) the nature and scope of the prior representation; (2) the nature of the present lawsuit; and (3) whether the client might have disclosed a confidence to her attorney in the prior representation which could be relevant to the present action. Hoffmann, 533 N.W.2d at 837. The former client must be given the presumption confidences were disclosed. See, e.g., Richers, 459 N.W.2d at 482

(abuse of discretion existed where district court did not give former client the presumption that confidences were disclosed).

Bradshaw admits a substantial relationship exits between the two representations. Palmer's former representation of the Does and Bradshaw's current representation of the defendants involve the same case. Palmer filed a motion to withdraw from the current litigation because of his previous participation in the Does' case. The pending lawsuit includes allegations that the school district and principal knew Gronewold molested Doe but did nothing to stop the continual harassment and abuse. Such issues necessarily involve sensitive and confidential information. The Does likely disclosed confidences to Palmer in the prior representation which would certainly be relevant in Bradshaw's defense of the school district and principal. See id. As such, we conclude there is a substantial relationship between the former and the present representations. This determination alone requires disqualification of the Bradshaw firm.

Because of the strong appearance of impropriety, once we conclude a substantial relationship exists between the two representations, disqualification cannot be avoided. See 7A C.J.S. Attorney & Client § 159, at 229. Our rules of professional responsibility allow us to consider the appearance of impropriety as one factor in an attorney disqualification analysis. "Public confidence in law and lawyers may be eroded by irresponsible or improper conduct of a lawyer. On occasion, ethical conduct of a lawyer may appear to laypersons to be unethical." EC 9-2. "Every lawyer owes a solemn duty ... to strive to avoid not only professional impropriety but also the appearance of impropriety." EC 9-6.

In examining whether the appearance of impropriety exists, the mere possibility of...