Meador, In re

• Decision Date: 03 July 1998
• Docket Number: No. 97-0582,97-0582
• Parties: 41 Tex. Sup. Ct. J. 673 In re Dana MEADOR, Relator.
• Court: Texas Supreme Court

Page 346

968 S.W.2d 346

41 Tex. Sup. Ct. J. 673

In re Dana MEADOR, Relator.

No. 97-0582.

Supreme Court of Texas.

Argued Dec. 4, 1997.

Decided April 14, 1998.

Rehearing Overruled July 3, 1998.

W. D. Masterson, Dallas, for Relator.

Jane Makela, George M. Kryder, III, Revecca Adans Cavner, Dallas, for Respondent.

PHILLIPS, Chief Justice, delivered the opinion for a unanimous Court.

The issue in this original mandamus proceeding is whether the trial court abused its discretion by refusing to disqualify plaintiff's counsel. Defendants contend that the lawyer improperly used privileged documents which the lawyer's client (in another lawsuit) secretly removed from defendants' offices. We hold that, under the facts and circumstances of this case, the trial court did not abuse its discretion by refusing to disqualify the lawyer. The court of appeals therefore abused its discretion in granting mandamus relief compelling disqualification. See 948 S.W.2d 345. Accordingly, we conditionally grant mandamus relief against the court of appeals.

I

Patricia Peterson worked at Conley, Lott, Nichols Machinery Company (CLN) from May 1994 until January 1996 as executive assistant for Robert Nichols, CLN's president. She had access to Nichols's office, and among her responsibilities were opening his mail and retrieving his phone messages.

During Peterson's tenure, Dana Meador, a former financial consultant for CLN, sued the company and Nichols for fraud, breach of contract, intentional infliction of emotional distress, assault, and discrimination. Meador alleged, among other things, that Tom Dowdle, CLN's former general manager, had sexually harassed her. When Meador filed her suit, CLN was prosecuting its own suit against Dowdle for fraud, which CLN subsequently settled in June 1995. Peterson, in the course of her duties at CLN, came across and read a letter from CLN's attorneys to Nichols describing the settlement terms. The letter reflected that, in addition to a cash payment, Dowdle had agreed to give CLN a sworn statement concerning the Meador lawsuit. The letter, however, did not specify, or set requirements for, the content of Dowdle's statement.

Dowdle subsequently gave his sworn statement, which Peterson also found and read at CLN. Peterson, who claims that she was also sexually assaulted by Dowdle, testified that the statement (which is not in the record) contained "blatant lies." Without Nichols's permission, Peterson copied the settlement letter, as well as a follow-up letter transmitting the settlement funds, a chronology of events in the Meador dispute prepared by CLN's counsel, and Nichols's handwritten notes about the Meador lawsuit. Peterson did not, however, copy Dowdle's statement. She testified that she expected CLN to pressure her for false testimony in the Meador lawsuit, and that she wanted the documents to help her substantiate the truth. Peterson admitted during testimony that Nichols would not have allowed her to copy the documents had he known of it. Peterson, believing she was about to be fired, quit her job at CLN in January 1996, taking the covertly copied documents with her.

Five months later, in considering whether to bring her own claim against CLN, Peterson called Meador. Meador referred Peterson to her own attorney, W.D. Masterson. At their first meeting in June 1996, Masterson agreed to represent Peterson. During this meeting, Peterson gave Masterson the Dowdle settlement letter she had copied in CLN's offices. Either Masterson or Peterson also gave a copy of the settlement letter to Meador.

A few days later, CLN deposed Meador in the underlying action. Although Meador's full deposition is not in the record before us, Meador testified at the disqualification hearing that, during her deposition, she gave the Dowdle settlement letter to CLN's attorneys and told them that Peterson had copied other documents as well. It is not clear whether Meador voluntarily produced the settlement letter or did so in response to a subpoena duces tecum.

Four months later, CLN noticed Peterson's deposition, including a subpoena duces tecum for all documents which Peterson may have taken from CLN. In response to the subpoena, Peterson gave the other documents to Masterson, who copied them. She then produced the documents at her deposition a week later. Upon seeing the documents, CLN demanded that Masterson return all copies of them, claiming that they were privileged. When Masterson refused to do so, CLN moved to disqualify him from representing Meador. After an evidentiary hearing in December 1996, the trial court ordered Masterson to return all of the CLN documents removed by Peterson, and to not use them in the Meador litigation. The court, however, refused to disqualify Masterson.

CLN then petitioned for writ of mandamus to the trial court. The court of appeals granted the relief, adopting the standard of conduct from ABA Formal Opinion 94-382, promulgated by the American Bar Association's Committee on Ethics and Professional Responsibility. ¹ That opinion provides:

A lawyer who receives on an unauthorized basis materials of an adverse party that she knows to be privileged or confidential should, upon recognizing the privileged or confidential nature of the materials, either refrain from reviewing such materials or review them only to the extent required to determine how appropriately to proceed; she should notify her adversary's lawyer that she has such materials and should either follow instructions of the adversary's lawyer with respect to the disposition of the materials, or refrain from using the materials until a definitive resolution of the proper disposition of the materials is obtained from a court.

ABA FORMAL OP. 94-382. The court of appeals focused on the Dowdle settlement letter, concluding that, even though this letter is privileged on its face, Masterson made no effort to notify CLN that he had the document. Because "Masterson's conduct fell short of the standard that an attorney who receives unsolicited confidential information must follow," the court of appeals ordered his disqualification. 948 S.W.2d at 349.

Masterson then sought mandamus relief in this Court against the court of appeals. We stayed the trial court proceedings and granted leave to file.

II

In determining whether the court of appeals abused its discretion by granting mandamus relief, we maintain our focus on the trial court's ruling. See Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 918 (Tex.1985). Although the trial court refused to disqualify Masterson, it ruled that he must return all copies of the documents and that he could not use them in the Meador litigation. Meador has not challenged this portion of the trial court's ruling. The only issue before us, therefore, is whether the trial court abused its discretion in refusing to disqualify Masterson.

Meador first argues that the trial court could not properly disqualify Masterson because he did not violate a specific disciplinary rule. She contends that ABA Formal Opinion 94-382, on which the court of appeals relied, is merely advisory, and does not impose a binding disciplinary standard on Texas attorneys. This contention is correct. The Texas Disciplinary Rules of Professional Conduct and opinions from Texas courts and the State Bar of Texas interpreting those rules provide the disciplinary standards for Texas attorneys. See generally TEX. GOV'T CODE §§ 81.072, 81.092. Meador further correctly argues that no specific Texas disciplinary rule applies to the circumstances of this case. Because Masterson did not violate a specific Texas disciplinary rule, Meador reasons, he cannot be disqualified. To answer this argument, we must consider the relationship between our disciplinary rules and attorney disqualification.

We have often looked to our disciplinary rules to decide disqualification issues. See National Medical Enters. v. Godbey, 924 S.W.2d 123, 132 (Tex.1996); Anderson Producing Inc. v. Koch Oil Co., 929 S.W.2d 416, 422 (Tex.1996); Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656-57 (Tex.1990); Ayres v. Canales, 790 S.W.2d 554, 555-58 (Tex.1990); NCNB Texas Nat'l Bank v. Coker, 765 S.W.2d 398, 399 (Tex.1989). We have emphasized, however, that the disciplinary rules are merely guidelines--not necessarily controlling standards--for such motions. See Godbey, 924 S.W.2d at 132; Anderson Producing, 929 S.W.2d at 422; Spears, 797 S.W.2d at 656. Indeed, the preamble to the Disciplinary Rules recognizes that "these rules are not designed to be standards for procedural decisions." TEX. DISC. R. PROF. COND. ., Preamble p 15. Particularly, a court should not disqualify a lawyer for a disciplinary violation that has not resulted in actual prejudice to the party seeking disqualification. See, e.g., TEX. DISC. R. PROF. COND D. 3.08. cmt. 10.

Meador argues, however, that while an attorney's violation of the disciplinary rules may not always justify disqualification, a court cannot disqualify an attorney unless he or she has violated a rule. For support, she points to our language in Spears:

The courts must adhere to an exacting standard when considering motions to disqualify so as to discourage their use as a dilatory tactic. Thus, the burden is on the movant to establish with specificity a violation of one or more of the disciplinary rules. Mere allegations of unethical conduct or evidence showing a remote possibility of a violation of the disciplinary rules will not suffice under this standard.

Spears, 797 S.W.2d at 656. The issue in Spears, however, was whether a lawyer had violated two specific disciplinary rules. The quoted language thus cannot be read as a holding that a court can never disqualify an attorney absent a disciplinary violation. For example, in National Medical Enterprises, Inc. v. Godbey, 924 S.W.2d 123 (Tex.1996), we held that the trial court abused its discretion in denying defendant NME's motion to disqualify the plaintiffs'...