Nemours Foundation v. Gilbane, Aetna, Federal Ins.
| Citation | 632 F. Supp. 418 |
| Decision Date | 27 March 1986 |
| Docket Number | Civ. A. No. 83-58-JJF. |
| Parties | NEMOURS FOUNDATION, Plaintiff, v. GILBANE, AETNA, FEDERAL INSURANCE COMPANY, Pierce Associates, Inc., Defendants. |
| Court | U.S. District Court — District of Delaware |
David A. Dial (argued), of Smith, Currie & Hancock, Atlanta, Ga., Stuart B. Young, of Young, Conaway, Stargatt & Taylor, Wilmington, Del., for Nemours.
Francis S. Babiarz (argued), and Robert K. Beste, of Biggs & Battaglia, Wilmington, Del., for Pierce Associates, Inc.
Richard R. Wier, Jr., of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., for Gilbane.
At this late juncture in a long and complicated proceeding the plaintiff, The Nemours Foundation ("Nemours"), has filed a motion to disqualify counsel for the defendant in this case, Pierce Associates, Inc. ("Pierce").1 The case began originally as three separate actions, all filed on April 5, 1983,2 concerning disputes which arose during the construction of an addition to the A.I. DuPont Institute Children's Hospital in Wilmington, Delaware (the "Project"). Remaining to be resolved is a civil action involving Nemours, Pierce, and Gilbane Building Company ("Gilbane"), the main contractor on the Project. Pierce was a subcontractor to Gilbane. Gilbane filed a counterclaim against Pierce and asserted third-party claims against Nemours, the architect of the Project, and Furlow Associates, Inc. ("Furlow"), the Project's mechanical engineer. Nemours, in turn, filed a counterclaim as well as a direct claim against Pierce, whereupon Pierce filed a counterclaim against Nemours. In Nemours' motion to disqualify, filed on October 4, 1985, Nemours requests the disqualification of the entire firm of Biggs & Battaglia ("Biggs"), Pierce's local Wilmington counsel, from further representation of their client. Nemours alleges that Biggs has a conflict of interest due to the former involvement of one of its present associates in this litigation as a former associate of Howard M. Berg & Associates ("Berg"), counsel for Furlow and co-counsel for Nemours at the time.
Much of the factual background is not in dispute. Paul A. Bradley, the attorney whose former representation of Furlow has raised the issue of disqualification in this case, was admitted to the practice of law in February 1983 while he was employed at Berg. He began his employment there on September 7, 1982. Bradley became involved in the litigation in April 1984, when he assisted Howard M. Berg, who "made all decisions regarding the representation of Furlow." (Id. at ¶ 5.) Bradley's responsibilities as a low-level associate involved preparing for a "mini-trial" among the parties in efforts to reach a settlement agreement. Bradley prepared the materials for a set of books to be distributed to the party participants and the arbitrator. Most of his consultation with experts concerned these materials. (Id. at ¶ 11.) Bradley also reviewed documents for Berg's client, Furlow, which included documents produced by Nemours, the party moving for the disqualification of Biggs in this case. (Id. at ¶ 9.) Bradley further attested in his affidavit submitted to the Court that, having reviewed thousands of documents, he presently (November 1, 1985) has no recollection of the content or existence of any documents that potentially were covered either by the work product doctrine or attorney-client privilege. (Id. at ¶ 12.) To the best of his knowledge, Bradley's involvement in the Furlow case terminated after the end of the mini-trial. (Id. at ¶ 13.)3
Bradley subsequently did not follow the litigation, review any discovery materials, or attend depositions concerning Furlow. He stated that he had no way to determine if any conversation he had while representing Furlow or any document involved in that case has been disclosed beyond the purview of the attorney-client privilege or work product doctrine. (D.I. 728, ¶ 14.) When he interviewed for a position with Biggs, he did not know of its involvement in the present litigation and had no conversation with anyone concerning his work for Furlow before being hired. (Id. at ¶ 15.)4
It is apparent that Biggs was completely innocent of any knowledge of Bradley's involvement in the litigation, as was Bradley of Biggs' until Bradley met Jack Rephan, an attorney for Braude, Margulies, Sacks & Rephan ("Braude, Margulies"), Pierce's main counsel, when Rephan visited Biggs' offices approximately in May 1985. Bradley and his superiors at Biggs immediately decided that Bradley would have no contact with the Pierce litigation whatsoever and would not discuss it. Bradley himself resolved that he would not discuss the litigation or prior representation of Furlow "in any way with anyone" at Biggs. (D.I. 728, ¶ 19.) He further attested that he has never been asked by anyone at Biggs or Braude, Margulies concerning his Furlow representation. He does not nor never has known the location of the Pierce files at Biggs. (Id. at ¶¶ 22, 24.)
Victor Battaglia described his firm's procedure of "screening" Bradley from the litigation. All attorneys in the Pierce litigation must report to him. Biggs has a central file room, but since the actions of the litigation were consolidated, and long before Bradley was hired, all Pierce files have been kept directly adjacent to Robert Beste's offices. (D.I. 726, ¶ 6.) Furthermore, the only documents in the file are pleadings and other documents filed and of record with the Court, and previous drafts of filed documents. (Id. at ¶ 7.)
On this motion for disqualification of Biggs, this Court is faced with two major issues. The first question is whether Bradley's previous involvement on behalf of Furlow in this litigation calls for his disqualification. Pierce argues that an attorney-client relationship never existed between Bradley and Nemours and contends therefore that there is no conflict of interest. The Court must address this issue first to determine the extent of Bradley's own involvement in the litigation, a necessary step in addressing the second issue. The essential discordance between Nemours' and Pierce's positions centers on whether this involvement of Bradley, now associated with Biggs, requires the disqualification of the entire firm of Biggs, as Nemours argues it should. Biggs contends that it has effectively "screened off" Bradley from any involvement or contacts with the Nemours litigation. This defense has been commonly termed the "Chinese Wall" defense. In ruling on this motion, the Court has coined the term "cone of silence" as a more accurate description of the ethical commands involved and the policies at stake.5
This Court clearly has the power to supervise the ethical activities of the attorneys who practice before it and, if necessary, disqualify those whose conduct breaches the norms as established by the bar.
Whenever an allegation is made that an attorney has violated his moral and ethical responsibility, an important question of professional ethics is raised. It is the duty of the district court to examine the charge, since it is that court which is authorized to supervise the conduct of the members of the bar.
Richardson v. Hamilton Int'l Corp., 469 F.2d 1382, 1385 (3d Cir.1972), cert. denied, 411 U.S. 986, 93 S.Ct. 2271, 36 L.Ed.2d 964 (1973). This power includes the authority to order disqualification. Id. at 1385-86. In ruling on the present motion, the Court will refer to the recently promulgated Delaware Lawyers' Rules of Professional Conduct ("Rules").6
Nemours alleges that the conflict of interest originates with Bradley, thus leading ultimately to the disqualification of Bradley and his firm. Bradley, as an associate at Berg, worked on the current litigation as counsel for Furlow. At that time, Furlow was a co-defendant of Nemours. As counsel for Furlow, Bradley was privy to confidences of both Furlow and Nemours as both planned "strategy sessions" in concert against Gilbane. This "commonality of interest" necessitated a sharing of work product, attorney-client privileges, and other confidential information. (D.I. 723 at iii.) Nemours further states that it "became clear to the parties involved ... that Pierce was the primary cause of the problems which were encountered during the construction of the Project and which were the bases of the ensuing litigation." (Id. at ii.) After intense negotiations, Gilbane, Furlow, and Nemours entered a series of agreements to settle or to dismiss claims. During this entire period, according to Nemours, the interests of Pierce — whose counsel is Biggs, Bradley's new employer — were adverse to those of Furlow. (Id. at iii.) Applying the Rules to this set of facts, specifically Rule 1.6 on confidentiality, Bradley is disqualified because the information he gained from Nemours was confidential information which must be protected, because Nemours must be considered a "client" of Bradley. Under Rule 1.9, Bradley cannot represent a client whose interests are "materially adverse" to the interest of the former client.
Pierce argues that Nemours cannot be considered a former client of Bradley for purposes of Rules 1.6 and 1.9. Nemours was merely a co-party of Furlow. The presumption that confidential information has passed to an attorney, which arises in the context of the attorney-client relationship, therefore does not apply. Nemours must prove that confidential information actually did pass from Nemours to Bradley, which it has been unable to do. (D.I. 730 at 15.)
Analysis must begin with the Rules. Rule 1.9, which deals with conflict of interest, reads as follows:
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