Paradyne Corp., In re
| Decision Date | 14 October 1986 |
| Docket Number | 86-3532,Nos. 86-3504,s. 86-3504 |
| Parties | In re PARADYNE CORPORATION, John D. Applegate, Kenneth M. Barry, Verney L. Brown, Francis A. Dolan, Cletus L. Gardenhour, George B. Pressly, Jorge O. Suarez, and Robert S. Wiggins, Petitioners. In re F. William SIEGRIST, Petitioner. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
James L. Slattery, Paradyne Corp., Largo, Fla., F. Whitten Peters, Williams & Connolly, Eva M. Petko, Barry S. Simon, Washington, D.C., for Paradyne.
Gerald A. Feffer and Dianne J. Smith, Williams & Connolly, Washington, D.C., for Wiggins.
Raymond G. Larroca, Miller, Cassidy, Larroca & Lewin, Washington, D.C., for Applegate.
Sachs, Greenebaum & Taylor, Thomas Hylden, Washington, D.C., for Dolan.
Mark Pizzo, Asst. Fed. Public Defender, Tampa, Fla., for Barry.
James Kynes, Winkles, Trombley & Kynes, P.A., Stuart Markman, Tampa, Fla., for Brown.
Terry A. Smiljanich, Blasingame, Forizs and Smiljanich, St. Petersburg, Fla., for Gradenhour.
Morris Weinberg, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tampa, Fla., for Pressly.
Cicero, Lund & Williams, P.A., Tampa, Fla., for Suarez.
Paul L. Friedman, White & Case, G. William Currier, Kathleen A. Ley, Washington, D.C., for Siegrist.
Andrew Grosso, Asst. U.S. Atty., Tampa, Fla., for the U.S.
Petitions for Writ of Mandamus to the United States District Court for the Middle District of Florida.
Before HILL, KRAVITCH and ANDERSON, Circuit Judges.
Paradyne Corporation and eight individual co-defendants in a pending criminal case seek a writ of mandamus ordering the district court to refrain from various actions proposed in response to government motions to disqualify defense counsel. Primarily, petitioners challenge the district court judge's announced plans to interview, in camera and outside the presence of counsel, individual defendants, witnesses, and attorneys in order to determine whether defense counsel received information protected by the attorney-client privilege of various individuals. Petitioners also request a transcript of an ex parte presentation made to the court by the government in support of its motion to disqualify. In a companion case, co-defendant William Siegrist seeks identical relief, and asks additionally that the district court be ordered to conduct a hearing pursuant to United States v. Garcia, 517 F.2d 272 (5th Cir.1975), so that Siegrist may waive his right to conflict-free counsel. Because the procedures proposed by the district court to determine the existence and scope of alleged conflicts of interest would constitute serious and unwarranted incursions on constitutional rights of defendants, a writ of mandamus must issue.
The controversy arises out of the December 1985 indictment of Paradyne and the individual defendants on charges related to a $100 million government contract awarded to Paradyne in 1981. Under the terms of the contract, Paradyne was to replace and upgrade a computer communications system between the field offices and the main office of the Social Security Administration. The indictment contains various charges related to an alleged conspiracy to defraud the government by falsely representing that Paradyne then had available a computer system meeting the requirements specified by the Social Security Administration. 1 Similar allegations previously had been raised in a civil suit filed against Paradyne in 1981 by the Securities and Exchange Commission and settled in 1985 with no admission of liability by Paradyne. A second civil suit stemming from the disputed contract, a shareholder class action filed in 1983 against Paradyne and various individuals, currently is pending before a different district court judge than is presiding over the criminal case.
The petition for mandamus was prompted by a motion filed by the government on April 1 for disqualification of defense attorneys due to alleged conflicts of interest arising from the various combinations of law firms that represented Paradyne and its employees in different aspects of the civil and criminal litigations. During the grand jury stage of the criminal investigation, Paradyne and those employees classified by the government as "targets" of the investigation were represented by the two firms that also represented Paradyne and certain employees in the SEC civil suit and in the pending sharehold class action. These two firms ("Paradyne's civil counsel") withdrew from the criminal case around the time of the indictment, and Paradyne and the individual defendants all now retain independent counsel. 2 The government alleges essentially that the current defense counsel face conflicts of interest because they may have received from Paradyne's civil counsel information that is subject to the attorney-client privileges of unindicted individuals who were "targets" of the criminal investigation. 3
In its challenge to counsel for Siegrist, the government asserts the additional claim that Siegrist's attorney previously represented potential government witnesses, and hence faces an actual conflict of interest as to these individuals. Although initially classified as a "target" of the investigation, Siegrist was downgraded to "witness" status in August 1985. He at that time became represented by his current counsel, who had been retained to represent the 24 Paradyne employees classified as "witnesses." 4 This attorney continued to represent Siegrist after Siegrist was again reclassified in October as a "target," and after he was indicted. The other "witnesses" have now retained independent counsel, and all but two have signed waivers of their attorney-client privileges to permit Siegrist's counsel to cross-examine them at trial. Siegrist does not deny that his counsel faces a conflict arising from the prior representation of these witnesses. In March, prior to the filing of the government's motion to disqualify, Siegrist filed a motion for a Garcia hearing in order to waive his right to conflict-free representation and maintain his current counsel.
In urging that defense counsel be disqualified for possible conflicts of interest, the government has presented no direct evidence that any individual's attorney-client privilege has been breached. Rather, the government contends that a distinct likelihood for violations of the privilege arises out of the relationships between Paradyne and the firms that have served as counsel. 5 The government claims that current defense counsel face irresolvable conflicts of interest because they would not be able to use privileged information in cross-examining witnesses. Similarly, the government argues that the close working relationship between Paradyne's civil and criminal counsel would result in an actual conflict of interest should civil counsel be called to testify regarding the charges of perjury and obstruction of justice filed against several of the defendants. The government further contends that the possession of privileged information by defense counsel--particularly in light of their denial that the information is in fact privileged--so taints their representation of defendants that disqualification is required to maintain the integrity of the judicial system. 6
The government presented these accusations in its April 1 motion and in an ex parte presentation to court on May 15. On June 23, the court proposed to conduct a series of hearings to determine: (1) what attorney-client relationships existed between Paradyne's civil counsel and various individuals involved in the case; (2) which individuals have waived their attorney-client privileges with these firms; (3) whether privileged information has been disseminated to defense counsel by Paradyne's civil counsel; (4) the extent to which Siegrist's counsel suffers a conflict of interest in his representation of Siegrist; and (5) whether Siegrist can effectively waive his right to conflict-free representation. The court announced that on successive days it would conduct in camera interrogations of potential witnesses and government personnel involved in the case, of defense attorneys, and of defendants.
The court subsequently informed counsel that the questioning would be much like a grand jury hearing, outside of the presence of counsel or witnesses. Those questioned would be permitted only to go outside chambers to confer with their counsel before answering specific questions. Although the court proposed to formulate its questions based on suggestions by the counsel for each side, counsel would not be permitted to cross-examine witnesses or to present their own witnesses or other evidence.
The court rejected defense objections to the proposed procedure but stayed the proceedings while defendants sought a writ of mandamus from this court. In the petition for the writ, Paradyne and the individual co-defendants ask this court either (1) to order the district court not to hold the proposed hearings and to deny the motions to disqualify, or (2) to prohibit the court from conducting the hearings as currently contemplated. They also seek to obtain a transcript of the May 15 ex parte presentation. Siegrist, in addition, seeks an order requiring the district court to conduct a Garcia hearing so that he may waive his right to conflict free counsel.
In opposing the disqualification hearings, all defendants except Siegrist claim primarily that, even if the government's assertions that privileged materials have been disseminated are true, current defense counsel cannot face a conflict of interest in this case because none has ever represented either potential witnesses or other defendants. Moreover, they contend that the contemplated in camera, ex parte hearings pose serious threats to the fifth and sixth amendment rights of the defendants. Siegrist admits that his counsel faces a conflict arising out of prior representation of two potential witnesses, but he argues that the procedures outlined in Garcia, supra,...
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