Ryan's Express Transp. Servs., Inc. v. Amador Stage Lines, Inc.

• Decision Date: 14 June 2012
• Docket Number: No. 56570.,56570.
• Citation: 279 P.3d 166,128 Nev. Adv. Op. 27
• Parties: RYAN'S EXPRESS TRANSPORTATION SERVICES, INC., a Nevada Corporation, Appellant, v. AMADOR STAGE LINES, INC., a Foreign Corporation, Respondent.
• Court: Nevada Supreme Court

279 P.3d 166

128 Nev. Adv. Op. 27

RYAN'S EXPRESS TRANSPORTATION SERVICES, INC., a Nevada Corporation, Appellant,

v.AMADOR STAGE LINES, INC., a Foreign Corporation, Respondent.

No. 56570.

Supreme Court of Nevada.

June 14, 2012.

Gibbs, Giden, Locher, Turner & Senet, LLP, and Becky A. Pintar and Airene Haze, Las Vegas, for Appellant.

Woodburn and Wedge and Ellen Jean Winograd, Reno, for Respondent.

Before the Court En Banc.

OPINION

By the Court, DOUGLAS, J.:

Although the Nevada Rules of Professional Conduct (RPC) permit the screening of disqualified attorneys to prevent an associated law firm's imputed disqualification in some cases, RPC 1.10(e); 1.11(b); 1.12(c), we have never considered whether screening is appropriate with regard to a settlement judge acting under this court's settlement conference program or how to determine the sufficiency of any screening measures utilized. We take this opportunity to consider the practice of attorney screening to cure imputed disqualification.

The parties agree that supreme court settlement judge Nicholas Frey is disqualified from representing respondent Amador Stage Lines, Inc., in the present matter. Pursuant to RPC 1.12(c), Frey's disqualification is imputed to the remaining members of his law firm, Woodburn and Wedge, but the parties disagree on whether screening may be utilized to cure the imputed disqualification. In order to resolve appellant Ryan's Express Transportation Services, Inc.'s pending motion to disqualify Woodburn and Wedge from representing Amador in this appeal, we must consider whether screening may be used to cure imputed disqualification in this situation and whether the screening measures taken by Woodburn and Wedge are sufficient.

However, because we conclude that more facts are necessary for us to consider the sufficiency of Woodburn and Wedge's screening measures, we defer ruling on the motion to disqualify and remand this matter to the district court for the limited purpose of conducting an evidentiary hearing and entering written findings of fact and conclusions of law regarding the adequacy of the screening.

FACTS AND PROCEDURAL HISTORY

Ryan's Express appeals from a district court's order dismissing its claims against Amador, and the appeal was assigned to this court's settlement program. SeeNRAP 16. Frey, a shareholder at the law firm of Woodburn and Wedge, was appointed as the settlement judge. After receiving the parties' confidential settlement statements, Frey held a settlement conference, but the parties were unable to reach an agreement. Thereafter, Amador's counsel of many years, Ellen Jean Winograd, accepted a position as a shareholder at Woodburn and Wedge, and Woodburn and Wedge substituted as counsel for Amador in the instant appeal.

Ryan's Express now moves to disqualify Woodburn and Wedge as Amador's counsel, asserting that a conflict of interest exists based on Frey's involvement in the case as a settlement judge, that the conflict is necessarily imputed to the entire law firm, and that the conflict cannot be cured by any screening measures. Amador admits that Frey is disqualified, but argues that the screening measures Woodburn and Wedge have undertaken are sufficient to cure the conflict, and that Winograd should be allowed to continue representing Amador.

DISCUSSION

Ryan's Express argues that Woodburn and Wedge must be disqualified from representing Amador in this appeal because Frey participated as a supreme court settlement judge in this matter. Ryan's Express contends that because Frey obtained highly confidential information pertaining to its strategies and factual and legal contentions, Frey must be disqualified and Frey's disqualification must be imputed to all other members of Woodburn and Wedge. Ryan's Express asserts that Frey's conflict of interest is fatal to Woodburn and Wedge's representation of Amador and cannot be cured by screening because RPC 1.10(e)(1) permits screening only where a disqualified lawyer did not have a “substantial role in or primary responsibility for the matter that causes the disqualification.” Ryan's Express insists that a law firm that employs a settlement judge who received confidential ex parte information must be disqualified in order to preserve the public trust, and that no screening measures can cure this disqualification. Furthermore, Ryan's Express argues that the interest of preventing public suspicion of the settlement program outweighs the interest of Amador's right to counsel of choice.

Amador, however, argues that disqualification of the entire firm is unnecessary and unwarranted. Amador contends that (1) Frey is an attorney and a supreme court settlement judge of the highest caliber and integrity, and that he would never compromise the settlement program; (2) disqualification of the firm would impose substantial hardship in Amador's opposition to the pending appeal because it would lose the services of its original counsel; (3) the applicable rule of professional conduct is RPC 1.12, which expressly permits the screening of mediators, arbitrators, and former judges to prevent imputed disqualification; and (4) Woodburn and Wedge has gone to extensive lengths to screen Frey from the present appeal.

Background

This court and other courts have long recognized that it is within the inherent power of the court to govern the conduct of the members of the bar appearing before it. State Bar of Nevada v. Claiborne, 104 Nev. 115, 126, 756 P.2d 464, 471 (1988); see, e.g., State ex rel. NSBA v. Krepela, 259 Neb. 395, 610 N.W.2d 1, 3 (2000); Beyers v. Richmond, 594 Pa. 654, 937 A.2d 1082, 1091 (2007); Swafford v. Harris, 967 S.W.2d 319, 321 (Tenn.1998). Similar to the principles governing attorney-client relationships and judicial conduct, settlement judges in this court's settlement program are under a duty of confidentiality and a duty to avoid conflicts of interest. In the Matter of the Adoption of Rule 16 of the Nevada Rules of Appellate Procedure Governing Settlement Conferences in Civil Appeals, ADKT 244 (Order Adopting Code of Conduct for Supreme Court Settlement Judges, March 10, 2006) [hereinafter, Code of Conduct for Supreme Court Settlement Judges]. Similar to an attorney-client relationship, parties coming before a settlement judge must have the “utmost confidence” that confidential information disclosed to the settlement judge will remain confidential. CompareRPC 1.6with Code of Conduct for Supreme Court Settlement Judges, supra, Standard V (employing language similar to Nevada Rules of Professional Conduct and requiring settlement judges to maintain the confidentiality of all information learned from mediation and private sessions). These duties of confidentiality and avoidance of conflicts of interest persist even after the termination of the settlement proceedings. Code of Conduct for Supreme Court Settlement Judges, supra, Standard III(G). Settlement judges, like attorneys and judges, also have an obligation to avoid even the appearance of impropriety. Id. Standard III(A), (G); Revised Nevada Code of Judicial Conduct Canon 1; Collier v. Legakes, 98 Nev. 307, 310, 646 P.2d 1219, 1220–21 (1982).

In this case, the parties agree that Frey is disqualified.¹ As the settlement judge for this appeal, Frey “participated personally and substantially” as a third-party neutral, and unless all parties give informed consent in writing, RPC 1.12(a), he may not represent anyone in connection with this matter. No such consent was given here. Furthermore, Woodburn and Wedge is necessarily disqualified under RPC 1.12's imputation provision, unless it can demonstrate that Frey was timely and adequately screened pursuant to RPC 1.12(c). Therefore, we turn our attention to the issue of screening.

Screening may be used to cure imputed disqualification

The ethical principles and public policy considerations that lead us to impose a presumption of shared confidence ² and at times disqualify entire law firms, however, do not come without a heavy cost. In applying the rule of imputed disqualification, we restrict the client's right to choice of counsel.³Leibowitz v. Dist. Ct., 119 Nev. 523, 532, 78 P.3d 515, 521 (2003). The importance of these competing concerns requires us to carefully balance one client's right to choice of counsel against another client's interest in avoiding disclosure of confidential information.

Here, because the settlement program is court-sponsored, any perceived improprieties will have a potential impact on the public's confidence in the judicial process. A perception that a party opponent could learn confidential information from the presiding settlement judge will also undermine the ability of the settlement program to resolve matters in a quick, cost-effective, and satisfactory manner. Parties will be less willing to share confidences when there is a fear that the settlement judge may later take this knowledge to an adversary.

On the other hand, an uncompromising rule that strictly requires the disqualification of a law firm associated with a settlement judge is problematic. Such a rule may have an effect of deterring otherwise well-qualified attorneys from seeking appointment as settlement judges. It may also impede the movement of attorneys associated with a settlement judge. Such a rule would potentially restrict a client's choice of counsel needlessly. Lawyers, simply, are not fungible goods. See Ryan v. Dist. Ct., 123 Nev. 419, 427, 168 P.3d 703, 709 (2007); Bongiovi v. Sullivan, 122 Nev. 556, 571, 138 P.3d 433, 444 (2006); see also Robins v. United States, 404 U.S. 1049, 1052, 92 S.Ct. 721, 30 L.Ed.2d 740 (1972) (Brennan, J., dissenting); Carlson v. Jess, 507 F.Supp.2d 968, 980 (E.D.Wis.2007). One lawyer cannot substitute for another lawyer's skills, experience, and other unquantifiable characteristics.

Because of the conflicting public policy and ethical concerns, we hold that the screening of lawyers, under the applicable rules of professional...