Talvy v. American Red Cross in Greater New York

• Decision Date: 01 November 1994
• Citation: 205 A.D.2d 143,618 N.Y.S.2d 25
• Parties: Edward TALVY, Plaintiff-Respondent, v. AMERICAN RED CROSS IN GREATER NEW YORK, Robert M. Bender, Jr., and Mary Stanton, Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 25

618 N.Y.S.2d 25

205 A.D.2d 143

Edward TALVY, Plaintiff-Respondent, v. AMERICAN RED CROSS IN GREATER NEW YORK, Robert M. Bender Jr., and Mary Stanton, Defendants-Appellants.

Supreme Court, Appellate Division First Department.

Nov. 1, 1994.

Mark A. Jacoby, New York City, of counsel (Lawrence J. Baer, of counsel, Weil, Gotshal & Manges, attorneys), for defendants-appellants.

Arthur M. Wisehart, New York City, of counsel (Wisehart & Koch, attorneys), for plaintiff-respondent.

Before SULLIVAN, J.P., and CARRO, ELLERIN, KUPFERMAN and ASCH, JJ.

SULLIVAN, Justice Presiding.

Defendants appeal from the disqualification of their attorneys, Weil, Gotshal & Manges (WG & M), from the defense of this discrimination action in which plaintiff, the former Personnel Director of defendant American Red Cross in Greater New York (New York Red Cross), alleges that he was harassed and mistreated because of his age, race and national origin. Robert M. Bender, Jr., and Mary Stanton, the individual defendants, are New York Red Cross's Chief Executive Officer and Manager of Human Resources, respectively.

The facts relevant to the disqualification motion may be briefly summarized. In the course of his duties as Personnel Director, plaintiff, from time to time, consulted with WG & M in regard to legal matters involving employment in which WG & M was representing New York Red Cross. In one particular instance, plaintiff spoke with a WG & M attorney after a former New York Red Cross employee, Henrietta Cooper, filed an administrative complaint in May 1988 with the New York State Division of Human Rights (NYSDHR), alleging employer discrimination based on race and color resulting in the termination of her employment. In her administrative complaint, Ms. Cooper alleged, inter alia, that plaintiff, although not named as a respondent therein, was, as New York Red Cross Personnel Director, unresponsive to her charge of harassment by one of her fellow employees, who had allegedly directed racial insults towards her.

Plaintiff forwarded the administrative complaint to WG & M, which undertook New York Red Cross's defense in that matter. At the time, plaintiff had a telephone conversation with a Ms. Jagoda, an attorney with WG & M but no longer in its employ, concerning the allegations of the complaint. According to Ms. Jagoda, plaintiff denied being unresponsive to Ms. Cooper's complaint and insisted that he advised Ms. Cooper to follow New York Red Cross's grievance procedure. According to Ms. Cooper's account, plaintiff told her that "nothing could be done about the situation because [the fellow employee] has been employed with the organization for a longer time and she is [w]hite." When Ms. Jagoda, in August 1991, sent plaintiff a proposed affidavit setting forth the substance of his assertions and disclaimers, as stated to her during the May 1988 telephone conversation, he refused to execute it.

Thereafter, in July 1992, Ms. Cooper commenced an action in the federal court pursuant to Title VII of the Civil Rights Act of 1964 against New York Red Cross, alleging the same acts of discrimination as claimed in the complaint before NYSDHR. WG & M represents New York Red Cross in that action. New York Red Cross considers plaintiff's account of his conversation with Ms. Cooper, as recounted to Ms. Jagoda, to be of critical importance to Cooper's case against it. If Cooper's version, as alleged in her NYSDHR complaint, is accurate, plaintiff's advice only compounded the alleged discrimination and made the defense of New York Red Cross more difficult. If, on the other hand, the conversation with Cooper took place as Jagoda described it, plaintiff's response was entirely appropriate and Cooper emerges as a disgruntled employee who refused to follow the company's grievance policy. The matter is complicated by Cooper's more recent statement, under oath, that she believes that the statement attributed to plaintiff was "my own conclusion rather than anything that [plaintiff] said." This statement appears in an affidavit prepared by Wisehart & Koch, Cooper's former attorneys in the federal action, who were disqualified on New York Red Cross's application. Wisehart & Koch also represent plaintiff in this action.

Wisehart & Koch also represent Joan Lipin, a former employee of New York Red Cross, in two actions in the federal court against it and various individual defendants, including several attorneys with WG & M, as well as in a matter alleging sexual harassment and discrimination in the Supreme Court, New York County, Lipin v. Bender, which has been dismissed as a sanction for plaintiff's improper taking and use of confidential documents. This court affirmed that dismissal (193 A.D.2d 424, 597 N.Y.S.2d 340, lv. to app. granted 197 A.D.2d 942, 603 N.Y.S.2d 731).

The Lipin actions are relevant because plaintiff now alleges that defendants Stanton, his former supervisor, and Bender, the Chief Executive Officer, "harassed" him for, inter alia, refusing to sign a "false and defamatory" statement, dated July 13, 1989, ostensibly prepared by WG & M, which purports to recount plaintiff's recollections of criticisms he had heard of Ms. Lipin from her fellow employees. According to plaintiff, when Stanton presented this statement to him to sign he refused. It should be noted, however, that at an earlier deposition, before Mr. Wisehart began to represent him, plaintiff testified that Ms. Stanton asked him to write something "negative" about Ms. Lipin. He did not at that time claim that Ms. Stanton had given him a prepared written statement.

In her deposition, Ms. Stanton testified that she had neither prepared nor given the statement in question, which bears the legend "Prepared at the Request of [WG & M]," to plaintiff and first became aware of its existence when Mr. Wisehart produced it in October 1991--two years after the date appearing on the document--in the Lipin lawsuit. According to Ms. Stanton, she merely informed plaintiff that Ms. Lipin had commenced a lawsuit against New York Red Cross and asked if he could recall if there were any complaints about her and, if so, to document those complaints in writing. In response to disqualification motions filed in both the Lipin litigation and the instant matter, defendants have submitted affidavits by the WG & M partner handling both cases expressly denying any participation in or knowledge of the preparation of the written statement.

Over three years after the commencement of this action, plaintiff filed a note of issue and statement of readiness. When defendants moved to strike the note of issue for an alleged refusal to comply with previously requested discovery, plaintiff cross-moved to disqualify WG & M, asserting as grounds therefor a conflict of interest in that WG & M formerly represented plaintiff in both the Cooper and Lipin matters, its joint representation of New York Red Cross and its employees, Bender and Stanton, parties with adverse interests, and the prohibition against being an advocate witness (see, Code of Professional Responsibility DR 5-102[A] [22 NYCRR 1200.21(a) ]. The IAS court ruled that WG & M should be disqualified, finding, inter alia, that although no attorney-client relationship existed between plaintiff and WG & M, his communications with WG & M, as New York Red Cross counsel, in the performance of his duties as Personnel Director of New York Red Cross with respect to ongoing legal concerns affecting employment matters and specifically in the Cooper matter, constituted confidences which WG & M was forbidden to disclose to New York Red Cross. The court also found that WG & M could not represent New York Red Cross in both the instant matter and Cooper action, given the divergent accounts as to plaintiff's handling of Cooper's discrimination complaint. Finally, the court found that "some" attorneys from WG & M "ought" to be called as witnesses to refute plaintiff's claim that New York Red Cross retaliated against him for refusing to sign the written statement concerning Ms. Lipin, alleged to have been presented to him for signature by his superior, defendant Stanton. None of the grounds asserted warrants disqualification. Accordingly, we reverse and deny the cross-motion.

The rule is well established that a party seeking to disqualify an attorney or a law firm on the ground of prior representation must establish "(1) the existence of a prior attorney-client relationship and (2) that the former and current representations are both adverse and substantially related [citations omitted]." (Solow v. Grace & Co., 83 N.Y.2d 303, 308, 610 N.Y.S.2d 128, 632 N.E.2d 437.) The rule is intended to serve two purposes, namely, the protection of client confidences and the avoidance of the appearance of impropriety. (Id., at 308, 610 N.Y.S.2d 128, 632 N.E.2d 437.)

With respect to confidentiality, a lawyer may not disclose or adversely use confidential information obtained from a former or current client. (Code of Professional Responsibility DR 4-101[B] [22 NYCRR 1200.19(b) ]; see, DR 5-108[A][2] [22 NYCRR 1200.27(a)(2)].) The lawyer's obligation to respect those confidences is a continuing one. (Solow v. Grace & Co., supra, at 309, 610 N.Y.S.2d 128, 632 N.E.2d 437.) When a lawyer represents a party against a former client, the former client's expectation of confidentiality is placed in direct conflict with the current client's interest in the lawyer's vigorous representation of him. (Id., at 309, 610 N.Y.S.2d 128, 632 N.E.2d 437.) Thus, the rule with respect to prior representation is intended to assure that the former client is not burdened with the fear that matters spoken in confidence will subsequently be used against him in related litigation. (Id., at 309, 610 N.Y.S.2d 128, 632 N.E.2d 437; see, Cardinale v. Golinello, 43 N.Y.2d 288, 295-296, 401 N.Y.S.2d 191, 372 N.E.2d 26; Code of Professional Responsibility DR 4-101 [22 NYCRR 1200.19].) "If an attorney has...