Wei Su v. Sotheby's, Inc.

• Decision Date: 11 August 2021
• Docket Number: 17-CV-4577 (VEC)
• Court: U.S. District Court — Southern District of New York
• Parties: WEI SU and HAI JUAN WANG, Plaintiffs, v. SOTHEBY'S, INC., Defendant. SOTHEBY'S, INC., Counter-Claimant, v. WEI SU, HAI JUAN WANG, and YEH YAO HWANG Counterclaim-Defendants, YEH YAO HWANG, Cross-Claimant, v. WEI SU and HAI JUAN WANG, Cross-Defendants, WEI SU and HAI JUAN WANG, Cross-Claimants, v. YEH YAO HWANG, Cross-Defendant,

WEI SU and HAI JUAN WANG, Plaintiffs, v. SOTHEBY'S, INC., Defendant.

SOTHEBY'S, INC., Counter-Claimant, v. WEI SU, HAI JUAN WANG, and YEH YAO HWANG Counterclaim-Defendants, YEH YAO HWANG, Cross-Claimant, v. WEI SU and HAI JUAN WANG, Cross-Defendants, WEI SU and HAI JUAN WANG, Cross-Claimants, v. YEH YAO HWANG, Cross-Defendant,

No. 17-CV-4577 (VEC)

United States District Court, S.D. New York

August 11, 2021

OPINION & ORDER

VALERIE CAPRONI, United States District Judge:

Yeh Yao Hwang (“Yeh”) has moved to disqualify Xuejie Wong (“Wong”) and the Law Offices of Xuejie Wong PLLC from representing Wei Su and Hai Juan Wang (Wei Su's agent) (collectively “Su”). Notice of Mot., Dkt 185 at 1-2. For the reasons discussed below, Yeh's motion to disqualify is DENIED.

BACKGROUND

The Court assumes familiarity with its prior opinions entered over the course of this four-year saga and will summarize only the facts most pertinent to this motion.^[1] Su and Yeh dispute ownership of a 10th to 9th Century B.C. Chinese ritual wine vessel (“Vessel”) that Su consigned to Sotheby's for auction in 2014. See Am Compl., Dkt. 89 ¶¶ 9, 14; Sotheby's Ans. &amp Countercl., Dkt. 101 at 9-11. When Yeh asserted ownership to Sotheby's, the Vessel was pulled from the auction. See Am. Compl. ¶ 16; Sotheby's Ans. & Countercl. ¶ 15. Su sued Sotheby's seeking return of the Vessel, and Sotheby's commenced an interpleader action. See Am. Compl. ¶¶ 32-60; Sotheby's Ans. & Countercl. at 9-14. After significant difficulties gaining service on Yeh, he eventually appeared in the action. See Wei Su v. Sotheby's, Inc., No. 17-CV-4577, 2018 WL 4804675, at *3-5 (S.D.N.Y. Oct. 3, 2018); Notice of Appearance, Dkt. 78 at 1. Then, on May 24, 2019, Yeh filed a cross-claim against Su for conversion. See Yeh Ans. & Cross-cls., Dkt. 104 at 3, 7. Su moved for summary judgment on the cross-claim, contending that Yeh's conversion claim is barred by the statute of limitations. See Su Summ. J. Mem. of Law, Dkt. 156-2 at 2.

On September 29, 2020, the Court denied Su's motion for summary judgment finding that there are questions of fact material to whether Su is equitably estopped from asserting a statute of limitations defense.^[2] See Wei Su v. Sotheby's, Inc., 490 F.Supp.3d 725, 728 (S.D.N.Y. 2020). A defendant can be equitably estopped from asserting a statute of limitations defense if (1) the plaintiff shows that the defendant affirmatively acted to conceal his involvement in particular wrongdoing, see id. at 730-31 (citing Farkas v. Farkas, 168 F.3d 638, 642 (2d Cir. 1999); Markel Am. Ins. Co. v. Grimaldi, No. 10-CV-5447, 2012 WL 1020424, at *1, *5 (E.D.N.Y. Feb. 10, 2012)); and (2) the plaintiff brought the action within a reasonable time after the facts giving rise to the estoppel ceased, see id. at 731 (citing Prevost v. Hartman, 103 A.D.2d 842, 843 (2d Dep't 1984); Golden Budha Corp. v. Canadian Land Co., 931 F.2d 196, 200 (2d Cir. 1991)). The Court held that questions of material fact existed relative to both requirements. See id. at 731, 734. Among the alleged affirmative acts of concealment most pertinent to the motion to disqualify are Su's failure to name Yeh as a defendant when bringing this action in 2017 and the fact that Wong ignored an email from Yeh claiming co-ownership of the vessel while simultaneously reporting to the Court that Su was unable to locate Yeh for service of process.^[3] See id. at 733.

On October 30, 2020, Yeh moved to disqualify Wong, contending that she began representing Su in 2014 and that she may have been involved in the alleged affirmative acts of concealment that occurred after 2014. See Mem. of Law, Dkt. 186 at 2. Given her alleged involvement, Yeh argues that Wong is a necessary and material witness to his equitable estoppel defense. See id.; Notice of Mot. at 1-2. Su opposes the motion. Resp., Dkt. 190.

LEGAL STANDARD

When considering a motion to disqualify counsel, the Court's power stems from its supervisory authority to preserve the integrity of the adversary process. “[T]he only truly binding authority on disqualification issues is [Second] Circuit precedent, ” but the New York State Rules of Professional Conduct are “highly persuasive authority.” Skidmore v. Warburg Dillon Read LLC, No. 99-CV-10525, 2001 WL 504876, at *2 (S.D.N.Y. May 11, 2001), abrogated on other grounds by Satina v. N.Y.C. Hum. Res. Admin., No. 14-CV-3152, 2015 WL 6681203 (S.D.N.Y. Nov. 2, 2015).^[4]

Yeh argues that Wong should be disqualified pursuant to New York Rule of Professional Conduct 3.7. Mem. of Law at 6. That rule provides:

(a) A lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact [unless one of five exceptions applies].

(b) A lawyer may not act as advocate before a tribunal in a matter if:

(1) another lawyer in the lawyer's firm is likely to be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony may be prejudicial to the client; or

(2) the lawyer is precluded from doing so [due to conflict with a current or former client].

N.Y. R. Profl Conduct 3.7(a)-(b).

Rule 3.7(a) is designed to alleviate the risks associated with an attorney as a witness. Murray v. Metro. Life Ins. Co., 583 F.3d 173, 178 (2d Cir. 2009). Such risks include that the attorney may be forced to “vouch for his own credibility, ” “place opposing counsel in a difficult position when she has to cross-examine, ” “distort[] the truth as a result of bias in favor of his client, ” and blur “the line between argument and evidence, ” which may confuse a jury. Id. (citations omitted). In imputation cases under Rule 3.7(b), however, these concerns are “absent or, at least, greatly reduced.” Id. (quoting Ramey v. Dist. 141, Intern. Ass'n of Machinists & Aerospace Workers, 378 F.3d 269, 283 (2d Cir. 2004)). A jury “is not likely to be misled when a lawyer acts as advocate in a trial in which another lawyer in the lawyer's firm will testify, ” so disqualification under Rule 3.7(b) should occur “only when the concerns motivating the rule are at their most acute.” Id.

DISCUSSION

I. The Motion to Disqualify Wong Based on Rule 3.7(a) Is Denied Because She Will Not Be Trial Counsel

Rule 3.7(a) does not apply to Wong because she will not be trial counsel in this case. For Rule 3.7(a) to apply, an attorney must “properly [be] considered trial counsel.” Murray, 583 F.3d at 179 (holding that attorney who “will not act as an advocate before the jury” despite being a “member of the trial team” is not trial counsel for the purposes of 3.7(a)); see also Arenson Off. Furnishings, Inc. v. Kopelman, No. 20-CV-10497, 2021 WL 1758806, at *3 (S.D.N.Y. May 4, 2021) (“Because Fanburg is not serving as trial counsel and will not advocate before the jury, Rule 3.7(a) does not apply, let alone provide a basis for disqualification.”).

Wong has stated under oath that Leo Clarke “will be trial counsel and will examine all witnesses and argue to the court.” Wong Decl., Dkt. 191 ¶ 21; see also Resp. at 1 (“Counsel Wong will not be trial counsel . . . .”). Instead of serving as trial counsel, Wong will limit her role to “communicating with [her] clients and with Mr. Clarke.” Wong Decl. ¶ 21. Wong's statement that she will not be trial counsel is a sufficient basis for the Court to conclude that

Wong will not be trial counsel. See BT Holdings, LLC v. Vill. of Chester, No. 15-CV-1986, 2015 WL 8968360, at *6 (S.D.N.Y. Dec. 14, 2015) (relying on an attorney's declaration that another attorney “will not be advocating at trial” to conclude that he will not be trial counsel).

In short, because Rule 3.7(a) can disqualify only trial counsel, and Wong is not going to be trial counsel, she is not disqualified under Rule 3.7(a).^[5]

II. The Motion to Disqualify Clarke Based on Rule 3.7(b) is Denied

Yeh invoked Rule 3.7(b) for the first time in his reply brief.^[6] While that alone would be reason enough to deny the motion, Anghel v. Sebelius, 912 F.Supp.2d 4, 14 (E.D.N.Y. 2012) (“It is well settled in the Second Circuit that a party may not raise an argument for the first time in his reply brief.”) (internal citation omitted) (collecting cases), even if the argument had been timely raised, Yeh has not made any of the required factual showings that would be required to disqualify Clarke pursuant to Rule 3.7(b).

Because there is no indication that Clarke will be called as a witness in this case, he can only be disqualified if he is a member of Wong's firm and Wong's firm is disqualified under Rule 3.7(b). The first requirement is that Clarke must be a member of Wong's firm.^[7] See N.Y. R. Profl Conduct 3.7(b) (“A lawyer may not act as advocate before a tribunal in a matter if . . . another lawyer in the lawyer's firm is likely to be called as a witness . . . .) (emphasis added).

The parties dispute Clarke's relationship to Wong's firm. Compare Resp. at 3 (“Clarke is not an employee of Wong's firm . . . .”) with Reply, Dkt 193 at 9 (“Clarke, as of counsel to Wong, must also be disqualified . . . .”). But even if Clarke were of counsel to Wong's firm, that may not be enough on its own to conclude that Clarke is a member of Wong's firm for the purposes of Rule 3.7(b). Determining whether the relationship between an attorney and a law firm is sufficient for Rule 3.7(b) disqualification requires “examining] the substance of the relationship under review and the procedures in place.” Hempstead Video, Inc. v. Inc. Vill. of Valley Stream, 409 F.3d 127, 135 (2d Cir. 2005). “[A]n attenuated relationship between a lawyer and a law firm will be insufficient to make the attorney a member of that firm for the purposes of an attorney disqualification motion, regardless of the attorney's ‘...