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UNITED FOOD AND CMMRCAL WRKRS v. DARWN LYNCH

September 16, 1991

UNITED FOOD AND COMMERCIAL WORKERS HEALTH AND WELFARE FUND OF NORTHEASTERN PENNSYLVANIA, ET AL.
v.
DARWIN LYNCH ADMINISTRATORS, INC., ET AL.



The opinion of the court was delivered by: Nealon, District Judge.

MEMORANDUM

On February 15, 1991, the plaintiffs, United Food and Commercial Workers Health and Welfare Fund of Northeastern Pennsylvania (Fund) and its Trustees, Ronald T. Brooks, Mary Ann Dalkiewicz, Thomas Lazur, Maryellen Francke, E.J. Fox, and Paul Chiz, Jr., filed a complaint alleging that the defendants, Darwin Lynch Administrators, Inc. (DLA) and Darwin Lynch (Lynch), personally and in his capacity as an administrator and fiduciary; breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The defendants filed an answer and counterclaims against the plaintiffs on March 26, 1991.*fn1

On April 4, 1991, the defendants filed a motion to disqualify the plaintiffs' counsel, Barry Slevin (Slevin) and Slevin & Hart, P.C. The defendants contend that Slevin participated "in the transactions and occurences [sic] which give rise to the [p]laintiffs' claim and the [d]efendants' defenses thereto, and are necessary witnesses in this action."*fn2 After extensions of time, the defendants submitted their supporting brief on May 2, 1991, and the plaintiffs filed their opposition brief on June 17, 1991. The defendants filed a reply on July 1, 1991. In addition, supplemental briefs were filed by the plaintiffs on July 8, 1991 and the defendants on July 9, 1991.

I. Background*fn3

The Fund is a joint labor and management health and welfare fund established pursuant to § 302(c) of the Labor Management Relations Act (LMRA), 29 U.S.C. § 186(c). DLA is a corporation that is in the business of providing administrative, consulting and related services to health and welfare pension plans. Lynch is the President and majority shareholder of DLA. The plaintiffs state that DLA was named the administrative manager of the Fund on January 1, 1988 in accordance with a contract. In fulfilling its obligations under the contract, DLA was bound by the Plan Documents of the Fund.

The plaintiffs aver that DLA's employees advised New Medico that their services to Holland would be covered by the Fund without obtaining the prior approval of the Trustees. On May 24, 1990, DLA paid $8,694.00 from the Fund to New Medico.*fn4 Hence, the plaintiffs assert that the defendants breached their contractual and fiduciary duties in their handling of Holland's benefits claim.*fn5

II. Discussion

The defendants contend that the plaintiffs' counsel should be disqualified because Slevin, an attorney with Slevin & Hart, P.C., is a necessary witness in the action. Further, the defendants assert that Slevin has an interest adverse to the plaintiffs and that he represented the defendants in a prior civil suit arising from a claim for benefits.

A. Standing

The plaintiffs argue that the Rules of Professional Conduct*fn6 do not give the defendants "any standing to bring this motion."*fn7 The court concludes, however, that the disqualification motion is properly before the court. "One of the inherent powers of any federal court is the admission and discipline of attorneys practicing before it." In re Corn Derivatives Antitrust Litigation, 748 F.2d 157, 160 (3d Cir. 1984). In determining whether disqualification is appropriate, the court looks to the standards and principles promulgated by the American Bar Association in the Rules of Professional Conduct for guidance. See id. at 160-61.*fn8

B. Lawyer as Witness

Rule 3.7 prohibits a lawyer from acting "as advocate at a trial in which the lawyer is likely to be a necessary witness. . . ."*fn9 (Emphasis added). In contrast to the superseded provisions of the Code of Professional Responsibility, Rule 3.7 sets forth a restrictive criterion for disqualification.*fn10 "This standard requires the opposing party to bear a higher burden on a disqualification motion, permits the court to delay ruling until it can determine whether another witness can testify, and precludes disqualification if the lawyer's testimony would merely be cumulative." Cannon Airways, Inc. v. Franklin Holdings Corp., 669 F. Supp. 96, 100 (D.Del 1987) (citations omitted).

The defendants aver that DLA entered into an administrative agreement (1985 Agreement) with the Fund on July 6, 1985. The 1985 Agreement was to terminate on June 1, 1990. The defendants state that it is the plaintiff's contention that the 1985 Agreement was superseded by a subsequent agreement (1988 Agreement) effective on January 1, 1988 and that the plaintiffs' breach of contract claim arises from the 1988 Agreement. While the defendants dispute the effective date of the ...


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