UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
November 27, 1995
ABE DWORKIN and ADA SYLVIA DWORKIN V. GENERAL MOTORS CORPORATION
The opinion of the court was delivered by: CAHN
November 27th, 1995
Plaintiffs Abe Dworkin and Ada Sylvia Dworkin ("Plaintiffs") brought this action against General Motors Corporation ("GM") pursuant to 73 P.S. § 1951-1963, commonly known as the Pennsylvania Lemon Law, among other applicable laws. Currently before the court is GM's motion to disqualify Kimmel & Silverman, P.C. ("K&S") and Jay London, Esquire, ("London") (hereinafter collectively referred to as "Respondents") from representing Plaintiffs in this matter.
GM is a defendant in approximately one hundred lemon law cases pending in this district. In order to avoid inconsistent decisions regarding the issue of disqualification, the parties agreed to designate this case as a test case in which the disqualification issue would be litigated and resolved. Upon consideration of GM's Motion to Disqualify, Respondents' response thereto, all other related briefs and memoranda of law, and after an evidentiary hearing that took place over four separate days, this court finds that Respondents have complied with the Rules of Professional Conduct and should not be disqualified.
The Pennsylvania Lemon Law, the Magnuson-Moss Act, 15 U.S.C. § 2301-2312, and several other statutory schemes give purchasers of defective automobiles the right to sue automobile manufacturers under certain circumstances. These laws will collectively be referred to as "lemon laws" by this court. GM retained the law firms of Lavin, Coleman, Finarelli & Gray ("Lavin") and McBreen, McBreen & Kopco ("McBreen") to defend GM in lemon law suits brought against GM in the greater Philadelphia area. Lavin has represented GM in this capacity since at least 1988, and McBreen has represented GM in lemon law suits since August, 1994. Motion of General Motors Corporation to Disqualify Kimmel & Silverman, P.C. and Jay London, Esquire, from Representing Clients in Suits Against General Motors Corporation in Automobile Warranty Litigation [hereinafter GM Motion to Disqualify], Ex. B, PP 6, 14 (Affidavit of Laurie N. Adams in Steel v. General Motors Corporation, 1995 U.S. Dist. LEXIS 19608, No. 95-CV-02506 (D.N.J)).
London was employed as an associate attorney by Lavin from approximately August, 1988 to February, 1993. From approximately March, 1993 to April, 1994 London was employed as an associate attorney by Harvey, Pennington, Herting & Renneisen, Ltd. ("Harvey, Pennington"). From April, 1994 to May 26, 1995, London was employed as an associate attorney by McBreen. During his employment at Lavin and McBreen, London worked on the defense of lemon law cases brought against GM. While at Harvey, Pennington, however, London was not involved in lemon law cases or any other cases involving GM.
While at Lavin, London represented GM in over twenty lemon law matters and billed nearly 1000 hours to GM. GM Motion to Disqualify, Ex. A, P 6 (Affidavit of Francis P. Burns, III in Steel case). GM contends that while at Lavin, London was privy to written materials, distributed or approved by GM, that described GM's philosophy and strategy for the defense of lemon law matters. GM further contends that London had frequent contact with GM personnel, specifically GM Legal Assistant Laurie Adams ("Adams"), concerning the defense of GM in lemon law matters.
London joined McBreen in April, 1994 as an associate. In the spring of 1994, London and McBreen partner Steven B. Kantrowitz, Esquire ("Kantrowitz") spoke with Adams to market McBreen's services to GM for the defense of lemon law claims. On August 3, 1994, London and Kantrowitz met with Adams in Detroit to formalize this relationship. GM Motion to Disqualify, Ex. B, P 13 (Adams Aff.). GM avers that a focus of this meeting was to discuss GM's philosophy and strategies for handling lemon law claims filed by K&S. During his employment at McBreen, London defended GM in twenty-nine lemon law claims; in twenty-eight of those matters, the plaintiffs were represented by K&S. Id. P 14. GM asserts that London was the only associate at McBreen assigned to represent GM, that London was GM's primary contact person at McBreen, and that Adams had frequent contact with London, which included discussions of confidential topics.
London resigned from McBreen on Friday, May 26, 1995. On Monday, May 29, 1995 (Memorial Day), London called Robert Silverman ("Silverman") of K&S at Silverman's home. London contends that he had Kantrowitz's permission to call opposing counsel to notify them that he had resigned from McBreen and to request that opposing counsel not take any adverse action during the transition period at McBreen created by London's resignation. During the course of their telephone conversation, Silverman stated that K&S might be interested in hiring London to work on non-GM matters.
On May 31, 1995, London met with Silverman and Craig T. Kimmel ("Kimmel"). London, Silverman, and Kimmel agreed that if an offer were made to London, it would only be after an ethics screen had been implemented, and that London would work exclusively on non-GM matters. After Silverman left the meeting, Kimmel and London created an ethics screen based on a draft London had developed prior to the meeting. On the afternoon of May 31, 1995, Kimmel and Silverman held a meeting of all K&S employees at which the ethics screen was implemented and explained. After this meeting, an offer was made to London via telephone. On June 2, London telephoned Adams, informing her that he had resigned from McBreen and had been offered a position at K&S. London confirmed this telephone conversation with Adams in a letter sent by certified mail the same day. In this letter, London also stated that he wanted to discuss a waiver by GM of any potential conflicts of interest and that a copy of the K&S ethics screen would be available to GM upon request. London accepted the position at K&S on June 2, 1995 and began working at K&S on June 7, 1995. By June 12, 1995 letter, Adams advised London that GM declined to waive any potential conflict of interest and requested a copy of the K&S ethics screen. On June 19, London sent a copy of the K&S ethics screen policy to Adams via facsimile. On June 20, Adams sent a letter to London advising him that GM had received the ethics screen policy, that GM still declined to waive any potential conflict of interest, and that GM objected to any representation by London or K&S in cases against GM. On June 23, Adams received a letter via facsimile from London in which he proposed a meeting between Adams and K&S to discuss GM's concerns. Adams declined this invitation via a June 26 letter to London, stating that whatever additional information that London wished to supply could be conveyed by writing.
K&S, a small firm
with offices in Blue Bell, Pennsylvania and Haddonfield, New Jersey, specializes in lemon law cases against automobile manufacturers, including GM. K&S has brought hundreds of lemon law claims against GM and asserts that there is little, if any, GM strategy or philosophy that K&S has not learned through its extensive experience litigating and settling these claims.
The 10,000-square-foot office space of K&S at Blue Bell contains all client files and includes fourteen separate offices and two conference rooms. Each attorney's office locks and unlocks with a separate key. The particular attorney assigned to an office has that office's only key, with the exception of Silverman, who possesses a master key. Silverman's office consists of a main office and a sub-office, in which all GM files are stored. Whenever Silverman is away from his office, the doors are locked. Each attorney has a personal computer with a personal access code; there is no system network. Silverman reviews all incoming mail and facsimiles for distribution.
In this court, the Rules of Professional Conduct (the "Rules") adopted by the Supreme Court of Pennsylvania govern issues of professional conduct, including the present motion to disqualify. U.S.D.C., E.D. Pa., Local R. Civ. P. 83.6, R. IV(B).
GM alleges that London and K&S should be disqualified pursuant to Rules 1.6, 1.9, and 1.10. This court will analyze GM's claims under these three Rules in turn.
The applicable portions of Rule 1.6 are as follows:
(a) A lawyer shall not reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation, and except as stated in paragraphs (b) and (c).
. . . .
(c) A lawyer may reveal such information to the extent that the lawyer reasonably believes necessary:
. . .
(3) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim or disciplinary proceeding against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client.
(d) The duty not to reveal information relating to representation of a client continues after the client-lawyer relationship has terminated.
Rules of Professional Conduct Rule 1.6.
GM correctly asserts that London is obliged to protect all information "relating to the representation" of GM. Id. cmt. ("The confidentiality rule applies not merely to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source."). In order to show that London violated Rule 1.6, however, GM must prove that London has actually revealed information relating to the representation of GM. GM's offers of proof as to this issue are testimony from Francis P. Burns, III, a Lavin partner, and expert witness Edward W. Mullinix, senior counsel at Schnader, Harrison, Segal and Lewis.
Burns testified that the phrase "standardized pleadings, discovery, and releases" that allegedly appears in GM guidelines distributed to London appears verbatim in the affidavit signed by London in Steel v. General Motors Corporation, the disqualification action in front of Magistrate Judge Kugler of the United States District Court for the District of New Jersey. Tr., Sept. 21, 1995, at 275-77. Assuming that this exact phrase is used in GM guidelines, this court finds that the use of this innocuous phrase does not amount to the revelation of information relating to the representation of GM, nor will this court draw the inference that the use of this phrase suggests that London has revealed other information relating to the representation of GM.
Mullinix testified that London disclosed that GM desired cost-effective handling of lemon law litigation, that GM had given McBreen standing settlement authority, that he knew what that settlement authority was, and various other factors relating to his representation of GM during his testimony in the Steel case.
Tr., Oct. 5, 1995, at 227-29. These statements, although they do relate to the representation of GM, were made in the context of London defending himself against charges of violating the New Jersey Rules of Professional Conduct and, as such, are protected by Rule 1.6(c)(3).
In short, this court concludes that London has not violated his duty of confidentiality under Rule 1.6.
B. Rule 1.9
Rule 1.9 provides:
A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after a full disclosure of the circumstances and consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information has become generally known.
Rules of Professional Conduct Rule 1.9. London clearly "formerly represented" GM in a number of lemon law matters. However, London has not violated Rule 1.9(a), because he is not currently representing any party against his former client.
Similarly, London has not violated Rule 1.9(b), because GM has not presented any evidence that London has used information relating to his representation of GM to its disadvantage.
C. Rule 1.10
Rule 1.10 governs issues of imputed disqualification. The relevant provisions of Rule 1.10 are as follows:
(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9 or 2.2.
(b) When a lawyer becomes associated with a firm, the firm may not knowingly represent a person in the same or a substantially related matter in which that lawyer, or a firm with which the lawyer was associated, had previously represented a client whose interests are materially adverse to that person and about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(b) that is material to the matter unless:
(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and
(2) written notice is promptly given to the appropriate client to enable it to ascertain compliance with the provisions of this rule.
Rules of Professional Conduct Rule 1.10.
Rule 1.10 (a) is not applicable in this case. See Graham v. Wyeth Lab., 906 F.2d 1419, 1422 (10th Cir. 1990) (stating that the applicability of Rule 1.10(a) is limited to instances in which "the conflicted lawyer remains with the same firm throughout the prior and current representations"); see also Rules of Professional Conduct Rule 1.10 cmt. ("Paragraph (a) operates only among lawyers currently associated in a firm."). In the instant case, London has switched firms, so the situation is governed by Rule 1.10(b). See Graham, 906 F.2d at 1422 (stating that "paragraph (b) applies when disqualification of the moving lawyer's new firm is sought"); see also Rules of Professional Conduct Rule 1.10 cmt. (stating that paragraph (b) applies "when a lawyer moves from one firm to another").
Clearly, London "previously represented" GM, and GM's interests are "materially adverse" to those of clients that K&S represents against GM. In addition, by virtue of London's prior representation of GM, he certainly possesses information "relating to the representation" of GM that would be protected by Rules 1.6 and 1.9(b). Although this court declines to rule on whether such information would be "material" in other lemon law cases or whether lemon law claims are indeed "substantially related," this court will assume that both of these propositions are true for the purposes of this decision.
In a Rule 1.10(b) inquiry, the burden of proof is on the firm whose disqualification is being sought. Rules of Professional Conduct Rule 1.10 cmt. In the instant case, Respondents have satisfied their burden to show that London is adequately screened, is apportioned no fee from GM matters, and that written notice was promptly given to GM.
The Rules of Professional Conduct and the comments thereto do not provide specific guidance as to what constitutes an effective screen. Although enumerated in a dissenting opinion, this court finds the factors listed by Chief Justice Nix in Maritrans GP, Inc. v. Pepper, Hamilton & Scheetz, 529 Pa. 241, 602 A.2d 1277 (Pa. 1992), to be helpful in analyzing the effectiveness of K&S's ethics screen. These factors include:
1. The substantiality of the relationship between the attorney and the former client
2. the time lapse between the matters in dispute
3. the size of the firm and the number of disqualified attorneys
4. the nature of the disqualified attorney's involvement
5. the timing of the wall
602 A.2d at 1289 (citations omitted) (summarizing factors considered by other courts). In addition, the features of the wall itself should be analyzed, including the following:
1. the prohibition of discussion of sensitive matters
2. restricted circulation of sensitive documents
3. restricted access to files
4. strong firm policy against breach, including sanctions, physical and/or geographical separation
Id. (citation omitted); see also LaSalle, 703 F.2d at 259 (listing similar factors). GM has persuasively argued that London had a substantial relationship with GM through his representation of GM in many lemon law actions and his frequent contact with Adams. The time lapse between London's representation of GM and his employment at K&S was minimal. Despite Respondents' persuasive arguments that K&S's small size will enable them to effectively monitor their ethics screen, this court recognizes that courts analyzing this factor have considered a firm's small size to be a detriment rather than an asset in implementing an effective screen. See, e.g., Decora, 899 F. Supp. 132, 1995 U.S. Dist. LEXIS 12646, 1995 WL 519643, at *7-8 (stating that "relatively small size" of approximately forty-attorney firm was one factor in determining screening mechanism to be ineffective); Weglarz v. Bruck, 128 Ill. App. 3d 1, 470 N.E.2d 21, 25, 83 Ill. Dec. 266 (Ill. App. Ct. 1984) (affirming decision to disqualify firm in part because the firm "was a small law firm where presumably there is more contact between the attorneys than would exist in a large, departmentalized firm"). As the lawyer assigned to manage day-to-day matters for GM in over twenty lemon law cases while at McBreen, it can be assumed that the nature of London's involvement was fairly substantial. GM Motion to Disqualify, Ex. B, P 14 (Adams Aff.). However, the comprehensiveness of K&S's ethics screen and its timely implementation convince this court that the screen is and will continue to be effective in protecting any information or confidences that London may possess from being disseminated to any other member of K&S.
This court notes that K&S took great care to implement its ethics screen before London began his employment at K&S.
See LaSalle, 703 F.2d at 259 (noting the importance of the existence of a screen "at the time when the potentially disqualifying event occurred, either when the attorney first joined the firm or when the firm accepted a case presenting an ethical problem"). The K&S ethics screen also satisfies the four factors of an effective screen enumerated by Chief Justice Nix in Maritrans.9 First, the screen clearly prohibits the "discussion of sensitive matters." Paragraph six of the screen states:
There is an absolute prohibition of any conversations or discussions with, around, near, or in the presence of the screened attorney concerning or relating to the screened files and/or matters. Any employee who violates this policy will be terminated and will be subject to disciplinary proceedings.
Ex. GM-6B. GM believes that this provision is inadequate, arguing that the term "screened files and/or matters" refers only to current K&S cases against GM and that there is no prohibition against London revealing information he gained while representing GM in past actions. This argument is weak, especially considering the fact that an introductory paragraph of the screen states: "The purpose of this policy is to prevent the inadvertent or intentional spread of prior client confidences."
GM also argues that as shareholders of K&S, Kimmel and Silverman are not "employees" and are therefore not subject to the disciplinary provisions of paragraph six. However, a shareholder of a professional corporation may certainly also be an employee of that corporation. See, e.g., Gorman v. North Pittsburgh Oral Surgery Assocs., 664 F. Supp. 212, 214 (W.D. Pa. 1987) (stating that a professional corporation "enables a professional to employ him or herself"). This court finds that Kimmel, Silverman, and London fully understand their obligations under the Rules of Professional Conduct and consider themselves bound by the ethics screen, including paragraph six. The screen clearly provides for restricted circulation of sensitive documents and restricted access to files.
K&S has also implemented several other policies to further ensure compliance with the Rules of Professional Conduct. For example, each GM file is color coded or otherwise marked such that it is readily identifiable from a distance, and K&S has established a call screening procedure so that no claimant against GM will have any contact with London. See Ex. GM-6B PP 1, 2 & 8. Finally, this court is satisfied that K&S has a strong firm policy against breech of the screen.
Despite K&S's strict provisions against violation of the screen, GM argues that paragraph twelve of the screen, entitled Structural Divisions, has been breached by Kimmel.
Paragraph twelve reads as follows:
Robert M. Silverman is the partner responsible for handling General Motors Corporation warranty litigation.
Craig Thor Kimmel is the partner responsible for handling warranty litigation against all of the other automobile manufacturers.
Ex. GM-6. Kimmel sent a July 11, 1995 letter to Customer Assistance Manager Jacqueline Vessel of GM's Chevrolet Motor Division. See Ex. GM-20. Since the implementation of the screen, Kimmel has also signed engagement letters in GM cases. See Exs. GM-3A; GM-3B; GM-3C; see also Tr., Oct. 5, 1995, at 71-72 (Kimmel's testimony that "there have been a few opportunities that have come up where I have signed an engagement letter [in GM cases] because either the client knew somebody that I knew and wanted to see my name on the signature line on an opening letter saying we represent this client"). This court finds that these actions violate neither the language nor the Spirit of paragraph twelve. Although Silverman is the partner responsible for handling GM warranty cases and Kimmel is the partner responsible for handling non-GM warranty cases, nothing in the screen states that Kimmel cannot have any involvement in GM cases or that Silverman cannot have any involvement in non-GM matters. The screen would arguably be more effective if Kimmel were never to have any contact with GM cases, but this court finds no reason why Kimmel should not be allowed to handle administrative aspects of GM-related matters, especially at times when Silverman is unavailable, which was apparently the factual scenario involved regarding the July 11, 1995 letter to Vessel. See Tr., Sept. 27, 1995, at 89-90 (Silverman testimony).
Respondents have satisfied the burden of showing that London "is apportioned no part of the fee" from K&S's representation of lemon law cases against GM, pursuant to Rule 1.10(b)(1). Silverman testified on cross-examination that London receives a straight salary that will not be increased or decreased depending on revenue derived from GM litigation. See Tr., Sept. 27, 1995, at 12. Revenue derived from all cases is deposited in a single account from which K&S pays its operating expenses, including salaries. See id. This court finds that K&S's anticipated revenues from non-GM cases will cover London's salary and any additional overhead his employment may incur, and there is nothing in the record that would suggest otherwise.
Respondents have satisfied their burden to show that written notice was promptly given to GM pursuant to Rule 1.10(b)(2). London sent a letter to Adams by certified mail on June 2, 1995, informing her that he resigned from McBreen on or about May 26, 1995, that he was offered employment as a litigation associate by K&S on May 31, 1995, that he would have no involvement on GM cases at K&S, that K&S had implemented an ethics screen, and that he would be "barred from discussing any aspect of [GM] cases with anyone at the firm." London also stated in this letter that a copy of the screen would be available to Adams and GM upon request. See Ex. GM-4. This court finds this written notice to be prompt, given that London had received the offer from K&S on May 31, 1995 and did not accept the offer until June 2, 1995, the day he sent this letter to Adams. This letter was certainly sufficient notice to "enable [GM] to ascertain compliance with the provisions of [Rule 1.10]," because based on this notice, GM would be able to make an informed inquiry as to whether the screen and fee-apportionment system were adequate. Thus, in short, this court finds that Respondents have effectuated an extremely thorough and effective screen and have complied with all of the other requirements of Rule 1.10.
The effectiveness of any ethics screen depends upon the integrity of the individuals who comply with it. This court has no doubt that Respondents understand their ethical obligations and will continue to adhere to the Rules of Professional Conduct and their ethics screen.
Finally, some courts have held that a disqualified attorney and his law firm should attest to screening procedures under oath. See Cromley, 17 F.3d at 1065; Kovacevic v. Fair Automotive Repair, Inc., 641 F. Supp. 237, 244 (N.D. Ill. 1986). Although the testimony of Silverman, Kimmel, and London has satisfied this court that the ethics screen was in place when London began his employment at K&S, that the provisions of the screen have been and will continue to be complied with, and that London will be apportioned no fee derived from cases against GM, this court holds, out of an abundance of caution, that London and K&S, through its partners Kimmel and Silverman, should attest to these facts and the specific screening provisions under oath. See Kovacevic, 641 F. Supp. at 245 (denying disqualification motion but ordering supplemental affidavit to ensure compliance with ethics rules)
For the reasons set forth above, this court denies GM's motion to disqualify Respondents. Respondents' counsel must file supplemental affidavits in accordance with the above ruling. An appropriate order follows.
BY THE COURT:
Edward N. Cahn, Chief Judge
AND NOW, this 27 day of November, 1995, upon consideration of the Motion of General Motors Corporation to Disqualify Kimmel & Silverman, P.C. and Jay London, Esquire, from Representing Clients in Suits Against General Motors Corporation in Automobile Warranty Litigation, Respondents' response thereto, and all other related briefs and memoranda of law, and following an evidentiary hearing that took place over four separate days, it is hereby ORDERED that the Motion to Disqualify is DENIED.
It is FURTHER ORDERED that Respondents Jay London, Esquire, and Kimmel & Silverman, P.C., through its partners Robert Silverman and Craig Kimmel, submit supplemental affidavits attesting to the following:
1. that Jay London and the law firm of Kimmel & Silverman, P.C. have complied with and will continue to comply with the specific provisions of the ethics screen established by Kimmel & Silverman, P.C.;
2. that Jay London has not been and will not be apportioned any part of fees derived from Kimmel & Silverman, P.C.'s representation of clients against GM in automobile warranty/lemon law cases;
3. that the Kimmel & Silverman, P.C. ethics screen was in effect before London began his employment at Kimmel & Silverman, P.C. on June 7, 1995.
BY THE COURT:
Edward N. Cahn, Chief Judge