United States District Court, Eastern District of Pennsylvania
November 16, 1999
JOHN D. SHADE, PLAINTIFF,
GREAT LAKES DREDGE & DOCK COMPANY, DEFENDANT.
The opinion of the court was delivered by: Katz, Senior District Judge.
MEMORANDUM & ORDER
Before the court is defendant's motion to disqualify attorney
Marvin I. Barish from continuing to represent plaintiff John
Shade. Because disqualification is an inappropriate sanction
under these circumstances, the court will deny the motion.
John Shade brought this action under the Jones Act for injuries
he suffered during his employment with defendant. After a jury
trial in October 1997, plaintiff was awarded $870,000. The Third
Circuit reversed this judgment for evidentiary error, and the
case is scheduled for retrial beginning on December 13, 1999.
Defendant's present motion argues that Barish must be
disqualified for violations of two professional rules.*fn1
Defendant first argues that the acknowledged provision of an
apartment and associated costs for Shade and his family by the
Barish firm since November 1997 qualifies as a conflict of
interest that warrants disqualification. Defendant also claims
that Barish knowingly offered false testimony to the court during
the 1997 trial and that this requires his disqualification.*fn2
A district court has power to disqualify an attorney deriving
"from its inherent authority to supervise the professional
conduct of attorneys appearing before it." United States v.
Miller, 624 F.2d 1198, 1201 (3d Cir. 1980); see also In re Corn
Derivatives Antitrust Litig., 748 F.2d 157, 160 (3d Cir. 1984)
(same). As many decisions have stressed, "courts have vital
interests in protecting the integrity of their judgments,
maintaining public confidence in the integrity of the bar,
eliminating conflicts of interest, and protecting confidential
communications between attorneys and their clients."
Commonwealth Ins. Co. v. Graphix Hot Line, Inc., 808 F. Supp. 1200,
1203 (E.D.Pa. 1992); see also United States v.
Moscony, 927 F.2d 742, 749 (3d Cir. 1991) (same).
In this case, the general power of the court to sanction an
attorney is not at issue. The only question is whether the
extreme sanction of disqualification is appropriate assuming that
an ethical rule was violated. While disqualification is obviously
a permissible and even necessary step in some cases,
disqualification should not be imposed lightly.
[T]he court should disqualify an attorney only when
it determines, on the facts of the particular case,
that disqualification is an appropriate means of
enforcing the applicable disciplinary rule. It should
consider the ends that the disciplinary rule is
designed to serve and any countervailing policies,
such as permitting a litigant to retain the counsel
of his choice and enabling attorneys to practice
without excessive restriction.
Miller, 624 F.2d at 1201. That is, even if the court finds that
an attorney violated an ethical rule, "disqualification is never
automatic." Id.; see also Cohen v. Oasin, 844 F. Supp. 1065,
1067 (E.D.Pa. 1994) (stating that district court has latitude to
impose sanctions in a manner fair to all parties to the
litigation). Although this right is obviously not absolute, a
party's choice of counsel is a significant consideration in
determining the propriety of disqualification. See Commonwealth
Ins., 808 F. Supp. at 1203. Weighing against this right is the
need to protect opposing parties' ability to try their case in a
fair manner. See, e.g., University Patents, Inc. v. Kligman,
737 F. Supp. 325, 329 (E.D.Pa. 1990).
Doubts should be resolved in favor of disqualification, see
Brennan v. Independence Blue Cross, 949 F. Supp. 305, 307
(E.D.Pa. 1996), but it is the burden of the party arguing for
disqualification to demonstrate clearly that "continuing
representation would be impermissible." Id. (quoting Cohen,
844 F. Supp. at 1067). As a general rule, motions to disqualify
opposing counsel are disfavored. See Cohen, 844 F. Supp. at
1067; Kligman, 737 F. Supp. at 329. While the court does not
suggest that the present motion was filed for strategic purposes,
it must be acknowledged that "the purpose of the Rules can be
subverted when they are invoked by opposing parties as procedural
weapons." Rules of Professional Conduct, Preamble Scope.
II. The Alleged Violations
A. Living Expenses
The basis for defendant's first allegation of impropriety is
the Barish firm's provision of an apartment and related expenses
to the Shade family. See Def. Ex. A (deposition testimony of
Shade stating that Barish paid rent and other expenses since
1997); Def. Ex. B (rental papers listing Barish as applicant for
occupancy by Shade and his family; billing records of apartment
indicating Barish paid rent). Barish does not dispute these
facts, although he explains that his firm had acquired the
apartment to house out-of-town clients and experts. See Pl.Mem.
of Law at 1. According to Barish, the Shades' occupancy began
after Shade lost both his job and his home following the first
trial and was extended indefinitely after Shade's wife was
injured and he had an "emotional breakdown." Id. The family was
told from the outset that they had no obligation to repay rent or
other expenses. See Pl.Ex. A. Before taking this step, the
Barish firm consulted with outside counsel, which opined that the
firm would not violate applicable ethical rules if it provided
housing and related expenses to the Shades. See Pl.Ex. B.
Defendant, however, argues that this conduct violated Rule 1.8,
which generally prohibits lawyers from engaging in representation
that constitutes a conflict of interest, and that Barish must be
disqualified. As is most relevant in this case, the rule states:
(e) A lawyer shall not provide financial assistance
to a client in connection with
pending or contemplated litigation, except that:
(1) a lawyer may advance court costs and expenses
of litigation, the repayment of which may be
contingent on the outcome of the matter; and
(2) a lawyer representing an indigent client may
pay court costs and expenses of litigation on
behalf of the client.
(j) A lawyer shall not acquire a proprietary interest
in a cause of action that the lawyer is conducting
for a client, except that the lawyer may:
(1) acquire a lien granted by law to secure the
lawyer's fee or expenses; and
(2) contract with a client for a reasonable
contingent fee in a civil case.
Rule of Professional Conduct 1.8. As the commentary to the rule
suggests, subsection (j) "has its basis in common law champerty
and maintenance." Commentary to Rule 1.8. Section (e)'s
provisions for payment of some expenses are a specific exception
to those principles. See id.
The traditional perspective suggests at least three harms that
could result from permitting lawyers to provide living expenses
to their clients: (1) loaning money to a client gives the lawyer
an interest in the litigation that could cause the lawyer to act
other than in the client's best interests; (2) permitting such
advances might encourage attorneys to seek out marginal claims
that would "churn up litigation"; and (3) permitting advances
might degrade the profession by leading lawyers to compete for
clients by offering the best financial assistance packages.
Michael R. Koval, "Living Expenses, Litigation Expenses, and
Lending Money to Clients," 7 Geo. J. Legal Ethics 1117, 1117-18
(1994). The modern perspective frames these evils primarily in
terms of a prohibited conflict of interest between the attorney
and the client. See, e.g., Dawn S. Garrett, "Lending a Helping
Hand: Professional Responsibility and Attorney-Client Financing
Prohibitions," 16 U. Dayton L.Rev. 221, 230-35 (1990) (analyzing
prohibition within framework of ethical canons). These concerns
are evidenced in the 1954 American Bar Association Opinion on
this issue submitted by defendant. See Def. Ex. 1. In that
opinion, the ABA stated that payment of living expenses was
improper as it gave the attorney an interest in the outcome of
the litigation because, presumably, the living costs advanced
would be reimbursed from the verdict. This situation might lead
the attorney to consider her own interests above those of the
client in negotiating a settlement.*fn3
Both parties, understandably, spend a considerable amount of
time arguing as to whether or not there was a violation of an
ethical rule. It is unnecessary to rule on this question however.
Even assuming that the provision of an apartment and related
expenses violates the Rules of Professional Conduct,
disqualification is not necessary to effectuate the purposes of
the rule or protect the integrity of the legal process in this
case. First, the client's interests would not be served by
disqualification. Barish has represented Shade in this matter for
more than two years and is preparing for a trial scheduled in
less than a month. Obviously, this point is not dispositive, and,
were the court convinced that there was risk of a genuine
conflict between Shade and his attorney, the matter would be
resolved differently. However, the fact that Shade will not be
asked to repay the firm for costs of housing his
family indicates that the risk of improper settlement to protect
the law firm's interest is low.*fn4 See, e.g. Essex County Jail
Annex Inmates v. Treffinger, 18 F. Supp.2d 418, 431-32 (D.N.J.
1998) (in discussing Rule 1.7, noting particular need to have
specific finding of conflict in situations in which attorneys'
interests may trump those of clients; rejecting applicability of
multi-defendant conflict cases to attorney self-interest cases).
Second, while the court acknowledges the significant public
interest in untainted legal proceedings and in promoting attorney
integrity, permitting Barish to continue representing Shade will
not compromise these principles. The defendant argues for
disqualification based solely on its expressed concern for the
legal system and for Shade but does not suggest that its own
ability to prepare for trial or present its case will be
hampered. Nor does the court envision any public interest that
would outweigh Shade's interest in continuing to work with
Barish; in fact, the danger of public dissatisfaction with the
legal process appears to be greater from the last minute
disqualification of an attorney who apparently provided housing
for a client who was faced with dire financial circumstances.
Counsel has not submitted any precedent suggesting that
disqualification in an ongoing case is an appropriate response to
the payment of living expenses. The only case defendant cites on
this issue is In re Berlant, 458 Pa. 439, 328 A.2d 471 (1974).
In that case, an attorney appealed from a decision suspending him
from practice for five years because of fifteen instances of
misconduct, including two counts of improper advances to clients.
See id. at 473. The majority opinion discussed the improper
advances only in a footnote, in which the court stated that the
attorney attempted "to justify his advances on the basis of the
client's indigency[.]" While the court ruled motivation
irrelevant to a finding that the attorney had committed an
offense, the court stated that motivation was relevant in
considering the appropriate sanction. See id. at 476 n. 12.
Furthermore, a concurring and dissenting opinion suggested that
the propriety of sanctions would be doubtful if the attorney had
advanced money solely for humanitarian reasons. That opinion
explained, "My concurrence on [the advancement] charge is based
solely on the evidence indicating that the purpose of one
`loan' was not simply to enable an indigent client to withstand
the rigors of a possibly protracted litigation, but was designed
to (and did) influence the client — who had already retained
other counsel — to dismiss his attorney and retain appellant."
Id. at 479 (Manderino, J., concurring and dissenting).
Berlant is thus of limited value in determining the proper
course of action in this case because of the larger number of
allegations of misconduct and the scant discussion of the issue
of providing living expenses. If anything, Berlant furthers the
plaintiff's position by suggesting that the court should consider
the attorney's motivation in advancing monies when determining
what, if any, sanctions to impose. The only other authority
directly on point submitted by defendant is the 1954 American Bar
Association Opinion. The ABA Opinion did not, however, indicate
that disqualification was necessarily the proper response to a
violation of the rule.*fn5
B. Offering False Testimony
Defendant next alleges that Barish knowingly presented false
testimony by Mark Oldham, a witness at Shade's trial, and that
this warrants disqualification. Mark Oldham was one of John
Shade's co-workers at Great Lakes Dredge. In 1995, Barish
represented Oldham in his own personal injury action. During
Oldman's trial in the New Jersey District Court in April 1995,
Barish elicited testimony from Oldham in which he stated that he
was running the front end loader that injured Shade's hand. In
the course of that testimony, Oldham explained that he cut off
Shade's thumb when he pulled the wrong lever on the machine.
See Def. Ex. C at 60-61 (testimony at Oldman's trial).*fn6 Mr
Barish referred to that explanation in his closing in the same
trial. See Def. Ex. D at 15.*fn7 In contrast, at Shade's
trial, Oldham testified that the lever had fallen down
accidentally and that he had nothing to do with the accident in
which Shade lost his thumb. He explained that he was not even in
the cab of the machine when the accident occurred. See Def. Ex.
F at 37 (direct and cross-examination).*fn8 Defendant
stresses that Barish met with Oldham numerous times, both in the
preparation of his own case and in connection with his testimony
for Shade's case. During at least one deposition, Oldham also
explained that he did not cause the accident in which Shade lost
his thumb. See Def. Ex. E at 99-100, 106-07 (Oldham dep.).*fn9
Defendant alleges that this testimony violated Rule 3.3, which
describes an attorney's duty of candor toward a tribunal. That
rule states in relevant part:.
(a) A lawyer shall not knowingly:
(4) offer evidence that the lawyer knows to be
false. If a lawyer has offered material evidence
and comes to know of its falsity, the lawyer shall
take reasonable remedial measures.
(c) A lawyer may refuse to offer evidence that the
lawyer reasonably believes is false.
Rule of Professional Conduct 3.3. This rule safeguards principles
that are basic to the adversarial system of justice: The excesses
of this system would likely overcome its virtues if attorneys
were free to represent clients with no regard whatsoever for the
truth of their statements to the court. See Eagan by Keith v.
Jackson, 855 F. Supp. 765, 790-91 (E.D.Pa. 1994); see also
United States v. Shaffer Equip., 11 F.3d 450, 457 (4th Cir.
1993) ("Even the slightest accommodation of deceit or a lack of
candor in any material respect quickly erodes the validity of the
process."). That is, the overall duty of truth "takes it shape
from the larger object of preserving the integrity of the
judicial system." Id. However, it is important to emphasize
that a mere suspicion of perjury is not enough to require
disclosure to the court. See id. at 459. As the rule quoted
above indicates, an attorney's duty to inform the court does not
arise unless the attorney knows that false testimony has been
elicited; an attorney has the option of refusing to offer
testimony she believes to be false.
The defendant has not met its burden of justifying
disqualification under this rule. First, the court is not
satisfied that defendant has shown that Barish offered false
testimony, much less that he did so knowingly. According to
Oldham's affidavit, his testimony at his own trial was based on
the knowledge he had at the time. See Pl.Ex. E ¶ 9 (Aff. by
Oldham). He explains that his limited experience on the machine
that caused the injury led him to believe mistakenly that "the
lowering of the claws could only have occurred by pulling the
lever for the claws," id. ¶ 4, when, in fact, he later learned
that the machine itself had mechanical problems that "affected
the movement of the claws." Id. ¶ 5. Oldham also states, "I
further became aware that even if I had pulled the wrong lever in
an effort to raise the forks, that would not have caused the
claws to fall." Id. ¶ 5. The supporting memorandum of law
explains that Oldham's testimony at his trial on this matter was
peripheral evidence "offered with other evidence to explain Mr.
Oldham's own subjective belief that he was unable to return to
seaman's duties as his eye injury prevented him from properly
performing his work." Pl. Mem. of Law at 16.
More importantly, the court does not believe that
disqualification is the only means to enforce the rule in general
or, in this case, to assure that trial occurs without taint of
wrongdoing or unfairness to the defendant. Knowledge of the
inconsistency in Oldham's testimony provides the defendant with
ample ground to impeach him and to raise the question of what, if
any, role Barish played in the different testimony. See Essex
County Jail Annex Inmates, 18 F. Supp.2d at 440 (focusing
primarily on degree to which misconduct tainted future
proceedings). That is, the defendant does not face meaningful
prejudice either in terms of trial preparation or trial
presentation. Similarly, the public's interests in a fair and
open resolution of this dispute will be served by exploration of
these issues in the courtroom itself during trial. Weighing
strongly against disqualification, as described previously, are
the rapidity with which trial is approaching and Barish's
long-time representation of Shade. These factors warrant
permitting Barish to continue acting as Shade's attorney. Cf.
id. at 443-45 (holding that attorney who disclosed sensitive
information regarding security to inmates and then misled court
had to be disqualified because of potential prejudice to
enforcement of consent decrees).*fn10
In denying defendant's motion, the court makes no comment on
the propriety of sanctions besides disqualification. The only
question before this court is whether Barish should be
disqualified from representing Shade in the outgoing litigation
regarding his injury. With this in mind, the court looks to the
degree to which Barish's actions compromise his client and the
degree to which they would taint the trial scheduled for
December. Shade would suffer severe hardship from losing the
attorney he has selected at this late point in the process, and
both of the allegations made by defendant may be explored in the
trial itself, a fact that lessens the possibility of public
disenchantment with the judicial process and the bar. The public
discussion of these issues will also ensure that the defendant is
not hampered in presenting its own position. In short, the
defendant has not met its burden of demonstrating that
disqualification is necessary.
An appropriate order follows.
AND NOW, this 16th day of November, 1999, upon consideration
of Defendant's Motion for Disqualification of Plaintiff's
Attorney, Marvin I. Barish, and the response thereto, it is
hereby ORDERED that the Motion is DENIED.